Valuing the Global Environment:

Actions & Investments for a 21st Century

 

Introduction

Earlier this year I had the joy of becoming a grandfather for the first time. In April, I will have the honor of joining colleagues from 161 nations in the Global Environment Facility's first Assembly in New Delhi. These milestones have more to do with each other, and with this book, than might at first seem apparent.

Join with me in asking yourself these questions:

What urgent environmental problems overshadow all children born into the world today?

What combination of economic and environmental challenges can the generation coming of age in 2020, and those to follow, expect to tackle?

What new partnerships, policies, and finance are needed now to ensure their success?

As last year drew to a close, people the world over gained a deeper appreciation of our economic and environmental interdependence. Starting in Asia's newly industrialized nations, falling stock markets followed the sun, producing record declines in Japan, Europe, and the Americas. In Southeast Asia, during the same period, forest fires raged for weeks, spreading smoke across six countries and adversely affecting the health of more than 70 million people. And in Kyoto, negotiators worked into the early morning hours to forge a consensus on Earth’s climate future.

Interdependence means that all of us, whatever the stage of our development, are traveling in the same boat, floating and sinking together. Building a sturdier vessel benefits all passengers. The vocabulary of interdependence does not recognize winners and losers, nor does it dwell on the "burdens" of international engagement. Opportunity sharing is what we must now be about.

 

Part I: Signals on the Horizon

Most of our current development choices, North and South, are rocking the boat. The gap between rich and poor -- between and within nations -- is widening. Consumption and population trends alike spell serious trouble, and environmental issues, like the economy itself, are increasingly global in nature. Ecosystems critical to the functioning of earth's life support systems continue to be undermined, and land degradation threatens food security and livelihoods.

How much better off all of Earth's people will be when we adopt sustainable development as our common agenda -- and that can and will happen with the active support of citizens everywhere. Chapter two highlights the ongoing efforts of environmental activists and entrepreneurs to build constituencies for change. These courageous many are enabling governments and international institutions to alter the political economy of environmental degradation from the bottom up, with the active assistance of non-governmental organizations and other community based groups.

During the last decade, these new partnerships have led us to a common understanding of the most fundamental priorities facing all nations. Reducing the risks of climate change, conserving and sustainably using our stocks of biological diversity, protecting international waters, phasing out ozone-depleting substances -- and associated efforts to combat land degradation -- these are issues encompassing the fate of all peoples, political systems, sectors, species, and generations. They are problems which must be solved together and soon. What is more, and often forgotten, is that these solutions hold enormous promise for alleviating poverty and improving quality of life for all.

Any strategy that aims to sustainably manage earth's resources must build on the positive ties between development and the environment, while breaking the negative bonds between economic growth and environmental degradation. "Business as usual" can give way to alternative scenarios with positive outcomes for all. But first we must incorporate environmental values into all our priorities and actions. This includes repositioning our economies -- not necessarily toward producing less, but definitely toward producing (and consuming) differently.

Efficiency, innovation, substitution, and structural change. Together, these principles can have a powerful effect on the relationship between economic activity and the environment by ensuring that the scarcity of natural resources is accurately reflected in the value societies place upon them. Firms of all sizes have little reason to cut back on wastes and emissions, until the right incentives -- provided by regulations, charges, inducements, or other means -- are established. Given fragile and limited resources, poorly defined or non-existent property rights, limited access to credit and insurance markets, and the simple need to survive, low income producers -- a majority of the world's people -- are generally unable to invest in long-term environmental protection and resource conservation.

Chapter three describes market-based policies governments can apply to accelerate the transition to sustainable development. Key measures include new incentive systems, the elimination or reduction of price subsidies, the clarification of property rights, and, at the national level, more open trade and investment policies which promote environment friendly technology transfer and a more efficient allocation of resources. No single approach works everywhere and all entail costs -- financial, political, or both. But the benefits can be great and this much is certain: the costs of inaction to human health and welfare and to our natural environment will prove much greater over the long term.

  

Part II: Four Issues for the Next Century

Biodiversity loss. Extinction and ecosystem destruction threaten earth's vital life support system. By adopting new strategies for conserving and sustainably using biodiversity, we will preserve not just the many "free" economic benefits we take for granted (agriculture, pharmaceuticals, the raw components of our material civilization), but also the cultural, spiritual, and purely biological values inherent in our natural world.

Climate change. Melting ice caps and the thermal expansion of the oceans are of immediate concern to residents of low-lying island states and coastal areas. In time, greenhouse gas-induced climate change threatens to play havoc with most everyone's weather, disrupt agricultural trade, deal a strong blow to already weakened ecosystems (forests, wetlands, and coral reefs), and give new impetus to the spread of infectious diseases. New policy and technology approaches offer opportunities for reducing greenhouse gas emissions while putting our energy future on a sustainable footing.

International waters. The local water problems of the 1970s have become the transboundary problems of the 1990s, linking the global water cycle to urbanization, watershed degradation, deforestation, biodiversity loss, and climate change. The human interrelationships are equally complex, involving geopolitical concerns, regional and global markets, monetary policies, and in-country subsidies. By scaling up lessons learned in transboundary waters management and partnerships, we can weave a safety net for the billions of people living in coastal communities and multi-country river basins.

Ozone. By initiating the phase-out of ozone-depleting chemicals during the 1970s, we are already experiencing a lower incidence of skin cancers than scientists originally predicted. Enforcement efforts continue but it is clear that lessons and the momentum gained from this success can help to carry us forward on other fronts as well.

Prevention and control of land degradation, especially desertification and deforestation, are critical to achieving sustainable development at the national level. They are also central to global environmental progress. The environmental and economic consequences of land degradation are not confined to the countries where it occurs. Its effects - loss of biodiversity, reduced atmospheric and subterranean carbon sequestration, and pollution of international waters - can be significant and global.

As part of its mandate, the GEF has endeavored to address land degradation as it relates to biodiversity, climate change, and international waters. Countries are taking a variety of actions to stop it. These include improved farming and grazing practices; afforestation, reforestation, and forest management; upgraded water management; and institutional and policy reform for better land use policies.

Chapters four through seven provide a comprehensive frame of reference for considering all of these global problems and their solutions: current scientific evidence, the power of grassroots action, the evolving policy response, a balance sheet of costs and benefits of action and inaction, and a short guide to the most promising new collaborative solutions on the horizon.

Finally, the book’s epilogue -- "Getting There From Here" -- speaks to opportunities for global environmentalism around the globe, and the role of the Global Environment Facility.

GEF produced Valuing the Global Environment in time to coincide with its first Assembly for a number of reasons, including to provide a common background for the meeting itself. The book’s ideas, and a number of its examples, draw on the GEF’s experience working in 119 nations since 1991. But to an even greater extent, this book reflects the innovation and hard work of millions of individuals and institutions worldwide over the last few decades -- and we are indebted to President Cardoso and over two dozen guest essayists from more than 20 nations for sharing their personal insights and professional recommendations.

Never has the time for international cooperation to every nation's individual benefit been more ripe. Earth's 21st century can provide answers to many of the questions that plague us in the 20th. We can be agents of positive thinking, while making clear the risks of business as usual. We can be the catalyst for partnerships, while recognizing the challenges of forging consensus. As the new millennium approaches, with the support and involvement of the community nations, the GEF will continue to look for new opportunities to add value to and for the global environment.

 

 

Epilogue:

Getting There From Here

Albert Einstein was deep in thought when the train conductor asked for his ticket. After a lengthy search of his pockets, the Nobel laureate jumped up and pulled his suitcase down from the rack. Recognizing his passenger, the conductor said: "Don't worry, Professor, I'm sure Princeton University will pay for another ticket." Einstein replied: "Young man, it's not the price of the ticket I am worried about. I need to know where I'm going."

The preceding seven chapters have been about booking passage to a different global future, while we still can. The journey has already begun in many respects, but reaching the destination requires that everyone be on board.

As our book has tried to demonstrate, there is clear reason for optimism. During the last quarter century, we have reached a common global understanding of the fundamental threats to Earth's ecological balance. During this same period, the world community has also reached consensus on many of the solutions. Witness the Montreal Protocol on Ozone Depleting Substances, Agenda 21, the conventions on biological diversity and climate change, the Kyoto Protocol, and the creation and restructuring of the Global Environment Facility.

The ongoing challenge is to move from the blueprint to the building stage. We must all do our part to breathe life into these commitments, not just nationally and internationally, but also in the places we live and work.

A Role for the GEF

The GEF was piloted in 1991 to do something totally new: to earmark multilateral funds for developing country-based projects with global environmental benefits. GEF’s brief is to make the connection between local and global environmental challenges and between national and international resources to conserve biodiversity, reduce the risks of climate change, protect the ozone layer, clean up international waters, and stop land degradation.

Over the past seven years, the need for and potential uses of this global partnership have become increasingly clear. Most importantly, the GEF was designated the financial mechanism for both the Convention on Biological Diversity and the Framework Convention on Climate Change. Without it, these two international treaties might be gathering dust, sharing the fate of others that lacked a provision for financing implementation.

To meet its potential and fulfill multiple missions, the GEF has had to evolve from its pilot form into a more broadly representative, participatory, transparent, effective, and strategic organization. This process began even before 1994, when the GEF was "restructured"and replenished with a fund of $2 billion.

The new GEF teamed the UN agencies most directly concerned with economic development and the environment, the UN Development Programme (UNDP) and the UN Environment Programme (UNEP), with the World Bank to implement GEF projects on the ground -- creating the first strategic alliance of United Nations and Bretton Woods institutions. A GEF Council was established -- balancing decision-making and representation from developing and developed nations, and economies in transition -- as was an Assembly, involving all participating states.

From these new beginnings, much has taken root and grown. The number of states participating in the GEF has grown to 161. The number of donors, from North and South, has increased to 36. Funds programmed for GEF projects in 119 countries now total $1.9 billion, with more than $5 billion leveraged from other sources.

The GEF has operationalized the highest priorities of the Conference of the Parties to support the design and implementation of country-driven projects in biodiversity and climate change. It is providing economies in transition with resources to phase out ozone depleting substances and meet their obligations to the Montreal Protocol. It is underwriting partnerships among countries in order to manage shared water resources sustainably.

But the GEF is more than a channel for project financing. It is also a far-reaching and dynamic network, uniquely positioned to share global environmental science, support related policy reform, build capacity, catalyze new combinations of actors, and foster markets for environment friendly technology.

 

Building Country Capacity

The GEF helps support global environmental security by integrating the global environment into national development and strengthening the capcity of developing countries to play their full part in protecting the global environment.

Over the coming months, with the GEF’s help, developing countries will be completing national communications and action plans called for in the Convention on Biological Diversity and the Framework Convention on Climate Change. These are important tools for mainstreaming climate and biodiversity concerns in country thinking and planning, and for identifying priorities that can form the basis for formulating country assistance or cooperation strategies, as well as longer term GEF support.

 

Tapping NGO Involvement

Civil society has become an important force in implementing Agenda 21 and in increasing public awareness on global sustainability, particularly at the local level. At the GEF, about one-third of the project ideas submitted by governments originate with non-governmental groups. Approximately 20 percent of the funds expended by the GEF involve NGOs in design, planning, and/or implementation. A total of 26 private foundations also are a part of GEF’s work.

In terms of governance, GEF was the first -- and is still the only -- international financial entity to welcome NGO observers to its Council meetings. NGO representatives play a vocal and substantive role in shaping the GEF agenda in other ways as well, including participation in interagency task forces -- such as the one created to design and launch the GEF’s new "medium-sized projects" window.

In 1995, an experimental GEF-NGO network was established, composed of 13 regional focal points and a global one, IUCN--The World Conservation Union. Its overall goal is to support and promote the GEF mission, with a particular emphasis on supporting and galvanizing outreach efforts and an active and constructive NGO role in the GEF process.

 

Fostering Environmentally Friendly Technologies

In a modest way, the GEF has already helped developing countries and economies in transition take the first steps toward addressing the problem of climate change. The GEF has mobilized $4.5 billion for climate change activities in over 110 developing countries. Of this, close to $700 million was provided in grants from the GEF.

Energy policy and investment in global environment friendly technologies are key pillars for any climate change strategy and it is the private sector -- not governments -- that are the key players in the technology transfer arena. Net private capital flows to developing countries are almost six times official development assistance. In the GEF, we are keen on entering into bilateral (or even trilateral) partnerships with the private sector where our funds augment, not displace, private capital and where our interventions facilitiate and catalyze demonstration projects with significant replication potential.

The GEF and its collaborators are also working to:

 

In more than 150 catalytic projects, the GEF is promoting state of the art technology: photovoltaics, biomass gasifiers, wind power, geothermal energy, efficient industrial boilers, and improved lighting systems. In a short time and with limited funds, GEF has increased the worldwide output of photovoltaic energy alone by more than five fold.

 

Multiplying the Benefits through Mainstreaming

But the GEF too has its limits. Because $2 billion -- or even $10 billion -- wouldn’t be sufficient to the task, the GEF also has the mission of mainstreaming the global environment into its implementing agencies and all other national and international development budgets. It is not difficult to imagine the tremendous positive impacts on global sustainability when multilateral and bilateral development institutions fully integrate global environmental concerns and actions into their wider agenda: in other words, into all economic and sector work -- in energy, in agriculture, forestry, water resources, industry, and infrastructure.

The evolutionary process the GEF took on board in the early 1990s must, in the new century, encompass all governments, development institutions, NGOs, and private business too. By strenghtening the linkages between and among all these partners, we can ensure that the global environment will remain a top priority, long after discrete projects end.

 

Investing in Environmental Security

Throughout history, nations have identified security threats as military and political challenges coming from a sovereign power. More recently, we have come to see the civil unrest that is the most common form of political violence in our world today as a source of wider instability. But we need to move beyond these familiar definitions to a new understanding of the global environmental situation as a very real threat to the security of nations and of the international order.

Once that shift in outlook takes hold, the resources for mounting an effective defense will follow. Once environmental concerns become a mainstream element in the strategic planning, economic calculations, and political dialogue of nations and their leaders, genuine progress toward sustainable development will also follow.

Agenda 21 opened with this hopeful observation: "integration of environment and development concerns and greater attention to them will lead to the fulfillment of basic needs, improved living standards for all, better protected and managed ecosystems, and a safer, more prosperous future. No nation can achieve this on its own but together we can -- in a global partnership for sustainable development."

The Global Environment Facility has been privileged to implement its part of this partnership on behalf of the people of the world. And it will continue to do so -- in the interest of sustainable development and future generations.

Mohamed T. El-Ashry

CEO & Chairman

Global Environment Facility