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SUMMARY
FOR POLICY-MAKERS |
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1
The challenges of poverty reduction and
environmental policy
1.1 The Vision
of the Rio Earth Summit
At
the start of the 21st century, fighting poverty and protecting the environment
are two of the most urgent challenges facing the international community.
Narrowing the massive disparities in the satisfaction of basic needs
and distribution of prosperity must be a primary objective. Extreme
poverty, such as that prevailing above all in sub-Saharan Africa and
South Asia, is the most obvious manifestation of the untenable imbalance
in the world's social system.
Human intervention in the natural environment is
already jeopardizing natural life-support systems, especially those
utilized by the poor, in many regions of the world. Unless countermeasures
are adopted, environmental changes will have an even more life-threatening
impact in future. While those who are responsible for global and transboundary
environmental problems, such as climate change, are predominantly based
in the industrialized countries, the vast majority of those affected
live in the developing world. Poor groups are especially vulnerable
to environmental changes as these people are more exposed to risks which
threaten their survival (disease, hunger, harvest losses etc.) and have
very few coping and adaptive capacities.
So it is important to remind ourselves of the conclusion
drawn at the Earth Summit in Rio de Janeiro (United Nations Conference
on Environment and Development – UNCED, 1992): environmental and
development policies are inextricably linked – and this must apply
to any promising long-term strategy aimed at reducing poverty worldwide
and narrowing the potentially explosive North-South divide. To this
end, poverty reduction and environmental protection must be forged into
a coherent policy from the local to the global level. Only an integrated
approach which involves civil-society actors can fulfil the guiding
vision of sustainable development. In the spirit of Rio, the German
Advisory Council on Global Change (WGBU) presents the following hypothesis:
Global environmental policies are prerequisite to global poverty
reduction.
1.2 An integrated
analysis of poverty, environmental change and relevant political processes
The recommendations
for action set out in this report are based on an analysis of the systemic
links between poverty (income poverty, disease, malnutrition, and lack
of education, social stability and social capital) and environmental
changes (climate change, water pollution and lack of water resources,
soil degradation, loss of biological diversity and resources, and air
pollution). The manifestations of and interactions between poverty and
environmental problems are investigated in their various forms. This
type of integrated analysis is nothing new; what is new, however, is
the consistent linking of a holistic approach with the following key
questions: which institutional arrangements offer ways of coping with
these problems, and where must gaps be closed? To this end, WBGU has
evaluated major international political processes and developed recommendations
on policy coherence. It also presents various recommendations on further
research to identify the strategic gaps in theoretical and practical
knowledge.
1.3 Deficits in
global poverty reduction and environmental policies
WBGU's
analysis reveals that the existing institutional architecture is too
weak to solve poverty and environmental problems any time soon. It also
shows that although most of the political processes studied perform
key functions in terms of identifying themes, raising awareness and
establishing a conceptual framework for individual policy areas, the
lack of coordination between poverty reduction and environmental policy
is still a major shortcoming. The weakness of the United Nations is
an ubiquitous and recurrent problem. Moreover, international trade and
economic policy is not adequately geared towards the goals of poverty
reduction and environmental protection. Poor policy implementation and
inadequate funding are other major flaws.
Above
all, there is too little recognition of the need for a new development
paradigm. In particular, the principle that economic growth must be
decoupled from resource consumption as far as possible is not adequately
embedded in all policy areas. Moreover, the strategic option of leapfrogging
stages of technological development is given too little consideration
by international environment and development policy actors, even though
there are successful examples of this approach.
2
Recommendations on policy coherence
2.1 Drawing on
synergies generated by coupling poverty reduction with environmental
policy
WBGU's
analysis and assessment of political processes has revealed that the
impact of poverty reduction and environmental policy can be greatly
enhanced by dovetailing the two realms. The targeted coupling of these
two policy areas can help resolve goal conflicts and ensure that financial
resources are deployed more effectively. These are not the only two
policy areas in need of dovetailing. Trade and economic policy, for
example, must also not conflict with internationally agreed environmental
and poverty reduction targets. Although this position is generally endorsed
by the international community, there is still a major gap between the
pledges made and their actual implementation.
Compensation for the negative impacts of environmental changes
and the assumption of liability
Bearing the costs of environmental damage in line with the 'polluter
pays' principle
Industrialized countries are responsible for a substantial proportion
of the emissions of persistent trace gases and modifications to natural
biogeochemical cycles which trigger global environmental changes such
as climate change. Very often, it is the developing countries which
are most severely affected by the negative impacts. The payment of compensation
for the ongoing environmental damage caused since the problem was identified
would take account of the industrialized countries' responsibility and
could help reduce the vulnerability of poor people in developing countries,
e.g. to climate change, and thus fight poverty. On the issue of climate
change in particular, WBGU recommends that states be obliged to
pay appropriate compensation for climate damage in line with their contribution
to global warming, taking 1990 as a baseline year for the calculation
of their emissions.
Making
private enterprises liable for environmental damage
Enterprises which cause environmental damage through their use of natural
resources or their environmentally harmful activities should –
in line with the 'polluter pays' principle – face liability under
civil law. Appropriate regulations should be established in both national
and international law. The – inadequate – sectoral environmental
liability regimes which exist at international level (e.g. in the law
of the sea or in relation to transboundary movements of hazardous wastes)
should be reinforced and extended to other environmental media (e.g.
freshwater regimes). The focus should be on strict (absolute) liability.
Here, the object of protection should be the environment per se, irrespective
of property status and economic value. Ongoing efforts to conclude cross-sectoral
international agreements on environmental liability in civil law should
also continue
Making the global economy more socially and environmentally responsible
Using international trade as a lever
Germany should intensify its efforts within the EU and multilateral
organizations such as the World Trade Organization (WTO) to ensure that
the developing countries' products are granted free access to the industrialized
countries' markets. Industrialized and newly industrializing countries
should open up their markets to products from developing countries to
the maximum extent and abolish agricultural subsidies which distort
competition. The only trade policy concessions which should be demanded
from the developing countries are those which have a direct and beneficial
impact on poverty reduction and global environmental protection, e.g.
easier market access for goods required by the poor, or zero tariffs
on goods whose use eases environmental stress (such as renewables technology).
The negotiations in the Doha Round, resumed in 2004, offer a useful
opportunity to use trade as a 'lever' for the benefit of the developing
countries.
Harmonizing the WTO rules with environmental protection
Within
the WTO, the precautionary principle should be given far greater priority,
and multilateral environmental agreements should take precedence over
WTO agreements. An appropriate addition to the exemptions contained
in the GATT/WTO treaty could ensure, for example, that programmes and
standards adopted under international environmental conventions are
not challenged by any decision taken within the WTO's dispute settlement
mechanism. Cooperation between the WTO and UNEP should be intensified.
The German Federal Government should continue to lobby pro-actively
for these objectives at the WTO negotiations.
Institutionalizing environmental and social standards
It is becoming increasingly important to establish more binding environmental
and social codes of conduct at institutional level for multinational
corporations, state export guarantee schemes and the private banking
sector. WBGU recommends that the Federal Government continues to work
actively for the implementation of the OECD Guidelines for Multinational
Enterprises. A system to monitor compliance with codes of conduct should
be established at EU level. These voluntary commitments should be incorporated
progressively into binding international law. Environmental standards
should also be introduced for exports of used industrial goods. The
granting of export credit guarantees by Euler Hermes Kreditversicherungs-AG
should be brought into line with existing OECD standards at last.
Expanding environmental policies as a pre-requisite for poverty
reduction
Preserving the integrity of the local environment, protecting and managing
resources in line with sustainability criteria, and preventing hazardous
environmental changes are key prerequisites for poverty reduction. Poor
people suffer most acutely from local environmental problems such as
water pollution or soil degradation which put their health and life-support
systems at risk. Environmental protection therefore directly contributes
to poverty reduction, and maintaining the natural environment can help
reduce vulnerability at the same time.
As
examples, various recommendations on ways of integrating poverty reduction
into environmental schemes are as follows: As part of climate protection,
WBGU recommends that the Federal Government work actively for an
international commitment on the preservation of carbon stocks in terrestrial
ecosystems (e.g. primary forests, wetlands, grasslands), perhaps in
the form of a protocol to the United Nations Framework Convention on
Climate Change. To encourage the integrated management of water resources,
international funding should be pooled and deployed, as a priority,
in the most water-poor regions where there is a high level of water-borne
diseases. Access to clean drinking water should be recognized as a fundamental
right under binding international law. In soil protection, salination
is a serious problem, so a global monitoring system for the early detection
of salination should be established. To reduce indoor air pollution,
WBGU has proposed the replacement of traditional biomass with modern
fuels. To this end, funding should be provided for pilot projects which
aim to establish a distributed energy supply, e.g. using biogenic liquefied
natural gas.
Reducing vulnerability through adaptation
People with adequate entitlements, such as access to education and healthcare,
are better able to cope with environmentally related pressures. This
aspect of poverty reduction is becoming more important in light of the
predictions being made in environmental research, for even if preventive
policies are implemented rigorously, many environmental changes can
no longer be prevented. German development cooperation should therefore
develop a strategic framework aimed at reducing vulnerability to both
gradual and abrupt environmental changes.
Safeguarding
the capacity for political action
WBGU recommends that a new field of action be established in development
cooperation, i.e. 'adaptation to expected global environmental changes'.
In particular, the German poverty reduction strategy currently being
pursued must be adapted in anticipation of the likely regional impacts
of global environmental changes.
Reducing
risks and vulnerability through development cooperation
WBGU recommends the inclusion of disaster risk management in the
Poverty Reduction Strategy Papers (PRSPs) and the integration of disaster
mitigation into the implementation of the UN Millennium Development
Goals (MDGs). Disaster prevention should also become a new sectoral
priority in development cooperation.
Adopting
a long-term perspective in national environmental planning in the developing
countries
Promoting environmentally relevant spatial planning as part of development
cooperation is strategically important, especially in terms of boosting
coping capacities. Among other things, the development and enforcement
of effective environmental laws, the production of national environmental
statistics, and policy coherence play a key role in this context. WBGU recommends that national environmental planning in the developing
countries focus to a greater extent on these long-term impacts.
Establishing risk prevention institutions
Risk and vulnerability assessments provide information which is urgently
needed in the planning of risk prevention schemes. An international
risk and vulnerability assessment programme should therefore be established,
whose task would be to develop 'Disaster Risk Indices' to identify priorities
for resource use based on cost-benefit analysis.
Protecting the environment through poverty reduction
The significance of poverty's negative impacts on the natural environment
is often overestimated – prosperity and industrialization play
a far greater role in causing environmental change. Nonetheless, the
poor are often forced to over-exploit the natural resources which generally
form the basis of their livelihoods. Combating poverty through better
provision of basic services, enhanced rights of participation and entitlements
along with better income-generation opportunities can reduce the pressure
on local ecosystems.
Coupling Poverty Reduction Strategy Papers with environmental strategies
Since 1999, the submission of a PRSP has been a prerequisite for debt
relief and concessionary loans from the World Bank, the IMF and G7.
WBGU welcomes this linkage in principle. However, too little priority
has been given to environmental aspects so far. As environmental policy
is prerequisite for poverty reduction, the PRSPs should include consistent
environmental strategies from the outset. They should also address any
potential conflicts between the objectives of economic development,
poverty reduction and environmental policy.
Boosting local communities' entitlements and property rights
Better participation by local and indigenous communities in decisions
on biological resources and conservation areas, as well as improved
entitlements to ecosystem services, can help lessen the negative incentives
which encourage over-exploitation of sensitive ecosystems at local level.
Appropriate framework conditions (e.g. good governance, secure entitlements)
are a key prerequisite here. WBGU recommends that the developing
countries be given targeted support to develop these framework conditions
in order to open up long-term prospects for the use of ecosystem services.
Improving conditions in urban slums and overcoming energy poverty
A water and sanitation infrastructure, waste disposal services, modern
energy supply and transportation systems are vital to combat urban poverty.
They also help to protect the local environment and reduce the pressure
on adjacent ecosystems. Integrated development plans for urban slums
are therefore essential, not only to combat poverty but also to prevent
further environmental damage. WBGU therefore recommends that the
German Programme of Action 2015 focus especially on water and energy
issues.
2.2 Reforming
the UN and enhancing environmental protection in the international system
WBGU
considers that the major challenges of environmental protection and
poverty reduction can only be mastered with the assistance of global
rules and effective international organizations, i.e. global governance.
This means reinforcing international law and intensifying multilateral
cooperation. To this end, a major reform of the international institutional
system is essential. The UN is a cumbersome organization which must
improve its capacity to steer policy and become the institutional backbone
of a global environmental and development partnership. This does not
mean weakening the international financial institutions and the World
Trade Organization, but integrating them more fully into a coherent
global governance architecture under the UN's political leadership.
Environment and development issues are key to the future of humankind.
They should therefore be given the same high priority as security issues
in the UN's institutional system.
The vision: Subsuming ECOSOC into a Council on Global Development
and Environment
Establishing a new lead agency in the UN system is the most promising
way to overcome the much-lamented lack of coherence in the international
institutional system and improve the enforceability of sustainability
goals. As a long-term vision, WBGU therefore recommends that a Council
on Global Development and Environment be established to replace the
Economic and Social Committee (ECOSOC). This new Council would provide
the strategic and policy framework, coordinate the activities of the
multilateral organizations working on development and environment –
including the International Monetary Fund and the World Bank –
and focus their activities towards the guiding vision of sustainable
development. This would not only ensure that the problems of environment
and poverty are given adequate priority within the UN system; it would
also overcome the international financial institutions' de facto externalization
out of the UN system. However, this will only be successful if the new
Council's decisions have more binding force than ECOSOC decisions in
providing policy direction. The new body should be composed of around
a dozen permanent members from the key industrialized and developing
countries and the same number of other representatives of the world's
regions, elected on a rotating basis. The permanent members should not
have a veto, and decisions would require not only an overall majority
but also separate majorities among the industrialized and the developing
countries respectively (North-South parity).
Since
an amendment to the UN Charter would be necessary to establish the new
Council, this reform project can only be achieved over the long term.
In the meantime, the Chief Executive Board for Coordination should be
utilized to better effect in coordinating the UN institutions. The Board
is a forum which brings together the executive heads of the UN programmes,
specialized agencies and funds, as well as the WTO, the World Bank and
the IMF.
Enhancing the status of environmental policy in the UN system
WBGU reiterates its recommendation, which has now been taken up
by the German Federal Government, for UNEP to be converted into a UN
specialized agency. This would enhance the importance attached to environmental
issues within the UN system and improve coordination on environmental
work. The new agency would also ensure that poverty reduction and economic
development in the poor countries are integrated into global environmental
policy and a fair division of burdens is established at global level.
In parallel, the Global Ministerial Environment Forum should play a
greater role in promoting international cooperation on environmental
issues, and should also have the capacity to make recommendations to
other UN organizations involved in environmental activities.
The UN Commission on Sustainable Development
Due to its institutional weakness, the UN Commission on Sustainable
Development (CSD) has been unable to fulfil its mandate satisfactorily
until now. WBGU considers that the CSD's status should be enhanced
through the appointment of a high-ranking figure – akin to the
UN High Commissioner for Human Rights – as its permanent chair.
Above all, the CSD chair could mediate, should conflicts arise between
the agencies working on sustainable development.
Improving participation in the international institutions
The UN system's guiding role in future policy development and the greater
focus on environmental and development issues will also depend on enhanced
participation. This means, firstly, that civil-society actors (enterprises,
interest groups and non-governmental organizations) must be involved
in consultation mechanisms and dialogue processes. Secondly, it means
that the developing countries must play a greater role in multilateral
decision-making bodies. This applies especially to the financial institutions
(IMF, World Bank) and the regional development banks, which are currently
dominated by the OECD countries. This power imbalance impedes the development
of a global environmental and development partnership which is key to
solving the problems of the environment and poverty. WBGU therefore
welcomes the German Federal Government's initiative which aims to modify
the voting arithmetic in the decision-making bodies of the Bretton Woods
Institutions.
Strengthening the environmental component of the Millennium
Development Goals
The MDGs are milestones on the path towards global poverty reduction.
Through their adoption, the international community has committed itself,
for the first time, to quantifiable goals and a fixed timetable. However,
the strong focus on social policy deficits implies that poverty reduction
can be viewed separately from the condition of the world's natural life-support
systems. WBGU therefore recommends that the environmental policy
objectives set forth in the MDGs be reinforced and that meaningful indicators
be agreed in this area. The UN Conference to review the progress made
in the achievement of the MDGs (the 'Millennium Summit 2000+5') in September
2005 offers a good political opportunity to take these steps.
Enhancing cooperation between the Rio Conventions
Cooperation between the UN Framework Convention on Climate Change, the
Convention on Biological Diversity and the UN Convention to Combat Desertification,
as well as in the thematic fields covered by these Conventions, is extremely
unsatisfactory. This is particularly true when conflicting objectives
arise. The Joint Liaison Group – a forum comprising representatives
of the secretariats of the three Rio Conventions – offers an opportunity
to address these problems and identify not only win-win situations but
also conflicting objectives. Furthermore, thematic working groups consisting
of an equal number of representatives from each Convention secretariat
could offer an additional opportunity to exchange views on mutual interests
and propose possible solutions to the relevant Conferences of the Parties.
In many cases, joint development of strategies within the framework
of the Conventions may be a positive way forward. The integration of
the Rio Conventions into development cooperation, as proposed by the
OECD, would ensure policy coherence among the donor countries.
Improving policy advice
Knowledge and evaluation are key to the development of viable policies
for the future. In order to predict and identify global environmental
and development problems and map out options for action, the role of
scientific policy advice should be enhanced. WBGU recommends that the
knowledge base available to policy-makers be improved through the production
of regular assessment reports. To this end, panels – akin to the
IPCC – should be established to deal with the issues of land,
soils and biodiversity. The option of establishing an Intergovernmental
Panel on Poverty and Vulnerability should also be explored.
2.3 Driving forward
local implementation
Since
the adoption of Agenda 21 in 1992 and the breakthrough of the concept
of sustainable development, a heightened awareness of the link between
environment and development has emerged. The international community
has agreed on a shared guiding vision of the overall direction and goals
of global development. Yet in practice, economic development or power
politics often still take precedence over sustainability. The guiding
vision can only be implemented successfully if national and local actors
are recognized as the driving forces behind this process. The transition
from the development and adoption of global action plans to their practical
implementation by local and national actors is mostly unsatisfactory.
In view of the increasing number of international conventions, the international
community must turn its attention to the widening gap between pledges
and practice as a matter of urgency.
Agreeing quantitative targets and developing indicator systems
Quantitative and time-bound targets should not only be set at an overarching
level, as in the MDGs; they are required in each separate field of action
in global environmental and development policy. This approach is already
being adopted in the Convention on Biological Diversity and the Kyoto
Protocol, for example. But time-bound quantitative targets have not
yet been established for other political processes, such as the Convention
to Combat Desertification. The setting of targets makes it easier to
assess political processes and their impacts at a later stage and should
therefore be introduced in all areas of environment and development
policy. Furthermore, ongoing monitoring of the impacts of measures through
the use of appropriate indicator systems is an essential prerequisite
which, although often called for, is still not fully implemented in
practice.
Coordinate the separate implementation pathways of environmental
conventions
The implementation pathways of the environmental conventions, the National
Strategies for Sustainable Development, and the National Action Plans
to combat poverty generally run concurrently in many countries and are
poorly coordinated. Implementation should therefore be streamlined in
a consistent and coherent way at national and local level in order to
improve the effectiveness and impact of the resources deployed. Integrated
measures at local level could form practical fields of action.
Improving donor coordination
The greater part of official development assistance (ODA) is granted
through bilateral approval procedures. Efforts are under way to improve
the coordination of the development funding provided by donor countries,
but are hindered by national interests:
- The
OECD's Development Assistance Committee (DAC) is seeking to ensure
that the international commitments undertaken at Monterrey 2002 are
honoured, that development cooperation becomes more effective, and
that it is targeted more specifically towards poverty reduction. The
German Action Plan on Harmonization of Donor Practices points in the
right direction. The German Federal Government should also work for
better donor coordination in international forums, such as the DAC's
High-Level Forum on Harmonization and Aid Effectiveness and the forthcoming
UN Conference to review the progress made in the achievement of the
MDGs in September 2005.
- The
Treaty on European Union merely assigns a 'supplementary' role to
the European Commission in European development policy, making it
more difficult to achieve effective coordination and coherence within
the EU. WBGU recommends greater communitization of development policy
and its integration into the Common Foreign and Security Policy. This
is especially important for the priority region of sub-Saharan Africa,
where more intensive development policies at Community level could
achieve substantially more than the bilateral efforts of the EU Member
States, now numbering 25 in all.
Mainstreaming of objectives
The Federal Government should ensure that trade, economic, security
and foreign policies do not conflict with development and environmental
policy objectives. This means in Germany, for example, involving all
the relevant ministries in decisions to grant Hermes credit guarantees
and enhancing the role of the Interministerial Committee. Furthermore,
the public profile of the Committee of State Secretaries for Sustainable
Development ('Green Cabinet') should be enhanced in order to reinforce
its key role in agenda-setting. In industrialized and developing countries
alike, environmental policy should be taken seriously both as an independent
policy field in its own right and as a cross-cutting task.
2.4 Promoting
good governance
Global
governance not only requires effective multilateral institutions and
the rigorous implementation of international agreements at regional
and national level. It also requires good governance in the
partner countries – i.e. the rule of law, legal certainty for
citizens and enterprises, respect for basic human rights, government
accountability, and anti-corruption measures.
In
WBGU's view, it is sensible to link development cooperation to good
governance criteria (conditionality). Within the development cooperation
framework, more assistance should be granted to recipient states which
are willing to reform and are taking positive action. To this end, non-purpose-specific
funding (budget aid) should be provided as well – albeit subject
to regular reviews.
Fragile
states with a weak political infrastructure need help to develop well-functioning
administrative and legal structures and effective environmental management
systems. For security and humanitarian reasons too, the international
community cannot afford to write off failing or collapsed states as
hopeless cases. It must find ways of maintaining or restoring these
states' monopoly of power as a prerequisite for peace, stability, development
and environmental protection. Failing states should therefore still
receive humanitarian aid and assistance with institution-building. The
anti-corruption campaigns being spearheaded by international NGOs and
national actors should also be supported. Germany should ratify the
UN Convention Against Corruption at the earliest opportunity.
2.5 Securing
the funding
WBGU estimates
the additional resources (international transfer from industrialized
to developing countries) needed to implement internationally agreed
poverty and environmental targets to run in the low hundreds of billions
of US dollars per year. Biodiversity conservation and compliance with
the 'global warming guard rail' established by WBGU, i.e. a maximum
tolerable temperature increase, are also likely to be achievable with
global financial resources less than US$400 thousand million, on average,
annually. A prerequisite, however, is that all measures are embedded
in a coherent sustainable development strategy. In the climate policy
field, adaptation and compensation funds must also be adequately funded.
For the purposes of comparison, the OECD countries' annual spending
on agricultural subsidies total around US$350 thousand million, while
annual global military expenditure amounts to almost US$1000 thousand
million. Global GDP stood at around US$36,000 thousand million in 2003.
In WBGU's view, the internationally agreed targets on poverty and environment
are affordable.
Poverty reduction and environmental protection are worthwhile for
the industrialized countries too
Besides their ethical responsibility, poverty reduction and environmental
protection accord with the industrialized countries' pragmatic interests
as well. At least four positive dividends can be anticipated for industrialized
countries:
- Environmental
dividend: By protecting global public goods, environmental damage
is reduced in the industrialized countries too.
- Development
dividend: Reducing poverty and environmental damage worldwide
creates markets for export products and investors from industrialized
countries.
- Trade
dividend: The abolition of subsidies in the industrialized countries
will boost world trade. The industrialized countries will also benefit,
e.g. because they will be able to import products more cheaply. Production
efficiency will also increase over the medium to long term.
- Security
dividend: By maintaining natural life-support systems and successfully
reducing poverty, the numbers of refugees fleeing from environmental
damage and poverty will decrease. Furthermore, improved living conditions,
better entitlements and more participation rights will reduce an enabling
environment for terrorism.
Dismantling
environmentally harmful subsidies and trade barriers
Every year, environmentally harmful subsidies amounting to around US$850
thousand million worldwide are paid to agriculture, the fossil fuel
and nuclear energy sectors, transport, the water industry, fisheries
and forestry. Significant funding could be released by slashing these
subsidies and allocating a proportion of the resources to development
and environmental policy. If the OECD countries abolished all their
trade barriers for agricultural goods and other products from developing
countries, the developing countries could increase their revenue by
at least US$40 thousand million per year.
Further development of the Clean Development Mechanism and emissions
trading
WBGU recommends that a positive decision be adopted as soon as possible
on the eligibility of CDM emissions reductions in future Kyoto commitment
periods. This would give investors planning security and thus ensure
that investment flows are not jeopardized in the current commitment
period. In a future expansion of emissions trading to include all newly
industrializing and developing countries, emissions trading would replace
the CDM and could thus lead to a substantial transfer of financial resources
to poorer countries. WBGU recommends that at the forthcoming negotiations,
the German Federal Government press for the rapid integration of all
states into a contraction and convergence regime.
Establishing a compensation fund for climate damage
In addition to the provision of regular and more generous financial
resources for the existing adaptation funds, WBGU recommends that polluters
be required to make further payments into an international fund as compensation
for the damage sustained by developing countries as a result of climate
change. In principle, all countries should undertake payment commitments,
which should be commensurate not only with their current emissions but
also with their cumulative greenhouse gas emissions since the baseline
year of 1990. Because it is impossible to predict future damage and
its distribution with certainty, some measure of flexibility is required
as regards the total resources available to the fund and the payments
per tonne of CO2 equivalent. Transparent rules should therefore be agreed
so that the payment commitments can be adapted not only to the damage
caused over time, but also to the countries’ economic performance.
Establishing a compensation fund for climate damage
In addition to the provision of regular and more generous financial
resources for the existing adaptation funds, WBGU recommends that polluters
be required to make further payments into an international fund as compensation
for the damage sustained by developing countries as a result of climate
change. In principle, all countries should undertake payment commitments,
which should be commensurate not only with their current emissions but
also with their cumulative greenhouse gas emissions since the baseline
year of 1990. Because it is impossible to predict future damage and
its distribution with certainty, some measure of flexibility is required
as regards the total resources available to the fund and the payments
per tonne of CO2 equivalent. Transparent rules should therefore be agreed
so that the payment commitments can be adapted not only to the damage
caused over time, but also to the countries' economic performance.
Creating insurance markets and expanding microfinancing
In order to reduce the vulnerability of the poor, WBGU recommends that
development cooperation further increase its support for micro-credit
schemes in developing countries. The launch of micro insurance schemes
for the purpose of risk spreading in the event of individual hardship
(e.g. illness) should also be considered as an element of risk management.
Measures to develop and expand an international insurance fund to guard
against damage caused by natural disasters, e.g. harvest losses, flooding
or pests, should also be driven forward. WBGU also recommends exploring
the extent to which weather derivatives, disaster loans and similar
capital market products can be deployed and developed further in order
to generate funding for this type of insurance scheme. At the G8 Summit
in 2003, it was agreed that the introduction of insurance against hunger
would be explored as an option. At the forthcoming G8 Summit, the German
Federal Government should lobby for the continuation and expansion of
this initiative.
Boosting official development assistance
Official development assistance (ODA) is very important, particularly
for the least developed countries. In WBGU's view, it is necessary to
establish a binding timetable to achieve, at the least, the target of
spending 0.7 per cent of gross national income on ODA. Germany's announcement
that it plans to allocate 0.33 per cent of gross national income to
ODA in 2006, thus increasing its ODA to more than €7 thousand million
annually, is a first step. As the next step, WBGU recommends an increase
to 0.5 per cent by 2010.
Widening debt relief
Further
debt relief is essential to promote economic development in developing
countries. WBGU endorses in principle an expansion of the HIPC Initiative
to include heavily indebted middle-income countries. This would allow
these countries to benefit from being released from a proportion, e.g.
10–20 per cent, of their debt. However, the expansion of debt
relief cannot take place at the expense of other development financing:
debt relief should not be factored into ODA, which is what often happens
at present.
The
G8 Summit in July 2005 will focus on, among other things, poverty reduction
and climate protection. In this context, WBGU welcomes the British Government's
announcement to cancel more of the poorest developing countries' debts.
The German Federal Government should follow suit.
Levying
user charges and introducing non-utilization obligation payments
As recommended in earlier reports, user charges should be levied on
aviation and the use of the seas. In addition, in order to protect environmental
resources whose preservation is a common concern and responsibility
of all humankind, but which cannot be defined as global public goods
in the strict sense, a system of non-utilization obligation payments
should be introduced.
3 Breathing
life into the Global Partnership for Environment and Development
The international
community will only master the major challenges of environmental protection
and poverty reduction if the industrialized and the developing countries
embark on a new type of cooperation. A 'global partnership' was agreed
at the Earth Summit in Rio de Janeiro in 1992 and, in the 2000 Millennium
Declaration, was described by all the heads of state and government
as one of the most important goals of international politics –
although the environmental dimension was neglected in this context.
To date, the partnership forged between the industrialized and developing
countries has failed to develop the momentum necessary to resolve the
key problems of poverty and environmental degradation. With increasing
resource consumption, worsening environmental damage and rising population
figures, the scope for action is narrowing. WBGU therefore recommends
that declarations of intent be followed by swift action and that the
global partnership be taken seriously.
The
governments of the developing countries have a responsibility to improve
the performance, transparency and management of their public sectors,
legal certainty for their citizens, and decision-makers' accountability.
They should also boost poor people's entitlements and rights of participation
and take seriously the environmental dimension of sustainability. Without
fundamental economic, social and political reforms and a change of behaviour
on the part of their elites in particular, the developing countries'
efforts to free themselves from the all-pervasive problems of poverty,
environmental degradation and violence are bound to fail.
For
their part, the industrialized countries must change their consumption
and production patterns at home while supporting viable modernization
processes in developing countries. The present gap between the wealthy
countries' rhetoric and their actual policies is undermining the developing
countries' trust and confidence and impeding joint progress. The industrialized
countries should honour the pledges that they have made: to open up
their markets to products from the developing countries, to cancel the
poorest countries' debt, and to provide more generous development assistance.
At the very least, they should fulfil the voluntary commitments undertaken
at the International Conference on Financing for Development in Monterrey
Over
the long term, an integrated approach which links poverty reduction
and environmental policy affords major opportunities to the developing
and industrialized countries alike.
