APPENDIX 4
Memorandum submitted by WWF-UK
WWF-UK, the global environment network, welcomes
this opportunity to submit evidence to the inquiry on the UN's
Financing for Development (FfD) process. WWF has been following
the process and attended UN preparatory meetings in New York towards
the end of last year and in January 2002 (the fourth and final
preparatory).
We believe it has become increasingly apparent
that aligning the trade, investment finance and sustainable development
agendas is imperative in order to secure an equitable and sustainable
future. Trade, in many instances, is the single most important
source of development finance. Members of the WTO, in agreeing
a programme of work in the WTO Ministerial Declaration, recognised
the centrality of the multilateral trading regime to addressing
development concerns. It is critical that the FfD conference takes
steps to better align the trade and sustainable development agenda
and make them mutually reinforcing, both in terms of multilateral
trade agreements as well as regional and bilateral agreements.
Addressing economic issues in isolation from
sustainability concerns can actually aggravate poverty and inequities,
and accelerate the degradation of the earth's environment and
natural resource base.
WWF would like to take this opportunity to emphasise
that there must be a strong link between the FfD process and the
forthcoming World Summit on Sustainable Development (WSSD). It
is imperative that the outcomes at WSSD are funded by the extra
finance arising from Monterrey.
How successful has the UN financing for development
summit been and what can we learn from the processes leading up
to the summit?
The FfD Conference could forge the appropriate
links between trade, investment, finance and sustainable development,
by ensuring that the outcomes of the FfD Conference inter alia:
— Underscore the important relationship
between the FfD and WSSD Conferences, notably by aligning more
clearly the six FfD focal areas with sustainable development objectives.
— Support the harnessing of international
trade and resource flows to support sustainable development—not
just development.
— Endorse the principle that development
should be pro-environment, pro-poor and pro-equity.
— Engage all stakeholders to make progress—particularly
business and industry (including transnational corporations)—in
the pursuit of financing for sustainable development
The FfD process so far has acknowledged that
combating poverty, achieving sustained growth, and ensuring sustainable,
sensitive, people-centred development is a critical challenge.
However, there is not sufficient incorporation of these issues
into the six operative sections of the consensus text.
What progress is being made by the UK and other
Governments in moving towards meeting the target of providing
0.7 per cent of GNI in official development assistance?
Northern governments committed themselves in
1970 to spending 0.7 per cent of their (GNP) on international
development. In 2001, the DAC average was 0.22 per cent of (GNP).
The Financing for Development conference in March in Monterrey
should be a key opportunity to make good their commitments. The
estimated costs of achieving the Millennium Development Goals
(MDGs) requires a rapid doubling of ODA. (The Zedillo report prepared
in advance of the Financing for Development Summit estimates the
costs of achieving the MDGs at an extra $50 billion a year. If
the DAC members actually delivered ODA according to the 0.7 target,
aid would increase by about $100 billion a year).
The UK Government is currently committed to
the 0.7 per cent target and to reaching 0.33 per cent of GNI by
2003-04 (from 0.27 per cent in 1997-98). At this rate of increase,
the target would not be reached for another 40 years, well beyond
the Millennium Declaration goal of 2015. The Comprehensive Spending
Review set for June provides the opportunity to announce a timetable
to accelerate the increase in aid spending and set the target
date as the end of this current Parliament for achieving the 0.7
per cent target.
The EU and its member states have reaffirmed
several times their commitment to reaching the 0.7 per cent target.
To date, EU member states give an average of 0.33 per cent and
only four EU countries have met the target of 0.7 per cent (Denmark,
Netherlands, Sweden and Luxembourg). Disappointingly, Denmark
which was well in the lead in recognising its global responsibilities,
has recently announced its intention to decrease its ODA which
is currently 1.06 per cent GNP. The most recent suggestion from
the Commission to the Council suggests that EU Member states could
individually and collectively commit to a sizeable increase in
ODA volume—at a minimum that by 2006 all those States which
have not yet reached the 0.7 target, would at least reach the
EU average for the year 2000 (0.33 per cent ODA/GNI). This minimum
is far from the sort of commitment required to show leadership
and acknowledge their responsibilities towards the least developed
countries. We acknowledge the Chancellor's and Secretary of State
for Development's calls to the EU and the wider world, but call
this should be backed up by the UK making a substantial commitment
themselves.
Aid is an essential complement to other forms
of support for economic growth such as foreign direct investment,
especially for those countries with the least capacity to attract
private direct investment. For countries in Africa and the least
developed, small island and landlocked developing countries, ODA
still provides the bulk of external financing and is critical
to the achievement of the millennium development goals. It is
also an investment in global political and economic security.
The goal of lifting more than a billion people
out of extreme poverty will not be achieved without tackling the
environmental challenges at the same time. Environmental degradation
impacts the poor by disproportionately affecting their health,
livelihoods, and security. Each year, between 5 and 6 million
people die from water-borne diseases and air pollution in developing
countries. The livelihoods of more than a billion rural people
are at risk because of land degradation and water scarcities.
Natural disasters such as floods and droughts threaten many more
vulnerable groups of poor people. Economic costs of environmental
degradation have been estimated at 4 to 8 per cent of GDP a year
in many developing countries. The Millennium Development Goals
include the goal of environmental sustainability and stopping
and reversing the loss of environmental resources.
Targeting aid towards building national policy
capacity for better environmental management is therefore a central
means to achieving long-lasting poverty reduction. Policies and
programmes that integrate environmental, social and economic aspects
of development and deliver sustainable livelihoods for the poor
are vital aspects of a good poverty reduction strategy. Pro-poor
policies such as reform of water and power subsidies, provision
of forest and land rights to rural communities and devolution
of decision-making powers have been shown to alleviate poverty
while increasing sustainable use of the natural capital. National
strategies for sustainable development (NSSDs) which are being
prepared in most countries, provide a comprehensive framework
for achieving environmental sustainability. In this context, we
welcome the consultation document that has been developed by DFID,
EC Development, UNDP and World Bank on "Linking Poverty Reduction
and Environmental Management—Policy Challenges and Opportunities"
as a contribution to the World Summit on Sustainable Development
process.
Increasing aid budgets can also be used for
the provision of global public goods such as biodiversity conservation,
climate change mitigation, global health and conflict prevention
whose benefits spill over national boundaries. Current aid spending
by DAC donors on GPGs amounts to 9 per cent of the total aid budget.
If aid was to increase by $50 billion, and current patterns of
spending maintained, funding for the environmental GPGs would
increase by $2.84 billion. However, this will still be insufficient,
and more innovative sources of financing GPGs should be explored.
How desirable and realistic are proposals for
novel forms of financing development, including currency transactions
taxes?
WWF supports many other NGOs in calling for
a levy on currency speculation to raise substantial revenues for
projects targeted towards the eradication of global poverty and
sustainable development objectives. This would be an innovative
way of raising the much-needed money to give further support to
the achievement of the Millennium Development Goals. We would
urge the UK government to give serious consideration to the introduction
of such an internationally co-ordinated currency transactions
tax which should enhance and not substitute for existing and internationally
agreed development aid commitments.
These revenues could, for example, also provide
financing for investment in global public goods, including oceans,
climate change mitigation, biodiversity conservation, ecosystem
services, global health and conflict prevention whose benefits
spill over national boundaries.
Currently, the Monterrey Consensus document
ignores the call in earlier texts for innovative methods of financing
for global public goods, although we understand that the EU is
intending to devote some further research into this area.
What are the prospects of developing countries
domestically generating sufficient finance for development? To
what extent would these prospects be increased by countries practising
good governance and promoting the rules of law?
The current Monterrey Consensus document acknowledges
the important role of development frameworks which are owned and
driven by developing countries and which embody poverty reduction
strategies, including Poverty Reduction Strategy Papers (PRSPs),
as vehicles for aid delivery. Country-owned plans for sustainable
development, where they have been developed with full stakeholder
participation, and with cross-governmental engagement provide
the criteria for funding and coherence amongst donors.
Integrating the principles of sustainable development
into country policies and programmes is a key target under the
MDGs. Aid can be strategically deployed to build capacity for
achieving such integration into NSSDs, PRSPs, and other policies
and plans. These strategies should be viewed as processes not
new plans; integrate the different dimensions of sustainability,
demonstrate a commitment to good governance and provide a basis
for measurable outcomes. In the long-term, aid will be effective
if it is untied, targeted, where possible pooled internationally,
conditional on presence of good policies, and cost effective in
its delivery.
Poverty and environment are closely interrelated
issues. Environmental resources such as forests and freshwater
support economic development and also contribute to incomes and
livelihoods of the poor directly. Poverty reduction efforts on
the other hand can encourage sustainable utilisation of natural
resources. Integrating environmental factors into national policy
processes such as the PRSPs can become an important means for
achieving sustainable development.
PRSPs provide a comprehensive development framework
for countries to strengthen macroeconomic stability and redirect
public expenditures towards poverty reduction. These are nationally
owned strategies prepared as part of the World Bank/IMF led HIPC
initiative to provide deeper and faster debt relief to 42 highly
indebted countries. PRSPs share their key principles and priorities
with the NSSDs prepared as part of commitments towards the international
development targets (IDTs) and the millennium development goals
MDGs, PRSPs and NSSDs do not have to be separate documents, but
should rather reflect a convergence in thinking and instruments
for achieving sustainable development.
The PRSPs are not meant to be limited to countries'
dialogue with the Bretton Woods institutions. Rather, these are
intended to serve as a broad framework within which both domestic
stakeholders and development partners can engage in and support
the design and implementation of country-owned poverty reduction
strategies. This point is reinforced by the fact that aid-dependant
countries are seeing a movement towards not only broader policy
dialogue in the context of the PRSPs, but also an evolution in
donor instruments away from funding stand-alone projects towards
provision of budgetary support to government programmes.
The PRSP approach is still in its early stages
of development. By January 2002, only eight countries: Bolivia,
Burkina Faso, Honduras, Mauritania, Mozambique, Nicaragua, Tanzania
and Uganda, had completed full PRSPs, and about a dozen others
were well advanced towards that goal. As the process moves forward,
it is essential that the quality of full PRSPs is not sacrificed,
both in terms of their content (which should mainstream the essential
natural resource base upon which economies and the poor depend)
and participatory process. We also believe that ways should be
explored to give the poor land rights and payments for stewardship
of environmental resources and ecosystem services which provide
benefits to local, national, regional and global users.
Foreign Direct Investment
In terms of foreign direct investment which
can be a principal means of facilitating development but from
which very few developing countries currently benefit, the goal
must be to ensure that the liberalisation of capital flows takes
place inside a regulatory framework that alleviates poverty and
promotes sustainable development. This will require a careful
balancing of the interests of investors with those of host countries,
and other stakeholders. Creating the right regulatory framework
will be challenging and require a variety of actions at all decision-making
levels. This framework should provide host countries with the
flexibility and ability to control investment flows that undermine
their pursuit of sustainable development. WWF calls for the following
actions:
A—AT THE
INTERNATIONAL LEVEL
Governments, in consultation with civil society
and other stakeholders, should cooperate to ensure that:
— Existing and any future bilateral,
regional and international investment treaties develop balanced
investment rules that:
(i) are compatible with MEAs. They
must contain explicit exceptions for measures taken pursuant to
MEAs
(ii) allow host countries to set
environmental standards in a non-protectionist manner. This requires
recognition of the precautionary principle
(iii) prohibit the lowering of environmental
standards to attract investment
— Transnational Corporations are held
accountable through an internationally agreed code of conduct,
to prevent those firms following environmental best practice from
being undermined by unscrupulous competitors. At a minimum, companies
must adhere to the existing OECD guidelines for multinational
corporations
— Detailed binding regulations are
developed in environmentally sensitive sectors, for example, minerals,
fossil fuels, agricultural commodities and bulk chemicals. This
should include stipulations on technical assistance to small and
medium-sized enterprises
— Legal barriers to suing foreign investors
and enforcing judgement in home countries are removed, for example,
through instruments developed under the Hague Conference on Private
International Law
— Restrictive business practices, transfer
pricing, and the problems of bribery, corruption and excess investment
incentives are addressed
— Information-sharing about the impacts
of FDI on environment and development is improved, for example,
through the provision of data, the joint development of methodologies
for assessing impacts of FDI, monitoring and research and establishing
fora to share experiences in harnessing investment to support
of sustainable development
B—AT THE
NATIONAL LEVEL
Host—or recipient—countries, supported
by development assistance, and in consultation with civil society,
should strengthen their environmental, social and economic governance
structures to support sustainable investments. This requires:
— Financing to monitor and enforce
environmental conditions, pollution levels and other environmental
impacts. This could be funded through various mechanisms, for
example, from international contributions, by investors in natural
resource sectors being charged higher resource rents and/or the
introduction of a Tobin tax
— Facilitating the removal of perverse
subsidies, for example, building on the outcomes of the WTO in
the fisheries and agricultural sectors, whilst also addressing
subsidies in the forestry and energy sectors
— Sustainability assessments for certain
types of investment—in particular in natural resource or
pollution intensive sectors.
Home or investing countries, individually and
collectively, should ensure that their investors act in a manner
supportive of sustainable development. In particular, they should:
— Create mechanisms to lever additional
funds from investors for projects aimed at sustainable development,
for example private-public partnerships that promote the use of
renewable energies, encourage sustainable production techniques
and the development of information technology
— Make assistance to investors conditional
on good environmental performance, for example, underwriting loans
through the export-credit agencies
— Provide development assistance that
supports recipient country efforts to develop good environmental
and social governance, including capacity building and knowledge,
skills and technology transfer.
Taken together these measures, and others, should
contribute to ensuring that a proper balance is struck between
protecting the rights of investors and promoting equitable and
sustainable development in the recipient country. The World Summit
on Sustainable Development in August/September 2002 and the meeting
on Financing for Development (ffd) in March 2002, present two
important occasions to pursue international investment discussions
that incorporate sustainability concerns, and propose concrete
mechanisms to operationalise such an approach.
WWF-UK
April 2002
|
