Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 100-119)

DR CAMILLA TOULMIN AND MR BILL VORLEY

30 MARCH 2006

Q100 Chairman: Do you see any attempts to overcome that? What could be done to make MDG7 more prominent in their thinking?

  Dr Toulmin: I think probably it requires two things. One is really the highest-level political support for environment and sustainable development, which I think we hear from Hilary Benn. He is extremely good at emphasising the importance a sustainable environment, the huge importance of climate change, in terms of achieving long-lasting development, and also as an equity issue within the world as a whole. I think we have got that support at the highest level. I am not sure that you have got the same level of support within the structure as a whole, and I think that is evidenced by the abolition of the position of the Chief Environmental Adviser. I think somehow DFID needs to be encouraged to take environment right back into its absolutely central functions as an organisation and to make sure that this strong focus on poverty in the MDGs has got a strong parallel track on sustainable development and environmental issues. You need that kind of political championing within the organisation, and allied with that I think you need a bit of creativity and imagination in terms of how best you deliver on those sorts of environmental and agricultural commitments. That then needs a bit of rethinking about ways of funding, and particularly finding alternative routes of funding that are not necessarily through direct budgetary support process.

Q101 Chairman: You have published a report recently called The Millennium Development Goals and Conservation. One of the areas it is focusing on is a report on the ecosystems services, a new phrase I am not sure I am entirely happy with, but there we are. Is this really the way forward, for developed countries to pay for environmental goods and services, such as carbon sequestration, in developing countries, or do you think it is simply a last-ditch attempt to get the environment included in the MDGs and the development agenda as a whole?

  Dr Toulmin: The work that we have been doing on ecosystems services shows that there are only limited circumstances in which that kind of approach, of markets for environmental services, there only certain circumstances in which those markets do generate both good environmental benefits and good poverty equity benefits. That is to say, this idea that markets can produce a whole set of environmental benefits is a much too simple ambition. Very often what happens is that you can get lots of environmental benefits but it is at the expense of a lot of equity and poverty-related goals that you might seek to achieve.

Q102 Chairman: Is that because the market is too powerful within whatever fora we are talking about here, or actually should we have market mechanisms nevertheless but with a much stronger framework?

  Dr Toulmin: If you take something like the Clean Development Mechanism, which, as you know very well, is offering markets for carbon sequestration services, in cases like the CDM what you find is that there is such a high transaction cost in getting into the market in the first place that I think there is only one CDM project in the whole of sub-Saharan Africa. There are economies of scale which mean that a lot of smaller, poorer countries cannot get access to that market. In other cases what you find, like for markets for watershed services, is that, unless you have got strong institutions and governance systems in place, the poor communities which you might have thought might benefit from these payments for watershed services in fact do not gain those payments because other, more powerful actors within the system are able to appropriate them. Those benefits from markets do need very strong institutions at local level if they are to have this beneficial equity impact.

Q103 Chairman: Do you think it would be simpler and more productive perhaps simply to impose environmental conditions on governments which receive our budgetary support?

  Dr Toulmin: Possibly, yes. My feeling is that it is useful to explore various different channels, in terms of achieving objectives. In some cases regulation may work best, in other cases markets may work best, in other cases some sort of mix of the two. I do not think you can have a hard and fast policy or instrument that is going to work well in all circumstances.

Q104 Chairman: Has anybody done a great deal of research on that? We are told increasingly and I have read one or two recent DFID documents saying how wonderful the markets are in delivering all sorts of goodies, but a great many people, of course, take the view that direct budgetary support with environmental conditions would be far quicker. Is there a body of evidence of which you are aware, is there some of it which DFID actually looks at before it makes the claims for market-based mechanisms?

  Dr Toulmin: We did this study a couple of years ago of over 200 examples of ecosystem markets, called Silver bullet or fools' gold?, which does a review of how these markets for ecosystems work, in a whole variety of different contexts. As I say, in summary, that came up with a view that there are only limited circumstances in which you get a win both for the environment and for poverty and equity objectives, therefore that this ambition to use the market in all circumstances was too strong, that one needed to moderate it with other mechanisms, particularly strengthening institutions, governance and maybe a more regulatory approach.

Q105 Chairman: One of the issues that you have highlighted is that very often environmental goods and services and their benefits to the most poor are not properly accounted for and therefore are difficult to include in such things as Poverty Reduction Strategies. How do you suggest this could be addressed?

  Dr Toulmin: I think this goes back to the question about how best to engage with and support a whole set of actors outside central government in the many countries in which DFID and other donors operate. Many of the key environmental issues are handled on a day-to-day basis by local people, local institutions, local government, local organisations, and somehow DFID and other donors need to find a way of being able to listen, to learn from and to support action at that sort of level. There are examples of where DFID has joined with other donors to set up funding mechanisms and support mechanisms which do provide for that kind of lower-level set of activities. One much-quoted example is the infrastructure fund in Mumbai, in India, which is a joint DFID-Swedish SIDA fund. That sort of innovation in aid delivery, in terms of financial and other technical support, is something which I think could be followed more often. That would provide a means by which the donors could be supporting a set of institutions that government may not have necessarily as a priority but which is a very important part of the broader civil society and local government infrastructure.

Q106 Chairman: With DFID's emphasis on macroeconomic growth as the main way of getting people out of poverty, how do you think their efforts, in terms of delivering the MDGs at the very local level, are being implemented; do you think they are doing a reasonably good job there or should they perhaps refocus a bit more?

  Dr Toulmin: Our feeling is that more refocusing is absolutely necessary. The third of our booklets, of which you referred to the second, was the focus of our conference at the end of last year, called `How to Make Poverty History: the Central Role of Local Organisations'. What they are saying there, which pulls together a lot of evidence from partners around the world, is that we must find a way of strengthening and providing not just finance but a variety of other forms of support too. Local government, local associations, a whole variety of local organisations, actually are the ones which, day to day, will help deliver the MDGs, in practice, and somehow we have got to find our way out of this trap created by a very large amount of money going through a very limited funnel into central government. Not unnaturally, central governments are not that keen necessarily on dispersing a lot of money down to local organisations, particularly when they are not under their political control. There are examples as I suggested in the case of Mumbai, there are also examples from west Africa and southern Africa where a joint donor fund is made available for these more meso- and local-level initiatives. I would suggest it would be good for DFID to innovate further in that field, if indeed they do want to get down to this more micro level, where the changes in the delivery of the MDGs, most of those, actually will either happen or not happen.

Q107 Mr Caton: As has been mentioned, you receive funding from various countries, a number of different countries. Which are best at integrating environment and development?

  Dr Toulmin: I think none of them is perfect and none of them finds it easy. In fact, we have been discussing with colleagues in Denmark and in Ireland and in DFID how to help make that integration work better. I suppose one might say that if they realise that there is a problem probably they are one step ahead of those who do not realise they have got a problem.

Q108 Mr Caton: Are there any examples of particular countries dealing with a particular issue or a particular project in a way that we can all learn from, in terms of bringing environment and development together?

  Dr Toulmin: I think probably you could find those examples through the OECD DAC ENVIRONET, which tries to build a sharing of experience and good practice amongst the different donor agencies, or through the Poverty Environment Partnership, which again draws not only on donor agencies but a range of UN and multilateral organisations. I cannot pull an example out of my head just immediately, I am afraid.

Q109 Mr Caton: Fine; we will look at that. Let us think of DFID. What are its strengths and weaknesses in this area?

  Dr Toulmin: I think its strengths have been this very necessary integration of environment into its sustainable livelihoods approach, which is something which evolved over the last, I suppose, five, eight years, from a situation maybe in the mid 1990s where you had a very strong natural resource focus. What they did then was to say, "A focus on natural resources is fine, but we need to see how those natural resources are drawn into an understanding of how people make an income and their livelihood strategy more broadly." I think that was a very strong, positive aspect of DFID's development and focus. Another has been this championing of the Poverty Environment Partnership, which has been a very valuable international platform for different agencies coming together to share experience on some of the difficulties of getting environment flagged up within their own organisations. That held a really good event at the Millennium Summit last September, really to bring in a number of people to try to flag up where environment was central to achievement of the MDGs, so it was good, as a high-level political platform. I think, equally, the sort of championing that we have had of climate change has been a very important element of the development agenda; it has been something that Hilary Benn has been very good at focusing on in the last few months. In terms of weaknesses, I think there is this fundamental mismatch between the sorts of person resources and aid mechanisms that you need to do good environmental work and the current structure and direction in which DFID is moving. There is a sort of fundamental mismatch there. What you tend to find is that there are some country programmes where you have got really good environmental activity going on, but largely that is because you have got somebody interesting and good in position in that particular country, rather than as a result of a more systematic policy, so it is patchy.

Q110 Mr Caton: For what sorts of projects does DFID fund IIED?

  Dr Toulmin: I can give you a couple of examples. One has been looking at watersheds around the world and looking at whether or not markets for watershed services make sense in these different contexts. That has been going on in six different countries, from Asia, Africa, Latin America, and coming up, as I say, with this much more muted enthusiasm for market mechanisms for achieving both environment and social goals. Another example is work which was concluded recently on looking at different ways of securing property rights for poor people in Ethiopia, Ghana and Mozambique, coming up again with a set of recommendations for how to design systems of land registration that are most likely to benefit poor people, so a very strong policy focus.

  Mr Vorley: There are two other, quite large projects, which DFID is supporting with networks of partners, around market governance and the position of smaller-scale producers and agriculture and food, as large supermarkets and food processors move in to middle- and low-income countries and how you can keep some sort of market access for smaller-scale producers in that. That is quite a large project. Another one is a partnership between IIED, the Natural Resources Institute and DFID to try to make sure that the standards which supermarkets impose here in the UK, including environmental standards, do not marginalise the very producers who are supposed to benefit from the `trade not aid' agenda and this mantra of making markets work for the poor. This is leading DFID into very interesting territory, of sitting down with Tesco, Asda, Marks & Spencer, here in the UK, to see if the developmental benefit of procurement from places like Africa can be maximised without losing the environmental benefits of having a private sector standard in place. That is a joint venture rather than just giving IIED money and saying "Get on with it."

Q111 Mr Caton: You are also funded by Defra, I understand. What sorts of things do you do for them; is it along the same lines, or is it completely different?

  Mr Vorley: It has been along the same lines. That programme of work has now finished and I am not sure if we do get any support from Defra at the moment.

Q112 Mr Caton: I am referring to your 2005 Annual Report, so it may be that it is there no longer?

  Mr Vorley: Yes, that is right. Again, it was a sort of multi-stakeholder process around benchmarking the private sector players in the food industry to try to raise standards rather than drive a race to the bottom, whereby you would scour the world for the cheapest food with the lowest environmental and social standards associated with that.

  Dr Toulmin: In relative terms, DFID is a far more important source of funding for us than Defra. DFID has been one of our principal sources.

Q113 Mr Caton: How much funding do you get from DFID?

  Dr Toulmin: Over the last five years, I suppose we have got between 20 and 35% of our funding from DFID and that will go up next year because we have got a partnership agreement with DFID now, one of these PPAs.

Q114 Mr Caton: Steve Bass, who is one of your senior fellows, was appointed as Chief Environmental Adviser by DFID but the post was lost after six months. Perhaps you have a unique insight into what happened. Why do you think DFID thought it so important to appoint an adviser and then, within six months, wanted to phase out the post?

  Dr Toulmin: We were completely perplexed by that. When he was appointed back in June 2003, Steve was completely taken aback, some months later, to find that position was being restructured out of existence. I can only imagine that it was for some kind of general restructuring process which all organisations, for some reason or another, choose to go through. We can all interpret it in various ways. I choose to interpret it as a desire to demote environment within the context of DFID's overall policy and I think that is the interpretation most people gave to that particular demotion. They did not demote the Chief Economic Adviser and I interpret that to mean that economics matters a lot more than environment, but that is my personal interpretation. Of course, Steve came from IIED, and I suppose, to a large extent, with him now back at IIED, we are the beneficiaries of that whole process, since he had a bit of time in DFID which has given him huge insights into how the organisation works. He is back in IIED now, working 30% of his time for DFID but the rest of the time on issues related to environment, MDGs and broader development activity.

Q115 Mr Caton: That is a small benefit compared with a major loss, it seems to me, in what you are saying?

  Dr Toulmin: Yes, that is right. It is a private benefit for IIED but a much larger collective loss.

Q116 Mr Caton: Going back to funding, why does DFID fund you and other organisations; is it because they have not got the expertise to do the work that you do, or is it something that would never be done in-house anyway?

  Dr Toulmin: I think, in general, if you look back, since Thatcherite times there has been a shift of work from within central ministries into research institutes and NGOs, which might have been done, 20 or 30 years ago, by staff in those central ministries. I think, in part, there has been certainly a shift of funding which in previous times might have been done as a core government function. I think it is also because the kind of work that we do I would hope added value, to understanding by DFID staff, both at headquarters and in field offices, contributes to their understanding of some of the policy options that they face and how they can carry forward particular areas of work more effectively. For example, we have been doing quite a lot of work on questions of land administration, particularly in the context of the Ghana programme, where DFID has got a significant investment in the work of the Ministry of Lands and Forests, so there is a very direct feeding-in, in that case, to a specific body of work that DFID wants to take forward.

  Mr Vorley: The trick being, of course, if you do support policy analysis and research which then is fed back into an organisation which has a high staff turnover, or does not have a large capacity to absorb that, at the central or the country level, there are problems of internalising that ,and one is inclined to go through repeated lesson-learning, sometimes, would you say?

  Dr Toulmin: Indeed, and quite often, when you appear with a short report, people say, "Oh, well, I don't have any time to read that." Again, I think it is this constraint on a really very limited number of people having to do a huge amount of work, and that means there is relatively little space for the reflection and thinking and questioning of alternative routes, that really there is not very much time for that.

  Mr Vorley: I think this partnership model around the UK retail sector could be an interesting model to look at, where rather than devolving or contracting research it is done as a joint venture between DFID and partners; that could be quite an interesting way forward.

Q117 Chairman: If I can follow up with a couple more questions on the staffing issue, we have been told a number of times of this famous number of 18 environment staff out of 2,927, or something like that. I am sure that if we ask the Minister, when he comes to an evidence session, the question "How do you cope with environmental issues with only 18 staff?" he is going to tell us that actually environmental issues are integrated into everybody's work and that all 2,927 will always be thinking about environmental issues as part of their overall work. If that were the answer, how would you rate it?

  Dr Toulmin: It is like all of these mainstreaming issues, is it not? If you have a bit of that background yourself then I think you do mainstream internally in that way, but I think if you come from a different kind of background, particularly if you come from a sort of mainstream economics background, it is much harder to have that sort of innate screening or understanding of environmental issues. When you look at a particular issue or project, that is not necessarily the set of questions that you are going to be asking yourself. I think what most organisations find is that once you mainstream and get rid of the environment experts, you get rid of gender experts, you get rid of other, more specific experts, then actually you lose the prod and the prompt which means that people keep those issues front of mind. Again, if most of the emphasis is going on transference of money to central budget support then these more diverse, locally-based, specific environmental issues just tend to get neglected.

  Mr Vorley: Just a defence; something like agriculture, which has a huge environmental and natural resource ingredient into it, is back on the map, fairly and squarely, in DFID, so I think it could be an overstatement to say we are down to 18, because with agriculture back in, both in research and policy, there is considerable environmental analysis and policy rushing in behind that.

Q118 Chairman: The work for which DFID funds you, how is that disseminated amongst DFID's staff; do they get any feedback?

  Dr Toulmin: It is disseminated in a variety of different ways. It depends a bit on the nature of the work, but, for instance, the work that I referred to on watersheds, there is a lot of contact between the research groups in each of those six countries and the DFID offices where that work is going on. Similarly that is the case with the example that I gave of looking at how you can secure land rights most effectively. In fact, we chose those countries—Ethiopia, Ghana and Mozambique—specifically because we knew there was either a strong DFID interest or a strong governmental interest within those countries into which the research results might feed. It is a bit more patchy in terms maybe of headquarters feedback. Again my impression is that people are incredibly hard-pushed for time, so that, for instance, when we had this big conference on land, in Africa, in November 2004, which brought together more than 100 people from different parts of the continent, including three ministers of land, we did not get anybody from DFID except a part-time consultant. That struck me as rather surprising, given the importance of the land issue in the African continent. We did get people from the Commission for Africa, but I was surprised not to get anybody from DFID itself. I was told, that day there was just nobody available because of the pressure of a whole set of other commitments. I think, on the supermarkets front, you have been having much more of a—

  Mr Vorley: In the headquarters, yes, but it is the opposite way round; there, you would talk to DFID offices in Kenya or Uganda and would be encountered by people who are interested very much in theory and want to support the work but spend all their time servicing the direct budgetary support and do not have much time for the smaller, more diffuse but very important work around smaller-scale producers and natural resources and market access.

Q119 Ms Barlow: You have highlighted a few DFID projects which you feel are environmentally effective, particularly in India, China and Kenya. Could you explain briefly what those are and why you think they are effective?

  Dr Toulmin: The one in Kenya, which in fact is run by an ex-IIED staff member, in fact we seem to be providers of environmental advisers to DFID, is focused very much around trying to strengthen rights over land and forests, particularly. Given that Kenya currently is going through this very interesting process of both constitutional reform but also trying to get a land reform process underway, so that work has been trying to support the consultation process within the country around how you get the rights of different kinds of communities properly reflected in whatever kind of legislative reform on land and forests and other natural resources takes place. That is necessarily a rather slow, consultative process and DFID has been very good, I think, at persuading the Government that it is better to go slower and to engage with a broader set of interests than to try to rush legislation onto the statute book which does not necessarily have such a strong buy-in from those different constituents.


 
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