Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 140-159)

MR CLIVE BATES, DR JOHN SEAGER AND MS CLARE TWELVETREES

20 APRIL 2006

  Q140  Chairman: In your memo you have highlighted the need to address the environmental impacts, particularly within middle income developing countries, which is for us, certainly those who served on a timber inquiry, clearly a very important issue, sustainable timber. How do you see DFID's role in this and how can the environmental issues in middle income countries be addressed?

  Mr Bates: The primary focus of our memorandum was on the close integration between environment and well-being of the poorest people where livelihoods are most strongly dependent upon the condition of the environment around them—for food, for shelter, for fuel, whether it is forest, fisheries, soils, whether it is the climate, water resources, floods, droughts and so on, so that is where we were putting our emphasis, aligned with DFID's core mission which is, rightly, poverty reduction and trying, I suppose, to articulate as best we could how strong that nexus is. Therefore, it should form a larger part than it currently does of the core poverty reduction objectives that DFID has under the International Development Act. For middle income countries the issue is a little bit more subtle because if you take China—I do not know if it counts as a middle income country yet—things like water resources are likely to become a constraint on its growth, and there what a body like the Environment Agency could do and what DFID might want to do if it is within its scope of priorities to deal with middle income countries in this way is to provide assistance on the institutional basis for managing the environment. By definition a middle income country has started to have sufficient resources of its own to invest in its own capacity and to maintain its own stock of environmental assets and natural capital and manage it; what we might be able to do usefully is to share technical knowledge and essentially institutional insights, but in a way there is a larger question there about where the priorities for development actually are. Is DFID primarily to focus on the very poor and improving their welfare, in which case there is a very strong case for an environmental poverty programme, or is it—and this is completely legitimate as well—also interested in the growth and well-being in middle income countries, especially the large number of poor people that there usually are in middle income countries, so even if the average growth rate and GDP per capita in China is growing very impressively, there are still an awful lot of very poor people and we should be concerned about them.

  Q141  Chairman: Indeed. Is there a lack of continuity, if you like, in our policy? At the moment DFID's strategy or primary duty is to alleviate poverty as I understand, which in the poorest countries means that the environmental impacts of marginal improvements in wealth perhaps do not have a great impact, but when you get to the middle income countries that is when the problems may really begin. Does DFID then wave goodbye to the environment at that point?

  Mr Bates: If the focus was on the very poorest then the environment and poverty link is probably the strongest there. It is the poorest that are most dependent on the environment and the most threatened by changes to it, as can be seen in East Africa at the moment—there is a terrible humanitarian catastrophe there driven by environmental pressures. It is the same across much of Africa and DFID has, rightly, a very strong focus on Africa. With middle income countries there is a strategic question about is the engagement that we have in the development process with poor countries or with poor people? If you take a country like China or India, they now have quite a wealthy and growing middle class, but they still have an awful lot of very poor people living on below a dollar a day and therefore part of the process. There the question is should our aid engagement with a middle income country be more about them taking more responsibility for their own poor people and redistributing wealth, or should we be acting directly on the poor people in middle income countries? That is, I suppose, a strategic question that I hope will be discussed in the forthcoming White Paper, but it is probably not one for the Environment Agency except to reaffirm the validity of the question, which is that there is an environment poverty nexus, both in the very poorest countries and still in middle income countries. The problems are slightly different though.

  Q142  Mr Vaizey: You hinted at what the big question is. What would be your perception of how well DFID incorporates environmental issues into its work?

  Mr Bates: Our sense is that it is shooting up the agenda. In 2000 DFID published a document—and this was perhaps the prevailing view at the time—which said we will deal with poverty first and then we will look after environment, as if environment was a kind of luxury good that would be something you only really did once you had solved the basic poverty problem. Since the World Summit on Sustainable Development, in DFID and in the development community as a whole, that world view has deteriorated and given way to a view in which environment and poverty, basic environmental services and assets, are fundamentally linked to welfare outcomes. The understanding is growing, it has not yet been operationalised fully and if we were to say what should be done here, there should be more emphasis on a strategy that recognises the poverty environment nexus, more resources—and I think the resources should flow from the strategy, we should not just count the number of environmental advisers—and ask what is the focus of the development agenda, is it more resources and then more mechanisms? DFID and the UK Government have many different mechanisms to influence, whether it is the World Bank, the European Union or the United Nations and its own bilateral programmes, but it must start with a much stronger, strategic view that the development outcomes, the core objectives of DFID can only be achieved with the very poorest people by having a very strong programme around forests, fisheries, water resources, resilience of systems against drought, flood, soil quality, the resilience of agricultural systems, all of which are fundamental environmental systems that provide wealth and income to the very poorest people.

  Q143  Mr Vaizey: In a sense you have answered my next two questions because I was going to ask you what evidence you would be looking for that DFID was taking the environment seriously. Effectively what you are saying, if I can paraphrase, is that DFID does not have an environmental strategy and you want to see an environmental strategy.

  Mr Bates: That is not quite what I would say. A lot of good work has been done in this area and what we must not do is regard it as if nothing has been done.

  Q144  Mr Vaizey: I am not saying that, what I am saying is that it should be at the core of what DFID does. At the moment there are good bits happening but not being brought together.

  Mr Bates: That is right. What has happened really over the last couple of years has been an acceleration in the number and quality of insight of statements—Gleneagles, the World Summit on Sustainable Development and some of the follow-up on that—that has started to make the case for this much more strongly. The secretary of state has made some excellent speeches in this area and there was a publication in February on DFID's approach to the environment that shows greater clarity and a focus on this issue. What needs to happen now is for that rhetoric, those insights and those ideas to be taken and turned into strategy resources and mechanisms, and the ideal opportunity to do that is the White Paper which is in preparation for later this year.

  Q145  Mr Vaizey: You are right, there are more resources going to DFID. The chairman mentioned that there are only 18 environmental specialists within 3,000 DFID officials, so presumably you would want to see in the uplifting of resources to DFID quite a lot of that going towards environmental measures.

  Mr Bates: The Chancellor announced last week or the week before that that the new money that is coming in will roughly double from five billion a year to 10 billion a year by 2013 if we meet the 0.7% GNI target; that is a five billion per year increase. The Chancellor also announced a big education programme out of that money. He has been quite forceful that that is a priority and that is what some of that money will be spent on, and a similar sort of thing could be done with the environment poverty nexus. I do not think it is a matter of counting the number of environmental advisers, it really is about the strength of the strategy and focus that they have. A lot of people can work on environment: the agricultural advisers, people dealing with infrastructure work on environment, but it is about having clarity about the maintenance and sustenance of environmental assets and how important those are to development outcomes, and then channelling the resources into that focused strategy which it would be great to see emerging in the White Paper.

  Q146  Mr Vaizey: Should DFID not just give you a chunk of money and say why not set up a proper international environment agency?

  Mr Bates: I do not think that would be right at all. DFID owns the MDGs, it owns the poverty agenda, it owns the development relationship with governments. We are happy to help but I think they own that agenda and they own the relationship with governments, and they have a much greater insight than we have into the—

  Q147  Mr Vaizey: They could contract with you to do more of the fieldwork.

  Mr Bates: That is right, and to some extent our small environmental international programme does that in a nascent way. It would be good to get us onto a more strategic footing so that we were embedded in a wider strategy about environmental development as was articulated in the White Paper, but I do not think we are here looking for a grab of turf or a piece of action as the Environment Agency.

  Q148  Mr Vaizey: I would not suggest that for a minute, I am looking for it. In your memo you put the case for a more programme based approach to bilateral aid when it comes to the environment and I just wondered why that was and what your concerns are about direct budgetary support when it comes to the environment.

  Mr Bates: There are lots of good arguments in favour, and in countries where there is the capacity, where the human rights record is good, the governance is good, there is no corruption and there are good fiduciary systems then budget support and the dialogue that goes with it is clearly a good thing to do. It does not apply to that many countries, but even so the broad philosophy of a country-led approach has a lot to recommend it; it is very, very important that countries own the development agenda albeit through a tough and challenging dialogue. What we are concerned about is whether a very strong country-led approach perhaps has within it systematic biases for particular types of programme which would be, I suppose, fairly modular, project-specific: building schools, building hospitals and where there is a clear government department in charge of it, it has power and authority to set up a strategy around health and education. For some of the things that we are talking about the responsibility in the government is very diffuse, it is not always the case that the government is as focused on poverty reduction as we would like it to be and it may be that the ambiguity in the millennium development goals does not help either—they are much clearer around the social programmes than they are around the environmental programmes, so if a country's poverty reduction strategy papers are developed from the millennium development goals there may be a bias against addressing the environmental poverty nexus there. I guess our concern is that a pure country-led approach may steer the focus of development into a particular direction—a very important direction: health and education—but it may leave these important environmental and poverty connections rather bereft and under-resourced. Therefore, in saying a programmatic approach—I think this is what DFID would call a sectoral approach—we thought we could have a bit more of a focus from the DFID, the UK Government or the multilateral institution side that says this is important, we want to put resources into this, but also at the same time having a strong, country-led approach about what is exactly done within those.

  Q149  Mr Vaizey: They are going in the other direction, they are going towards more a country-led approach.

  Mr Bates: That is again a question for the White Paper. In some places and some countries a good, country-led approach works, and the extreme examples of that, pure budget support or even debt relief, there is a good case for doing that. In other places where the government's capacity is weak, the objectives that are transmitted through the millennium development goals are vague, then you can see why these issues would not be addressed as much as the poverty and development outcomes would justify, and therefore it needs a bit of a push from our side. A programmatic approach means that we on our side have clear views about what kind of things could be done, that we have marshalled the expertise necessary, that we have a cadre of advisers and technocrats that understand what should be done, we have a community of interests and so on.

  Q150  Mr Vaizey: Could I ask finally about your suggestion of creating concessionary finance instruments, what you mean by that and an example of how they would work?

  Mr Bates: A concessionary finance instrument is a different way of giving a grant, it is a way of leveraging additional spend through loans, so something like the Global Environmental Facility is a concessionary finance mechanism and this goes on all the time. If we can blend grant finance with harder loan finance, then we might be able to leverage much better environmental outcomes for the money that goes in, and that is something that most multilateral institutions would attempt to do and most project finances would attempt to do.

  Q151  David Howarth: You have mentioned water several times already, you started to talk about hydrologists and water and I would like to concentrate on that area just for a while since it is an area where you have got considerable expertise. I wondered to start with how your expertise could be put to use in development projects abroad.

  Mr Bates: I will bring John in a minute, but it is really because at the heart of it the problems that we face here in the UK are similar in some ways to the problems that are faced everywhere. We have a certain amount of water resources, we have abstraction, we have different users—whether it is agriculture or the power sector or drinking water—we have changing precipitation, we are getting wetter winters and drier summers, so we are beginning to face all these issues. We have a very strong and I think very well-organised, well-engineered regulatory framework for water that includes Ofwat, it includes us, it includes the duties on the water companies, and in a sense we deliver quite a good water system. I am the first to say it is far from perfect, with too many leaks and a hosepipe ban in the Thames, but it is not a disaster; the equivalent in Africa means crops do not grow and people potentially die. So I think we have some concepts and ideas about water that do translate to other countries. John, have we done a water—

  Dr Seager: We have; in fact we are doing one right now in South Africa. We are working with the Department for Water Affairs there and what we are very keen to do is to try and change some of the focus to more integrated solutions for water resource management. A lot of the emphasis in developing countries so far has been on achievement on the water and sanitation millennium development goal, and whilst that is important because obviously it improves the quality of life for people, there are economic benefits and certainly health benefits, that has to be done in a sustainable way and therefore I think where we can come in as an organisation is to try and help countries to think about what integrated water resource management actually looks like on the ground. Certainly our experience in South Africa and other African countries is that there is no shortage of examples of unsustainable water use practices, and in many cases there are some real conflicts that we have observed in different kinds of water uses, not only between human uses but also the conflict between the environment and human exploitation of the water resource. In South Africa where we have been able to come in is to get them to think about how you engage stakeholders, what kind of ways you might need to have a proper dialogue about those conflicts in water use and how those resources can be partitioned, what kind of pricing structures you might need—there is a very good example in South Africa where basically there is provision for free basic water which is a small amount for all families and over and above that there is a pricing tariff in relation to the use. There is a number of different mechanisms that we are looking at and working with the South Africans on and we hope to continue that work as they roll out their programme of catchment management agencies, which is something we are working very closely with them on because, obviously, here in Europe we are rolling out our own Water Framework Directive across 25 Member States in Europe and there is a lot of reciprocal learning and experience sharing that can go on to help. So it is very much at that kind of level, developing the close, responsive relationships with the organisations there, allowing their officials to come over to the UK to work with us, to experience what we do, allowing for our staff to go over there to work with them. It is that kind of hand-holding relationship that we are trying to develop there.

  Q152  David Howarth: Clearly, you think that the UK approach to water resource management is applicable, that was your starting point, to other countries. Do you think you have persuaded DFID of that basic point?

  Dr Seager: First of all, yes, the UK approach has got a lot to offer. We are not working specifically with DFID on water resource issues at the moment, but certainly my discussions with environmental advisers convince me that they are very aware of the need for sustainable water resource use management approaches. They have set up a Water Forum in the UK which I think has been very beneficial to bring together UK stakeholders and expertise on water issues, they work closely with the World Water Forum, which again is working very much at the sustainable water resource use issues, so they are very well aware of it. The problem they quite often find is that when you actually go into the countries themselves the issues around water are quite often not articulated in poverty reduction strategy plans, and therefore that makes it quite difficult for DFID to allocate specific funding because the countries are not identifying that themselves. I think there is an issue there.

  Mr Bates: It is very political too, there are important property rights at stake. People own abstraction rights or are unwilling to give them up, so it is not a straightforward technocratic issue. It might be one of the reasons why it does not feature as heavily as it might in some country-led approaches, because it brings out some very, very thorny questions about who owns the water.

  Q153  David Howarth: You mention in your memo the astonishing figures about India where more than 250 km3 of water are abstracted for irrigation but only 150 km3 are being replenished, there is an enormous deficit. That raises the question which you are getting onto as to how you can prevent this happening in other countries, so that as Africa develops it does not produce the same sort of problem. You say it is not just a technical issue.

  Mr Bates: It is certainly not just a technical issue and whilst we think there are lessons to be learned from the underlying approach that we have to water resources in the UK, you can only take those lessons so far. There are strong politics involved in this and in some places there is almost no control over abstraction rights and, in fact, encouragement for unsustainable abstraction with the rise of cheap electric pumps that farmers can just plug into groundwater or rivers which is really causing abstraction to become quite chaotic. It is something where the property rights are very, very valuable and they have to be allocated very carefully, with good democracy and governance, no corruption and so on. So it does present some fairly mighty challenges.

  Q154  David Howarth: In the absence of an effective licensing system for abstraction, you are saying it could be part of the whole problem.

  Mr Bates: Yes, because if you do not have a licensing system or some sort of system for controlling abstraction, some sort of system for putting a price on water, then you will reach those sorts of unsustainable positions that we have seen in India and China and many developing countries, and going from where we are now into a situation where water resources are managed sustainably, with clear allocation of property rights, proper pricing of the resources, suitable infrastructure for collection and distribution and management of waste water—it is a huge challenge and I guess that is what we are saying here. Once you articulate that challenge, add in the climate change factor on top of it, you have got a really huge development challenge here and it needs to be faced with a really strong strategic approach, it cannot just be done in a piecemeal, ad hoc way.

  Q155  David Howarth: The climate change challenge is enormous for water resources, especially in poorer countries.

  Mr Bates: That is right.

  Q156  David Howarth: Do you think DFID is giving this highest priority to reflect climate change on water resources?

  Mr Bates: Again, the statements and the thinking are beginning to line up around this, and it is certainly acknowledged and there is certainly a lot of noise about climate change in DFID at the moment, rightly so. That needs to be taken and crystallised into a really strong strategy, backed with resources and mechanisms that will actually deliver a sensible response. It is worth saying that although there is a lot of focus on climate change, even if the climate were absolutely stable and there was no climate change there would still be huge environmental challenges to face around water resources, unsustainable abstraction, conflicts over abstraction from river, especially trans-boundary rivers, and so on. Climate change just takes all those problems and makes them an order worse and more difficult to deal with. In fairness, we in the UK are only now coming to think about our own response to climate change as it applies to water resources, floods, drought and so on and it is only now that we in the UK and I suppose the world community as a whole is gearing up to address the impact and adaptation requirements that there are for climate change. It is not surprising that they have not got a big embedded programme on this, but again it is something that would be great to see signalled as a strategy in the White Paper.

  Q157  David Howarth: Coming to another big controversy in the water area, going back to the millennium development goals about water, the way in which this is being brought about in policy terms is often by the privatisation of water. It is enormously controversial and NGOs say this does not work, it certainly does help poor people and there are difficulties that the companies are finding themselves and people are withdrawing from privatisation projects. When it comes to, specifically, water resource management, the management of catchments and that sort of thing, what is your view? Is privatisation an appropriate method, or what else can be done?

  Mr Bates: It is not one of those areas where we have an Environment Agency view as it applies to development, it is a little bit of a stretch for us. Obviously, we support the basic framework of water resources management in the UK which involves a lot of private sector entities; the key thing about them is that they work within a quite strongly regulated framework and they are regulated by us, the Environment Agency, and they are also regulated by Ofwat which has a strong influence on tariff structure, on connection policy and all the rest of it, so if one were to translate those insights it is not so much the ownership of the company and the assets that is important—and public sector companies do not have a fantastic track record either—it is the regulatory and institutional framework, it is the objectives, the legal basis that those water companies, private sector or public sector, operate within. There is an argument, one of the most persuasive arguments of privatisation, about separating the regulatory and political aspects from the delivery aspects, and having delivery placed in the hands of private sector companies who essentially do what they are told to meet objectives set by regulators and legislation, whereas in the past it has been a little bit more corporatist than blurred and in the UK it serves us particularly well. Without wanting to come down pro-privatisation or anti-privatisation, what we would say is that the emphasis should be on the regulatory framework and it is probably of lesser importance to actually own the assets.

  Q158  David Howarth: How do you see the experience around the world? I do not know whether you take a view on this, but what you are implying is that if you clarify the proper regulatory structure you are going to get outcomes which are not necessarily desirable, but on the other hand if you do not privatise you are going to get the confusion that we used to have, as you mentioned, and that does not seem desirable either. What are the success stories and the non-success stories that you have come across?

  Mr Bates: You may be taking us a little beyond our competence to help the Committee with that one, to be honest. The way you expressed it is right and it is clear that a pure private sector laissez faire approach to a basic good like water where actually the distributional objectives that a government would have are at least as important as the efficiency objectives, is not going to work unless it is embedded in a strong regulatory framework. John mentioned the tariff structure that is used in South Africa and there is a good argument there for a social tariff with escalating costs for each marginal block of water that is used; that would be a good proforma policy, but a private sector entity is not necessarily going to determine that on its own, in its own interests—it may do, it may not do, and that is where a government which is trying to secure wider public policy objectives needs to have a regulatory framework in which those entities would work.

  Q159  David Howarth: As the final question on this, would you recommend to developing countries the sort of water regulation that we have, with separation of the price regulation, the environmental regulation and the drinking water quality regulation—we have three different bodies each focused on one particular aspect of the policy—or would you favour the more integrated approach?

  Mr Bates: I would be hesitant, we would all be hesitant, to have one recommendation for all circumstances and in a sense you have to take account of the institutional structures that are already in place, it does not necessarily work by going in with a regulatory and institutional scorched earth policy—rebuild it in our image and all will be well. I would have a much more flexible approach, but I still think we can bring insights and we are facing problems all the time about the integration of different objectives. It is no secret that the Water Framework Directive presents enormous challenges to us, to get that right, so I think we can bring insight but we should not just come in with "This is the answer".

  David Howarth: Thank you.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 16 August 2006