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.
|
