The impact of UK overseas aid on environmental protection and climate change adaptation and mitigation

Further written evidence submitted by Dr Camilla Toulmin, International Institute for Environment and Development

1. Which donors "do environment well"?

"Doing environment well" requires donor agencies working with governmental and other partners to meet human needs while investing in environmental goods (natural resources such as crops, forests, wildlife, fisheries, etc as well as ecosystem services that produce public goods such as climate regulation, nutrient and water cycling, pollination, etc). It requires the recognition that a healthy environment is central to the long-term eradication of poverty, and this requires the right leadership, institutions, policy decisions and practical systems. Essentially doing environment well requires a focus on good environmental governance – who gets to decide what and how. Failures in environmental governance can often be traced to the failure to give adequate weight to the views of the marginalized and environmentally dependent poor – resulting in their exclusion from the sustainable management of environmental assets on which they are heavily dependent.

Internationally, the Rio Declaration and Agenda 21, the UNFCCC, Kyoto protocol and Copenhagen Accord (backing REDD+), the Conventions of Desertification and Biological Diversity have stimulated a range of national and regional reforms worth building on. Two points require emphasis: firstly, significant environmental improvements require major changes in the exercise of power; secondly, many key environmental challenges need coordination across a wide range of governance sectors.

There is widespread agreement on the key ingredients required to improve environmental governance: financing multi-stakeholder processes in which participation of those closest to environmental impacts is given precedence in the design of solutions; designing programmes that push increasing accountability to those closest to the environmental impact (e.g. co-management approaches); funding the collection of better environmental evidence, its timely spread and validation by field level groups (e.g. through farmer field schools, forest governance learning groups, city networks); insisting on monitoring and evaluation that assesses ‘value for money’ or ‘efficiency’ not only based on economic returns but also on the efficient delivery of socio-political and environmental resilience; and finally, requiring transparency in major land use decision-making and investment deals.

A comprehensive assessment of which donors have best institutionalised environmental matters would need to analyse the following dimensions:

· The conceptualisation of the environment. For instance do they only see it as a source of hazards posing risks, or do they also conceptualise the environment as a set of assets? Additionally do they only focus on one aspect of the environment, such as climate change, or do they have a wider more holistic recognition of the environment including how it relates to other development goals?

· The extent to which capacity is built both internally and externally to recognise and deal with environmental matters. For instance it has already been highlighted that donor difficulties in fully tackling environment issues are often attributable to limited interest or attention in such issues by host governments [1] . The extent to which donors can persuade host governments to incorporate environmental concerns in their projects and programmes is an important dimension of ascertaining whether a donor is doing the environment well. However, there are difficulties where recipient governments fail to give any importance to environmental matters.

· The active use of internal safeguards to ensure environmental matters are analysed when making decisions on the funding or design of projects and programs. For instance the use of strategic environmental assessments or environmental impact assessments. The most prominent donors that were highlighted in interviews for doing the environment well were those with a history of reflecting upon internal processes and taking steps to improve their work. NORAD, SIDA and DANIDA are frequently cited as being good at environmental matters, conduct regular evaluations in order to improve upon their work. This should not only be after the project has finished but also during the project’s operations.

· The mainstreaming of environmental issues and concerns across programmes i.e. is the environment treated as a sector which has an importance equal to economic and social interests?

Another difficulty existing in establishing which donors do environment well has been highlighted previously by the UK Environmental Audit Committee. Namely statements on the importance of environmental sustainability in international development and the existence of policies and guidance do not necessarily lead to effective integration of environment in development programmes. For instance it has already been established in 2009 that DFID was failing to systematically implement its environmental management procedures and that these procedures had little discernible impact upon development outcomes [2] . A comprehensive statement on what donors do well would need to fully analyse each donor on their theoretical conceptualisation and institutionalisation of the environment, and how this has been operationalised in practice including the communicating to host governments to pay attention to these concerns.

Another aspect of doing the environment well is continued support for environmental concerns. Donor support for urban environmental activities have waxed and waned over the years. An emphasis on strategic and holistic approaches to urban environmental management (e.g. Local Agenda 21), prevalent in the 90s, gave way to a more narrow focus on climate change and cities in the 2000s. Now more integrated approaches, that address but do not privilege climate change, are re-emerging. These shifts can be seen in the activities of organizations as diverse as the International Council for Local Environmental Initiatives (ICLEI) and the World Bank. Talk of local agenda 21 and sustainable cities may have given way to talk of resilient and eco-cities. But the world continues to urbanize – the urban population of Asia and Africa is expected to double during the first half of this century, and to account for half of the world’s total population by 2050. Some cities regularly get environmental plaudits: Bogota, Curitiba, Copenhagen, Rizhao, Singapore, and Vancouver. Others are rightly decried. Networks of cities are beginning to have some influence in the international environment arena, such as the C40. And it is increasingly recognized that climate change adaptation is so intimately bound up with local environmental issues and urban poverty that they really do need to be addressed together. Unfortunately, bilateral support for urban environmental action has declined in significance, and has not responded to the resurgence of interest in urban environmental action. Even Sida, Danida and DGIS, just a few years ago leading proponents of local environmental management, have ceased to be such significant players. This may be in part because support for urban issues, and local government engagements, do not fit neatly within the aid architecture that emerged from the Paris Declaration on Aid Effectiveness. It may also be because the bilaterals are relatively slow to respond to changing international conditions. Regardless, this would certainly be an appropriate time to demonstrate the relevance of bilateral development assistance by engaging effectively on urban issues.

In our opinion the best examples of ‘doing the environment’ well come when donors put the environment centre stage, engage flexibly with multiple actors on issues that they have prioritized (illegal logging, reducing deforestation, watershed management etc in which the poverty-environment linkages are made explicit), and are prepared to adapt as they go.

Three examples of good programming follow:

DFID’s Forest Governance and Trade (FGT) programme (and its successor) is an example of a donor doing environment well – using the entry point of clamping down on illegal logging (through the EU Forest Law Enforcement Governance and Trade – FLEGT action plan) to lever change in broader environmental governance in timber export countries. Reasons why this has worked include (i) the flexible funding to multiple government, private sector, academic and NGO/advocacy groups to ensure multi-stakeholder negotiations; (ii) the focus on ‘legality’ supporting national sovereignty and thus palatable to government; (iii) the use of market leverage (EU restricting trade on illegal products) to bring in private sector; (iv) linking supply side support with demand side measures; (v) allowing money to follow progress not drive process (vi) high emphasis on transparency and formal legal status of agreements (vii) patient multi‐stakeholder processes – with significant funding of gathering and sharing evidence (viii) the attention to careful coordination with other European donors and effective coalitions of interest.

SIDA is a good example of a donor where a large share of Swedish aid has the environment as either a significant or principal policy objective (in recent evaluations, larger than other OECD donors – and certainly the subject of significant internal prioritisation). This translates in practice into bilateral natural resources and environment programmes, for example in Kenya. Such programmes weave together government support for multi-sectoral policy reforms in agriculture, water and environment and the creation of a farmer driven agricultural extension service, with support for financial services provision, funding for civil society to generate evidence on key environmental issues and engage in policy debates etc.

The Norwegian action plan for environment in development cooperation sets the tone for NORAD’s highly acclaimed work on climate change and the environment. Once again success factors include (i) relatively flexible funding to multiple different government, academic, NGO/advocacy, and private sector groups and (ii) the emphasis on multi-stakeholder engagement (e.g. Guyana’s Low Carbon Development Strategy) (iii) careful attention to concerns over sovereignty (in national REDD plans); (iv) the use of financial leverage; (v) the spread of activities that generate a certain race to the top among recipient countries (vi) high emphasis on transparency.

2. What are the returns to investing in environmental assets

The best available estimates place the cost of addressing poverty-environment goals at US$60-90 billion per year [1] . Although this figure looks daunting, it should be noted that the Millennium Development Goal (MDG) on environmental sustainability has cross-cutting impacts on other MDGs. Projects aimed at ensuring environmental sustainability will positively impact on other MDGs such as eradicating extreme poverty and hunger, and promoting gender equality and empowerment.

Consequently in attempting to achieve poverty reduction goals, environmental and economic considerations cannot be separated. They are connected via complex linkages. The environment contributes to human well-being in two fundamental ways. First it provides the raw material for all economic production. Second it provides life support functions and other services essential to human welfare [2] .

The term ‘environmental assets’ encompasses the services supplied by our natural environment and the raw products it provides which are consumed and used in production processes. It is important to invest in environmental assets because they and the services they provide are for all practical purposes non-substitutable [3] . Investing in environmental assets should not be seen as a restraint on development/poverty reduction but rather an investment in assets which underpin poverty reduction. See for examples of environmental assets accompanied by examples of tangible and intangible investments and general well-being.

Table 1 : Examples of environmental assets accompanied by examples of tangible and intangible investments

Environmental Assets

Examples of Tangible Investment

Examples of Intangible Investment


Land terracing,

Farmer Field Schools


Creation of tree nurseries

Training on forest management


Purchasing of fishing vessels as a way to reduce the amount of fisherman and also compensating those for losing a source of income.

A transferable quota scheme to encourage high-cost fishermen to sell quotas to low-cost fishermen and to exit the industry.

Wetlands and mangroves

Replanting or restoration of wetland and mangrove areas.

Funding the creation of an integrated management strategy for mangrove areas which: safeguards the important ecological functions of the mangroves; allows sustainable traditional productive uses of the mangrove by local communities.

Environmental assets are essential to low income and otherwise disadvantaged groups in developing countries. These groups are more susceptible to environmental hazards due to their lack of assets and because they tend to reside in areas with low quality environmental resources. Natural hazards and the events they create, such as flooding, fires and drought, all significantly disrupt economic activity and society’s well-being [4] .

At the macro level Environmental assets are also central to developing country economies contributing around 26% of national wealth (see ).

Table 2 : Estimates of the composition of per capita wealth 2000 (2000$)

Income Group (excluding oil states)

Man-made or "produced" wealth

Environmental or "natural" wealth

Residual or "intangible" wealth

Overall wealth per capita

Environmental wealth as % of total wealth

Low income






Middle income






High income OECD












Source Hamilton et al (2005)

Please note that residual wealth includes human capital

There is considerable evidence that establishes a purely financial case for investing in environmental assets. Positive rates of return have been found on soil, agro-forestry, and water-resource conservation projects across low-income countries. It should be noted that frequently the conservation of environmental assets is more profitable than its conversion for primary economic purposes; such as the conservation of mangroves versus their conversion into shrimp farms. Why does this happen? Partly because actual prices do not represent real costs and benefits; and partly because the costs and returns are spread unevenly, so that particular interests benefit significantly from conversion, despite losses to the system overall.

A study into alternative mangrove management strategies in Cambodia found that many mangroves that had been converted into shrimp farms suffered an annual loss of US$1,103 per hectare. Additionally there were negative impacts on water pollution and fishing productivity [5] .

Benefits of mangroves and forests

· Create ozone and absorb carbon-dioxide plus sulphur-dioxide.

· Offers protection against storms and tsunamis.

· Source of building material, fuel, food, traditional medicines and products such as rubber or honey.

· Involved in water catchment and recharging of ground water.

· Impacts on microclimate (e.g. increased local rainfall and cooler microclimate).

· Captures and absorbs waste.

· Reduced soil erosion and improvement of soil quality.

· Increased ground water recharge.

· Provision of habitat for wildlife.

· Recreational and cultural values.

Source: Farley et al 2009 and FAO (

Investing in environmental assets: the development agenda

Investments that protect and restore environmental assets can produce substantial benefits, especially for low-income groups [1] . Poor people are disproportionately dependent on environmental assets for their livelihood and well-being. For instance over 1 billion people depend on forest goods and services for their livelihood [2] ; fisheries provide an important source of protein and food security to over 1 billion people [3] .

At national level, assets such as forests, farmland and water bodies account for 26% of the wealth of low-income countries – a much higher proportion than the 2% they provide in OECD countries [4] . Thus environmental assets are an important building block to developing countries for their development.

At household level, environmental assets provide roughly two-thirds of household income for the rural poor [5] . The environmental assets upon which these and otherwise disadvantaged groups depend are prone to rapid depreciation [6] . Investments are needed to not only improve productivity but to regenerate these assets.

Thus it is essential to focus poverty reduction efforts around improving the productivity and management of environmental assets of low-income and otherwise disadvantaged groups. Poverty reduction efforts should expand the asset base of the poor, strengthen their rights to these assets, and raise the efficiency with which these assets are used [7] . This can be achieved by both tangible investments, such as investing in land management projects such as terracing land; and non-tangible investments, such as recognising and confirming local rights to land and natural resources, as well as skills training for farmers. Investments can be direct, such as building wells; or indirect, such as providing improved cooking stoves and modern fuel in order to reduce deforestation.

Furthermore economic evidence shows that rising inequality in the value of assets between income-groups worsens prospects for economic growth and therefore poverty reduction [8] . As low-income and otherwise disadvantaged groups depend so heavily on environmental assets, investing in environmental assets will help to reduce inequality between groups.

Environmental assets and vulnerability

Low-income groups tend to reside in areas that are more vulnerable to environmental hazards than higher income groups. Studies have shown that 20% of the total loss of life expectancy of low-income groups in developing countries is attributable to environmental causes. Annual losses in human capital in developing countries resulting from environmental causes have been estimated at around US$200 billion [1] . Pro-poor investments in environmental assets should therefore aim to reduce the vulnerability of low-income and otherwise disadvantaged groups to hazards in order to build resilience and prevent disasters from occurring.

Within low-income and otherwise disadvantaged households, women and children typically suffer more from natural resource scarcity and low-quality environmental resources. Thus investments in environmental resources will also be relevant for MDG 3: promote gender equality and empower women. For instance, indoor air pollution is globally responsible for 1.6 million deaths each year [2] . Most vulnerable are women due to their household duties. Indirect investments in environmental assets such as improved cooking stoves not only reduce deforestation but also save time, improve health, and improve soil quality [3] .

Investing in environmental assets: the economic agenda

There is considerable evidence proving the financial case for making investments to improve and regenerate environmental assets. Assets provided by our natural environment are embedded in our way of life and generate large commercial revenues. For instance, 25 to 50% of the global US$640 billion pharmaceutical market derives from extracting active ingredients from the world’s diverse genetic resources [1] .

Positive rates of return have been found in many studies covering land/agriculture, forests, water/fisheries, eco-tourism and energy. Investing in environmental assets can provide both short and long term benefits as well as local to global benefits. These will be outlined in the following sections.

Economic case for soil investment

Approximately 2.6 billion people depend on agriculture for livelihood. Consequently the "greening" of agriculture can reduce both poverty and environmental degradation. For every 10% increase in agricultural yields in Africa and Asia, poverty has reduced by 7% and 5% respectively. Evidence collected by UNEP suggests that "greening" agriculture can increase yields between 54% and 179% especially on small farms [1] .

Table 3 demonstrates the benefits of various sustainable agricultural intensification programs across 20 countries in Africa. The projects which were carried out during the 1990s-2000s have documented benefits for 10.39 million farmers and their families and improvements on approximately 12.75 million hectares of land by2010.

Many other studies indicate investments in soil conservation projects generate positive rates of return. Studies conducted in Central America and the Caribbean (and included in the Pearce 2005 report) on projects such as building diversion ditches, terraces and rock walls have demonstrated positive rates of return of up to 84% [2] .

Table 3 : summary of productivity outcomes from case studies

Thematic focus

Area improved (ha)

Mean yield increase (ratio)

Net multiplicative annual increase in food production (thousand tones year)

Crop variety and system improvements




Agroforestry and soil conservation




Conservation agriculture




Integrated pest management




Horticulture and very small-scale agriculture




Livestock and fodder crops




Novel regional and national partnerships and policies











Source: Pretty et al 2011

Investing in land conservation projects not only halts the long-term reduction in the productivity of soil but also increases its carbon storage capacity, a globally shared benefit. In much of Africa, harvesting without good nutrient management is resulting in depleted soils. In other regions, notably in parts of Asia, the problem is excessive fertiliser application, causing nitrogen and phosphorus pollution of waterways. Soil recapitalisation through investment in better cultivation techniques and erosion control offers a significant carbon sink, as well as building more resilient local systems for production of food and environmental services [3] .

Case Study: Agro-forestry and agriculture - West and Northwest Cameroon


· Degraded land and deforestation.

· Loss of traditional knowledge about indigenous species. For example nutritious foods, medicines and other useful products.

· Unbalanced diets leading to malnutrition and greater susceptibility to disease.


1. Rehabilitate degraded land and promote food security through the use of nitrogen-fixing trees to restore crop yields and then diversify into new crops.

2. Create income generation opportunities from village tree nurseries and the domestification of indigenous fruits and nuts for local and regional trade.

3. Encourage the processing and marketing of food crops and tree products in order to create employment and entrepreneurial opportunities for community members.


· Increased crop yields and production of over 52,500 fertilizing trees.

· Improve diet leading to enhanced nutrition and health.

· Dissemination of knowledge and skills to neighbouring communities

· Income is rising annually and currently averages $150, $16,000 and $21,000 per RRC after 2, 5 and 10 years respectively (Average income per RRC: $2,400).

Source: Asaah et al 2011

Economic case for forest investment

Short-term liquidation of forest assets should be halted as over 1 billion people depend on forest goods and services for their livelihood [1] . Studies on forest conservation projects in Sudan, Nigeria and Peru have all been proven to generate positive returns [2] . In Nigeria rates of return were recorded of 1.7 to 6.1 [3] . Potential indirect benefits of investing in forestry are securing the long-term future of forests to create new forest-related jobs, livelihoods and revenues [4] .

According to UNEP, a US$29 billion investment paying forest landowners to conserve forests, plus private capital between 2010 to 2050, could increase value added in the forest industry to US$600 billion in 2050. This represents 20% more value than the "business as usual" scenario as well as increasing carbon stored in forests by 28% [5] .

Economic case for wetlands and fisheries investment

At the global scale, fisheries currently produce US$8 billion in profit and provide, either directly or indirectly, approximately US$35 billion in annual household income. The total annual contribution of the fisheries sector to global economic output is approximately US$235 billion [1] .

However over 75% of all marine fish species are below replacement levels and fisheries almost everywhere are operating far below earlier levels of productivity. This is having significant livelihood impacts for the 200m people whose jobs are in fisheries and nutrition impacts for the 1 billion people for whom fish are the main animal protein [2] . Investment is needed to improve management of fisheries and reduce overfishing by, for instance, de-commissioning vessels and short-term relocation of employment [3] .

Better management of over-exploited fisheries could produce considerable economic and ecological benefits. According to UNEP, the benefit of "greening" the fishing sector is about 3 to 5 times its cost. Investments in "greening" fisheries could result in the industry producing a US45 billion annual surplus [4] .

A possible mechanism to help manage fisheries better are tradable permit schemes. Preliminary evaluations in Madagascar regarding a tradable permit scheme for improving fisheries management suggested a cost-benefit ratio of 1.5. Economic studies of wetlands and mangrove conservation consistently record positive rates of return, as shown by studies from Cambodia, Cameroon, Thailand, Philippines, El Salvador, Nigeria, Korea, Indonesia, Taiwan, Uganda and Zambia which demonstrate positive rates of return from 1.2 to 7.4 [5] .

Case Study: Economic importance of coral reefs and mangroves to national economy of Belize


· Reef and mangrove associated tourism = US$150-196 million

· Sport fishing and diving = US$30-$37 million

· Cruise industry = US$5.3-$6.4 million


· Commercial fisheries (ignores artisanal) = US$14-$16 million per year

Shoreline Protection

· Coral reefs = $120-$180 million in avoided damages

· Coastal mangroves = $111-$167 million per year

Source: Cooper et al 2007I

Summary/Policy options

Action is needed to balance investments in environmental assets with other areas, such as education, health and infrastructure. This is especially relevant considering the cross-cutting nature of environmental sustainability.

Policy should target both tangible and intangible investments in environmental assets. It is likely that the appropriate role for policy is in finding ways to strengthen and build social capital, such as weak resource and property rights. Investments also need to be made which tackle the high discount rates of the poor. High discount rates discourage optimum investment levels in environmental assets such as soil conservation and tree planting. Improving access to financial services such as credit and insurance is a key area for policy action [1] .

Although there is a strong economic case for investing in environmental assets; economic valuation techniques have limits and therefore should only be one input into the decision process [2] . There is much scope for improving how the value of environmental goods and services offered by the environment, such as carbon storage, are documented in national accounts [3] .

3. What are some examples of complementary vehicles for aid delivery

What does the traditional method of delivering aid look like?

The aid system has evolved so that many methods for delivering aid exist. Aid can be channelled from donor countries straight to recipient governments, via multi-lateral organisations, via international NGOs or channelled directly to development projects on the ground [1] .

Channelling funding through multi-laterals is one of the most common official routes. For instance, DfID currently provides 38% (2009) of its aid through international bodies/multi-lateral agencies [2] . The reported benefits of using multi-lateral organisations to channel aid are that it can allow economies of scale, political neutrality and legitimacy; scale of resources (capital and knowledge), lower unit costs and the provision of public goods [3] . The reported arguments against the use of multilaterals as a vehicle for distributing aid are the institutional complexity and lack of transparency in processes; higher absolute costs and salaries; remoteness, and perceived lack of accountability from the perspective of domestic audiences. Members of the DAC report insufficient evidence of multilateral effectiveness, especially regarding impact and value for money. This is despite major investments in evaluation, assessment, disclosure, and communication. The aid system which has developed in recent times exhibits many inefficiencies and perverse incentives which frustrate progress on tackling poverty [4] . For instance it is often argued aid does not reach intended beneficiaries, due to corruption.

Changes to delivery mechanisms are needed

The last half-century of development assistance shows disappointing results. Poverty reduction in many instances requires local processes that improve the performance of national and local government. Change is needed because, although poor groups are meant to be the beneficiaries of aid, official aid agencies and development banks were not set up to be directly accountable to them. External aid needs to find ways to support the development of stronger local organizations that really deliver for low-income and otherwise disadvantaged groups and are accountable to them [1] . But many local organisations that benefit and represent poorer groups are not visible to donors and external "experts".

Women’s groups, savings and migrant groups; village associations and indigenous organizations have critical roles in development, sustainable resource use and ecosystem management, but only a very small proportion of official development assistance goes to what poor groups identify as their priorities. If they get any benefit from some externally funded initiative, it has usually been determined by someone else within a decision-making process over which they had no influence and within which there is no downwards accountability. And much of what is funded and supported by external agencies is inappropriate to the complex, risk-prone and diverse environments on which their livelihoods depend [2] .

Benefits of parallel delivery mechanisms

The question is which delivery mechanisms can target local and informal groups in the most effective manner. They should be accurately targeted at low cost and in a manner which supports institutional capacity building and ‘crowds in’ funding from government rather than ‘crowding it out’. Importantly it should not promote dependency on external funding and nor should it formalise local organizations in ways that reduce inclusion and internal accountability. It is administratively easier and financially cheaper to write a few large cheques than provide a large number of smaller funding packages, guidance and technical support to a mosaic of field-based projects. Organisations such as Shack/Slum Dwellers International (SDI) can reach these groups are accountable to them. Representative organizations such as SDI formed by urban poor groups have demonstrated new ways to build and improve homes, and improve provision for water, sanitation, drainage, and solid waste collection, that are both cheaper and of better quality than conventional government or private sector provision [1] . And not only do they deliver material improvements, they also build the kinds of collective capacities that are needed to secure further support from local government, and other state agencies.

Building parallel delivery mechanisms

The case studies below exhibit a set of similar principles and characteristics: they are participatory and hence more pro-poor, built with financial self-sufficiency in mind, managed greater by intended beneficiaries, based in developing countries, with capacity to directly receive funding from government, and build capacity of intended beneficiaries. They complement the traditional system of aid delivery. By adopting the types of aid delivery mechanisms case studied in this report, we believe that the aid delivery system as a whole will be stronger and have more impact on the lives of the poor.

Case Study 1 – The International Urban Poor Fund


Institutional introduction

The Urban Poor Fund International (UPFI) is a non-profit making, self-governed, self-managed financial facility initiated in 2001. UPFI collects funds from various sources (e.g. the Bill and Melinda Gates Foundation) and channels money to member National UPFs. These distribute money directly to local organizations ensuring money is distributed, efficiently, quickly and cheaply to its intended beneficiaries.

The national urban poor funds are typically created by SDI affiliates about two to three years after SDI begins work in a country. They are loan funds, established by federated savings groups, to facilitate community-led investments. Part of their capital is provided by the members, and part is generated from donors. In some countries, governments contribute directly to the funds; in many cases, they contribute counter-part resources to local project development.

Operational Ethos

Fundamental to its ethos is that the poor are central actors in development and poverty eradication. It is they who are best placed to decide and co-manage programmes in which they are the principal target. Focus is on projects that address the needs of all, and particularly those with the lowest incomes and who are the most vulnerable.

Money is used by local communities, for example, to secure land tenure, address shelter needs and improve basic services. But the fund is flexible in how its support can be used, reflecting different needs and opportunities in each locality. Terms and conditions are established by the federation of savings groups. The local SDI support NGO will provide administrative assistance, and sometimes participates in fund management, UPFI monies capitalise national loan funds to enable projects to be realised; part of the funds are used for capacity development and technical assistance.

The Urban Poor Fund International is managed by a Council of Federations, which meets about every six months, and which includes three representatives from all participating federations. It has an international Governing Board with ministerial representation from Brazil, India, Norway, Sweden, South Africa, Sri Lanka, and Uganda,

Community benefits

Representative organizations formed by community groups have demonstrated new ways to build and improve homes and improve provision of basic services. Projects are proven to be both cheaper and better quality than conventional government or private sector provision. As local groups draw on the fund, they build their own capacities, improving their financial management skills and negotiating abilities. Networks exist between communities and federations so best-practice in terms of projects and processes are spread. The importance of using loan and subsidy finance is to find modalities for the improvement of informal settlements that can go to scale. This necessarily involves an engagement with state authorities, at local and global level.

Better engagement with authorities

Also fundamental to its ethos is seeking better relations with government authorities. In many countries, politicians and senior civil servants have become advocates for community approaches. Engagement with governmental bodies has led to contributions to National UPFs. Land has been provided at no cost in Malawi, Philippines, Sri Lanka and Zambia. Technical support has been provided in Namibia, Philippines, South Africa, Tanzania and Zambia. Subsidy finance has been provided in Ghana, India, Namibia, South Africa, Sri Lanka, Tanzania and Zimbabwe.

Case study 2 – Asian Coalition for Housing Rights


Institutional Introduction

A further model of an approach to address urban-poverty supported by IIED’s work is that of the Asian Coalition for Housing Rights (ACHR) and their ACCA programme. This provides small grants of $3000 to numerous community groups across urban Asia. Additional grants may also be accessed to support the gathering of basic information about the city and networking among civil society and local government agencies. Once small projects have been completed successfully, groups can apply for a more limited number of larger grants to undertake housing projects.

Community Benefits

Communities use the small grants to address their immediate needs. This may include walkways and roads to improve travel from the city to the informal settlement, improved water and drainage provision, playgrounds and other social facilities. But the more significant benefits are in the strengthening of social relations with the neighbourhood and between neighbourhoods. As noted below, much of the relationship building is with local authorities.

Organizational ethos

The groups that ACHR supports are necessarily diverse, representing existing organizational realities on the ground. They include credit unions in Sri Lanka, Alinsky-style community organizers in the Philippines and a government savings and loan programme in Thailand. In some Asian countries, membership overlaps with SDI (see above). The common principle is that participants are willing to work together with others in their community to address local needs for services and infrastructure improvements. Self-help is seen as a critical first step to build a stronger local organization. In some cases further investments are supported by national and local level development assistance. ACHR seeks to be responsive to all of its members within the terms and conditions for finance that have been agreed by the ACCA committee, made up of participating Coalition members.

Better engagement with Authorities

ACCA-supported groups are encouraged to build a relationship with local government in their efforts to move from neighbourhood or settlement level activities to the city-wide scale. This requires groups to move beyond the grant finance of the small projects to manage loan finance and more complex financing options.

Case Study 3 – Bolsa Floresta



The Bolsa Floresta Programme (PBF) is an internationally certified project in Brazil run by the Sustainable Amazon Foundation (FAS). It is aimed at reducing deforestation and tackling poverty. As of 2009, PBF was the largest operational ‘Reduced Emissions from Deforestation and Forest Degradation’ (REDD) project in the world, covering an area of over 10 million hectares across fourteen protected areas. During 2010 the total budget for the PBF was US$11,066,666, benefiting more than 7614 families and total cost per hectare around US$1.

FAS is a public-private, independent, non-profit making, non-governmental organisation founded in 2007. Its stated mission is to "promote the sustainable involvement, environmental conservation and life quality improvement for the resident communities and users of the Amazonas State Conservation Units". All activities of FAS are approved by the State Public Ministry. Accounts are audited by PricewaterhouseCoopers and the State Public Ministry before being published. Better engagement between community groups and governmental bodies is ensured, as the programme is a joint public-private initiative.

The PBF is effectively self-funded, generating income from an endowment fund. This fund was formed from combined donations of approximately £22 million from the State Government of Amazonas, Bradesco Bank and Coca-Cola. FAS also receives a minimum annual payment of approximately £3.7 million from Bradesco Bank as well as donations from the Amazon Fund and Samsung.

Organizational ethos

The Bolsa Floresta programme first engaged the public to identify and developing projects that helped the forests as well as them. Leaders of social organisations, public officials and researchers in participatory workshops were consulted. Issues were then debated in community workshops. When conflicts occurred between urban and forest stakeholders, communities worries tended to be preferred. The process used in the making of the Bolsa Floresta programme derives from FASs belief that programmes should be participatory and bottom-up. As a result programmes tend to be cheaper, contribute to a sense of local ownership, as well as build on local know-how and traditional ethno-knowledge.

PBF components

The area benefiting from the PBF covers an area of 10 million hectares. The PBF has four components.

· ‘Bolsa Floresta - Income’ encourages and rewards sustainable production of forest products such as oils, nuts, wood, fruit species and native honey.

· ‘Bolsa Floresta - Social’ which improves community access of services such as health and education.

· ‘Bolsa Floresta - Family’ which pays £18 a month to the mothers of families living in the protected areas for their commitment to zero-deforestation, children’s education and the prevention of fires.

· ‘Bolsa Floresta - Associations’ which supports local resident associations to strengthen their organization and control of the programme.

Community Benefits

A survey conducted reported a very high satisfaction level among communities covered by the programme (92-97%). Additionally the vast majority of respondents believed that the programme was making a big contribution to improving the quality of life for their community including improved community cohesion.

The success of the PBF has led to it being adopted by other countries. Mozambique has launched an initiative to design a national REDD programme based on the PBF experience. Additionally the PBF is inspiring similar programmes in other African and Latin American countries.

Case Study 4 – Global Green Grants Fund



The Global Greengrants Fund is an organisation comprising a network of international and local activists. The strategy of the Global Greengrants Fund is to support local leaders in working towards social justice and environmental sustainability. Specific areas of focus are biodiversity, climate change, energy, indigenous peoples, sustenance, water, and women.

The Global Greengrants Fund is funded by various individuals, foundations, and companies such as the Ford Foundation and the Sigrid Rausing Trust. The Global Greengrants Fund is part of an alliance of international grantmakers. Currently the alliance is comprised of the ‘Center for Socio-Environmental Support’ (Brazil), ‘Small Change Fund’ (Canada), ‘Solidarity in Action Fund’ (Mexico), ‘Both ENDS’ (Netherlands) and the ‘Samdhana Institute’ focusing on Southeast Asia. Its three most established members in Brazil, Mexico, and Southeast Asia have raised more than US$5 million to support their missions in addition to the US$200,000 annual donation from the Global Greengrants Fund.

Grants, typically between US$500 to US$5,000, are designed so that they are disbursed quickly with minimal bureaucracy, allow end-use flexibility and appropriately sized so that they do not create burdens for financial management. Grants have been made to local activists in 129 different countries.

Organizational ethos

To target intended beneficiaries the Global Greengrants Fund uses a system of global advisors and regional advisory boards. Global advisors identify grant recipients, often local partners in their campaigns. The Regional advisory boards are comprised of representative local activists with information on pressing issues in their local areas. They also help identify, mentor and monitor recipients of grants.

Better engagement with Authorities

Groups which have received donations from the Global Greengrants Fund are encouraged to build a relationship with local government. This is by organising into groups in order to bring to the attention of those I positions of power environmental problems which afflict them. This requires groups to move beyond the grant finance of the small projects to manage loan finance and more complex financing options.


Asaah, E, K., Tchoundjeu, Z., Leakey R, R, B., Takousting, B., Njong, J., Edang, I. 2011. Trees, agroforestry and multifunctional agriculture in Cameroon. International Journal of Agriculture Sustainability. 9(1) 2011.

Bann, C. 2002. Economic analysis of alternative mangrove management strategies in Cambodia. In D. W. Pearce, C. Pearce and C. Palmer (eds). Valuing the Environment in Developing Countries: Case Studies. Cheltenham: Edward Elgar: 501-535

Cooper, E., L. Burke, and N. Bood. 2009. "Coastal Capital: Belize. The Economic Contribution of Belize’s Coral Reefs and Mangroves." WRI Working Paper. World Resrouces Institute, Washington DC. 53pp. Available online at

Hamilton, K, G. Ruta, A. Markandya, S. Pedroso, P. Silva, M. Ordoubadi, G. -M. Lange, L. Tajibaeva, L. Gronnevet and M. Dyoulgerov. 2005. Where is the Wealth of Nations? Measuring Capital for the 21st Century. Draft. Washington, D.C.: World Bank

Bigg, T. Satterthwaite, D. 2005. How to make poverty history: the central role of local organizations in meeting the MDGs. London IIED

Bigg. 2009. Building Resilience for an Interdependent World: Why the environment matters and what DFID should do about it. IIED

Pearce, D. 2005 Investing in Environmental Wealth for Poverty Reduction. Prepared on behalf of the Poverty Environment Partnership, UNDP, New York.

Penrose, JP. 2009. DFID Environmental Screening Review: lessons on environment mainstreaming from other donors

Pretty, J., Toulmin, C., Williams, S. 2011. Sustainable intensification in African agriculture. International Journal of Agriculture Sustainability. 9(1) 2011.

TEEB. 2009. The Economics of Ecosystems and Biodiversity for National and International Policy Makers –Summary: Responding to the Value of Nature 2009.

UNEP, 2011, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication,

WHO. 2006. Fuel for Life, Household Energy and Health. World Health organization, Geneva.

6 April 2011

[1] Penrose (2009)

[2] Penrose (2009)

[1] (Pearce 2005)

[2] (Farley et al 2009)

[3] (Farley et al 2009)

[4] (TEEB 2009)

[5] Bann (2002)

[1] (Pearce 2005)

[2] (UNEP 2011)

[3] (UNEP 2011)

[4] (IIED 2009)

[5] (IIED 2009)

[6] (Pearce 2005)

[7] (Pearce 2005)

[8] (Pearce 2005)

[1] (Pearce 2005)

[2] (WHO 2006)

[3] (Pearce 2005)

[1] (TEEB 2009:17) citing (SCDB 2008)

[1] (UNEP 2011)

[2] (Pearce 2005)

[3] (IIED 2009)

[1] (UNEP 2011)

[2] (Pearce 2005)

[3] ( Pearce 2005)

[4] (UNEP 2011)

[5] (UNEP 2011)

[1] (UNEP 2011)

[2] (IIED 2009)

[3] (UNEP 2011)

[4] (UNEP 2011)

[5] (Pearce 2005)

[1] (Pearce 2005)

[2] (TEEB 2009)

[3] (UNEP 2011)

[1] DfID currently use all of these vehicles see

[2] (Penrose 2009)

[3] OECD. (2010)

[4] Wilks. (2008)

[1] Bigg and Satterthwaite (2005)

[2] Bigg and Satterthwaite (2005)

[1] Bigg and Satterthwaite (2005)