We propose a global mechanism to finance sustainable development (SD) that offers a number of advantages over the current Global Environmental Facility (GEF). The mechanism would be multinational, provide incentives for rich and poor countries to promote SD, incorporate the principle of common, but differentiated, responsibilities and link incentives and funding for SD to structural benchmarks and performance targets. It would operate as a large fund into which rich countries would pay based on their level of population, per capita income and change in a measure of environmental sustainability. Receipts from the funds, called Country Undertakings and Rights for Environmental Sustainability (CURES), would be made to poor countries based on their population, per capita income and absolute level of environmental sustainability. This approach differentiates payments and receipts on the basis of income, while rewarding improvements in environmental performance in rich countries, and making greater payments to countries with greater environmental problems. To promote flexibility, recipient countries would be able to trade, bank or borrow their assigned CURES, provided that the trade resulted in a verifiable improvement in environmental sustainability in the purchasing country. A reformed GEF that adopted the desirable features of CURES, if widely adopted and funded at a sufficiently high level, would offer a significant boost to global SD and would greatly assist poor countries to address the twin challenges of poverty and environmental degradation.
Sustainable development (SD) became a widely accepted policy objective following the release of the report of the World Commission on Environment and Development [WCED] (1987) in 1987. Its focus on the need for a collective resolution of global environmental problems led to the 1992 United Nations Conference on Environment and Development (UNCED). Three important developments that came from UNCED include The United Nations Convention to Combat Desertification (UNCD), The United Nations Convention on Biological Diversity (UNCBD) and The United Nations Framework Convention on Climate Change (UNFCCC). Under all three agreements is the notion of ‘common but differentiated responsibilities’, that all countries bear a responsibility to address environmental challenges, but rich countries acknowledge a special responsibility in terms of supplying technologies and financial resources in the pursuit of SD. This principle was reaffirmed at the World Summit on Sustainable Development (WSSD) held in 2002, which also called for common efforts to be made to promote the integration of economic development, social development and environmental protection as mutually reinforcing components of sustainable development (United Nations, 2002).
One of the mechanisms for achieving common, but differentiated, responsibilities is the Global Environmental Facility (GEF). The GEF is funded by rich nations and makes transfers to poor countries to achieve specific environmental outcomes. As of February 2002, the GEF had authorized payments to poor countries totaling over US$2 billion (World Bank, 2002a) to cover the incremental costs associated with combating climate change, loss of biodiversity, degradation of international waters, stratospheric ozone depletion and persistent organic pollutants (World Bank, 2002b). Despite these payments and the existence of United Nations conventions on the global environment, fully integrated and effective global policies to improve overall environmental quality, especially in poor countries, have yet to fully materialize.
The principal difficulties in improving environmental quality include the linking of the different causes and solutions to environmental degradation and the financing of projects that promote SD and capacity development, especially in poor countries. To help overcome these challenges, we propose an innovative global mechanism called Country Undertakings and Rights for Environmental Sustainability (CURES) to promote SD in both rich and poor countries, while recognizing common, but differentiated, responsibilities. In Section 2, we present criteria that any global mechanism should fulfill to achieve the stated objectives of the UNCED and the WSSD. In Section 3, we illustrate how CURES could be implemented with a numerical example. To show how the funds transferred under CURES might be utilized, we describe a potential application in Indonesia in Section 4. Section 5 lists the advantages of CURES relative to the GEF, and argues that the GEF should be reformed to incorporate the desirable features of CURES. Concluding remarks are offered in Section 6.
It is some 30 years since the first United Nations conference on the environment and over a decade since the United Nations Conference on Environment and Development. Despite some significant gains in terms of livelihood and environmental quality, many of the laudable goals of these conferences remain unrealized.
To help address on going environmental and development problems, a new and innovative mechanism that promotes sustainable development is proposed, called Country Undertakings and Rights for Environmental Sustainability (CURES). The CURES funding mechanism has a number of advantages over existing institutions, such as the Global Environmental Facility (GEF). Ideally, CURES would involve all countries and would promote overall environmental sustainability, provide financial incentives for both rich and poor countries to improve national environmental performance, incorporate the principle of common, but differentiated, responsibilities and link incentives to verifiable and measurable accepted performance targets. A reformed GEF that adopted the desirable features of CURES, if widely adopted and funded at a sufficiently high level, would offer a significant boost to global sustainable development and would greatly assist poor countries to address the twin challenges of poverty and environmental degradation.
