Editors:

Jo Phillips – DEG Chair (Head of Trade and Development Policy, RSPB)Kit Vaughan - DEG White Paper Consultation Coordinator

Lead Authors* and Key Contributors:

1. Introduction - Jo Phillips and Kit Vaughan2. People and Planet - Tom Biggs*, Abisha Mapendembe* and Kit Vaughan3. Climate change - Toby Quantrill*, Jo Phillips*, Kit Vaughan and Paul Morling4. Economic growth - David Woodward* and Paul Morling5. Trade and the Private sector - Toby Quantrill*, Jo Phillips* and Tom Crompton6. Good governance - Jo Phillips*, Toby Quantrill* and Kit Vaughan7. Aid Architecture - Abisha Mapendembe*, Jo Phillips, Sally Nicholson and Jesse Griffiths8. Peace and Security - Edward Bell*, Jo Phillips* and Kit Vaughan9. Horizon Scanning - Steve Bass

We would like to acknowledge the following people for their support and contributions, as well as thank many others who helped with the first submission:

Jesse Griffiths – Action AidTom Sharman - Action AidDragan Nastic – BONDJoni Hillman - BONDJeff Powell - Bretton Woods Project George Gelber - CAFODHoward Mollet- CARE internationalClaire Wilton – FoESteve Bass – IIEDTom Bigg – IIEDSaleemul Huq – IIEDEdward Bell- International Alert Nick Killick- International AlertDavid Woodward - nefGraham Bennett – One World ActionJohn Magrath - Oxfam

Ian Williams- Plan BAbisha Mapendembe – RSPB Paul Morling – RSPBJohn Lanchbery – RSPBOlly Watts – RSPBRichard Allcorn - RSPBFelix Dodds - Stakeholder ForumJennifer Peer - Stakeholder ForumRachel Roach - TearfundLaura Webster - TearfundSarah La Trobe - TearfundSophie Harding – TearfundRuth Fuller - University of ReadingToby Quantrill - WWFMarie Hounslow -WWFAlison Doig - WWF

ELIMINATING WORLD POVERTY: FOR PEOPLE AND PLANET

Submission Two An Evidence Based Analysis (in further support of submission one)

For the Department for International Development White Paper Consultation Process

Prepared by the Development and Environment Group (DEG) of British Overseas NGOs for Development (BOND)

http://www.bond.org.uk/wgroups/environment/index.html

7th March 2006

Tom Crompton - WWFJames Leaton – WWFSally Nicholson - WWFGlyn Davies - Zoological Society of London

ii

Preface: DEG White Paper Submission OneEliminating World Poverty: For People and Planet

The BOND Development and Environment Group (DEG) submitted its initial response to the Department for International Development White Paper Consultation Process, on 24 March 2006 (see pages ii - ix).

Signatories to this first submission include (to date):i

1. Action Aid2. Airportwatch3. Bretton Woods Project4. BTCV5. CAFOD6. CGIAR Systemwide Program on Collective Action & Property Rights (CAPRi)7. Christian Aid8. Common Sense Solutions9. Commonwealth Human Ecology Council (CHEC)10. Conserve Africa Foundation11. Excellent Development12. Friends of the Earth13. Green Cross International14. Harvest Help15. Homeless International16. International and Rural Development Department of the University of Reading17. International Childcare Trust18. International Institute for Environment and Development (IIED)19. Islamic Relief20. Kaloko Trust21. Womankind22. Natural and Social Improvement Society Nepal (NSISN)23. New Economics Foundation (nef)24. Ockenden International25. One World Action26. Open Africa27. Oxfam28. People & Planet29. Pesticide Action Network UK30. Plan B31. Population and Sustainability Network32. Practical Action (previously ITDG)33. Royal Society for the Protection of Birds (RSPB)34. Save the Children35. Selby Trust36. Tearfund37. Tourism Concern38. Transrural Trust39. TREE Aid40. Ugandan Wildlife Authority (UWA)41. VSO42. Water Aid43. World Development Movement (WDM)44. World Emergency Relief45. World Wildlife Fund (WWF)46. ZSL Institute of Zoology

i DEG have left this open for additional sign on until 7th April 2006, the closing date of DFID’s consultation process

The following individuals have also endorsed this paper:47. Prof KM Homewood, Chair, Anthropology Department UCL and Human Ecology Research Group48. Dr Colin C.D. Tingle FRES, Environmental Impact Ecologist49. Satish Kumar, Programme Director of Schumacher College and editor of Resurgence Magazine

Eliminating World Poverty: For People and Planet

A Call for Action: The UK Government must pursue a coherent sustainable international development strategy for poverty eradication within a ‘One Planet Economy’1 that acknowledges the critical importance of environmental sustainability, and consistently addresses the impacts of all UK policies and actions upon developing countries.

“It’s a myth that developing countries can go for growth and worry about environmental sustainability later on … part of the deal has to be that we in the industrialized world must reduce our carbon emissions and other unsustainable use of resources, if we are to stay within globally sustainable limits”

Rt. Honourable Hilary Benn - White Paper Speech, 19 Jan 2006.

This White Paper provides a crucial opportunity for the UK Government to show true leadership in eradicating poverty and achieving sustainable development. The global imperatives and challenges of poverty eradication and ensuring environmental sustainability have been articulated by Hilary Benn during the White Paper Consultation, by DFID within a number of valuable publications, including the 2006 Environment Approach Paper, and by the UK Government and stakeholders within the UK Sustainable Development Strategy. Concerted and coherent action is urgently needed across government to address these global challenges.

FACING THE FACTS: POVERTY AND ENVIRONMENT LINKAGESPoverty eradication and sustainable development depend upon ensuring environmental sustainability; otherwise, any gains will be transitory and inequitable.2 This fact has been acknowledged at the highest level.3 However, within many development contexts, the environment is associated principally with checks and barriers to development. This is a false distinction as environmental management can unlock natural resources as the wealth of the poor as well as acting as a vital buffer for coping with social, economic and environmental shocks.

The environment refers to the living (biodiversity) and non-living components of the natural world, and to the interactions between them, that together support life on earth. The environment provides goods (natural resources) and services (ecosystem functions) used for food production, the harvesting of wild products, energy, and raw materials. The environment is also a recipient and partial recycler of waste products from the economy and an important source of recreation, beauty, spiritual values, and other amenities. Amongst their many pressing development challenges, however, developing country governments generally lack capacity and resources to identify, invest in, sustainably use, measure, monitor and regulate their environmental assets.4 The development community urgently needs to increase its understanding of and action on how environmental management can constructively underpin poverty eradication and sustainable development. DFID has taken important and welcomed steps to addressing this through its Environment Approach Paper (2006).

Some 2.7 billion people - almost half the world population - still live below the $2 a day poverty line. 5 They are disproportionately dependent on utilising environmental goods and services for livelihood security6. Positive environmental management, linked to improved and more equitable governance at all levels, offers opportunity to realise untapped wealth for billions of poor people, whilst protecting natural resources for present and future generations. This is an essential part of “good governance”.

However, the poor and particularly women, often lack voice, access and rights over their immediate resources - as well as to technologies and markets that enable them to earn a living from their resources.

Institutional failures and a lack of good governance increasingly disenfranchise the poor and degrade their natural assets. The poor are increasingly environmentally marginalised, forced into fragile and unproductive ecosystems or urban slums, which are worst affected by natural disasters and environmental hazards (such as floods, droughts, land slides).

Mounting evidence demonstrates that the international development system is failing on the environment, with severe consequences for the poorest.7 MDG7 (ensuring environmental sustainability) is way off track and threatens the achievement of other MDGs.8 The world is facing dire environmental consequences - climate change, biodiversity loss, declining ecosystem services, increasing vulnerability and tension and conflict. Climate change, largely fuelled by rich nations over-consumption, threatens the livelihood security, health, food production and water supplies for billions of people,9 undermining development gains and disproportionately impacting the poorest.10

DELIVERING SUSTAINABLE DEVELOPMENT WITHIN A “ONE PLANET ECONOMY”Addressing such global challenges as climate change, ecosystem degradation, HIV/AIDS, population dynamics and conflict, requires a fair and just multilateral system. Rich countries and the undemocratic global institutions they dominate (e.g. World Bank, IMF and WTO), largely create the arena of macroeconomic conditions within which low-income countries attempt to develop. Through distorted policies and markets, and unfair trading arrangements, this system can fuel poverty, inequality and unsustainable environmental practices, and then fail the world's poor and exacerbate environmental degradation. To deliver sustainable development, equity and justice for all, there is an urgent need to re-balance power and ensure much better participation, accountability and transparency in decision-making.

Despite recognising the multi-dimensional nature of poverty, the UK Government’s current poverty reduction agenda is principally focussed on economic growth, usually measured by Gross Domestic Product (GDP). This simplistic focus on growth and GDP as the means to reduce poverty, fails to reflect inequality (including access to assets and opportunities), the multiple deprivations by which poor people themselves identify their poverty, the condition of the world’s natural life-support systems (upon which life depends) and the failings of “trickle down” development. Pro-poor, pro-environmental growth increases the quantity and productivity of the per capita assets available to the poor (e.g. natural, physical, social, financial and human) whilst ensuring that the management of natural resources recognises their true importance to well-being and, where allocated through markets, decisions are based on societal, not private costs and benefits.11

Despite encouraging recent pronouncements, UK domestic and international policy in many areas (e.g. energy, transport, trade, and foreign policy) lacks coherence with international poverty eradication and sustainable development objectives. There is a real need for the UK to get its own house in order and to demonstrate good governance locally, nationally, within the EU and globally. This includes commitment to achieve sustainable development - and not merely economic growth. UK government's move towards a 'One Planet Economy' (an economy that grows within the capacity of the planet's resources) as part of the UK Sustainable Development Strategy acknowledges that economic growth cannot be measured as a success in isolation, or an end in its own right, but must be judged by its global impact on people and the environment.

DFID’S COMPARATIVE ADVANTAGEHistorically, DFID has been a respected change agent within the International Development community, e.g. supporting Livelihoods Approaches and comprehensive Participatory Poverty Assessments - listening to the voices of the poor.12 DFID has been a global leader in sustainable development, championing links between development and environment – particularly for the World Summit on Sustainable Development and the Poverty and Environment Partnership (PEP). DFID has proven international leadership and considerable experience in this field, which should not be marginalized or allowed to atrophy; but rather capitalised upon to help developing countries eliminate poverty and achieve sustainable development.

A CHALLENGE TO GOVERNMENTIt has been acknowledged at the highest level that: “We fundamentally depend on natural systems and resources for our existence and development”, and “Our efforts to defeat poverty and pursue sustainable development will be in vain if environmental degradation and natural resource depletion continue unabated” (Kofi Annan, UN Secretary General, 2005).13 International development and environment NGOs are forming active coalitions to tackle global challenges (e.g. Stop Climate Chaos, Trade Justice, CORE etc.). Environment and development issues are of increasing public concern, offering new opportunities for political support. Future public support for poverty reduction will be more secure if it links strongly to other issues about which the public is concerned, notably the environment. We are willing to support HMG on these issues, if it is prepared to take a strong public position, backed by committed action to deliver sustainable development and make poverty history.

We recommend that DFID and HMG explicitly implement a “New Vision” for Poverty Eradication and Environmental Sustainability within a “One Planet Economy”. This requires:

Delivering Development More Quickly: A New Approach to Eliminating Poverty

1. Ensuring environmental sustainability is explicitly recognised as a prerequisite for sustainable growth and development. HMG should identify the necessary policies, tools and systems to commit to action and articulate a vision for ‘green’ economic prosperity within the context of the UK Sustainable Development Strategy.14 DFID should make stronger, higher-profile efforts to promote and operationalise its Environment Approach Paper15 and Sustainable Development Action Plan, committing to and investing in achieving MDG 7 (ensuring environmental sustainability) as the foundation for poverty eradication, sustainable development and achieving other MDGs. This requires targeting new resources and political will towards ensuring effective environmental mainstreaming and policy coherence in support of MDG7.

2. Explicitly recognising the multi-dimensional nature of poverty and development, develop, use and promote measures that reflect this. DFID and HMG should develop, use and promote a more nuanced basket of indicators that reflect and measure real progress in eliminating poverty rather than focusing on simplistic monetary GDP or dollar per day measures that address neither deprivations in human development (health, education and gender equality etc.) nor non-reversible reductions in natural assets and environmental damage.

3. Identifying and changing UK, domestic - international and EU policy (e.g. energy, trade, agriculture, fisheries and foreign policy) that lacks coherence with international development objectives. HMG should develop new legislation (e.g. Swedish international development legislation16) for coherence on international sustainable development policy. An interdepartmental policy working group should be established to monitor and address constraints for increasing policy coherence across HMG – this could be moderated by the Sustainable Development Commission as part of its remit to follow up on the UK Sustainable Development Strategy.

4. Support increased international donor harmonisation and coherence on international development policy. Continue to lead in ensuring the Paris Declaration17 is operationalised, especially its environmental commitments and with gender commitments to be meaningfully integrated. DFID should recognise, develop and promote its comparative advantage in environment and development issues, working with other HMG departments to offer developing countries technical capacity and policy support for environmental analysis, assessment, investment and implementing environmental legislation and commitments.

Developing Pro-Poor Policies and Instruments for Poverty Reduction

5. Recognise benefits and limitations of Direct Budgetary Support (DBS) and develop flexible funding mechanisms for targeting the poor. Develop adaptable and transparent funding systems that build effective states but also respond to the needs of the poor in fragile states, support sub-national governance and local institutions, and provide resources for off-track MDGs such as MDG7. Alternative avenues for HMG support for developing countries should be explored to strengthen civil

society engagement in decision-making, build local capacity, invest in institutions and increase investment for critical environmental assets.

In support of this, DFID should support the EU ‘Thematic Programme for Environment and Sustainable Use of Natural Resources including Energy’ as a key instrument for delivering on the environmental dimensions of development and other external policies. This requires multi-annual financial earmarking of at least 450mEUR per annum, necessary to address global environmental challenges posed by economic, political and social pressures upon natural resources.18

6. Ensuring specific international development ‘Action Plans’ (e.g. water and sanitation) are actually delivering, and coherently address environmental issues and opportunities (e.g. delivering on commitments to integrated water resource management (IWRM) and water efficiency). DFID should regularly monitor, review and publish “from commitment to action” position papers to show progress on its Action Plans (as it has done for health and education).

7. Ensuring consistency with the European Policy. DFID should ensure consistency with the “European Consensus”(November 2005) and the EU Treaty objective of promoting sustainable development. Ensure adherence to the European Community principles of coherence for development and cooperation policy (Article 178) as well as environmental integration across all policies (Article 6). Including effective environmental mainstreaming and timely use of environment screening tools and procedures.19

8. Further recommendations for DFID and HMG on specific issues:

a) Climate change (i) adaptation: Continually endorse the strong scientific evidence for climate change. Increase commitment to creating a low carbon future and ensure all development assistance minimises climate and disaster-related risks, including through using climate safeguard policies. Promote developing countries participation in the formal UN process to negotiate a post 2012 climate framework based on a strengthened and expanded Kyoto architecture. Stress the urgent need to help developing countries adapt to climate change and champion (i) the LDC Fund created by the UNFCCC (at COP7 in Marrakech) (ii) the Kyoto framework and (iii) the five year programme of work on adaptation agreed at COP 11 and COP/MOP1, including the provision of substantial funding and technical support to assist LDCs to adapt (as per Commission for Africa Report).20

b) Climate change (ii) mitigation: Implement significant cuts in UK emissions and strongly encourage all developed countries to assess their consumption patterns and reduce carbon emissions, supporting a robust policy framework for G8 countries’ long-term action on climate change. HMG should establish a UK Carbon Budget to deliver a reduction in UK carbon emissions of 3% per year. Within such a framework, the UK Government must encourage behavioural change at all levels of society through tax incentives, effective education and awareness-raising. DFID and DEFRA should engage with the Treasury to shape ethical and environmentally friendly procurement strategies.

c) Technology: Support access to renewable and environmentally sound technologies to help developing countries leapfrog environmentally damaging development processes. This should include developing new industries and skills and capturing new markets based on a ‘green’ economy and provision of environmentally sustainable goods and services. HMG should work with the World Bank, other IFI and G8 countries to promote much more ambitious investment targets for renewables and to support sustainable and socially responsible businesses in emerging economies.

d) Disaster management: Increase support for reducing disaster risks and lead in implementing the Hyogo21 Framework for Action including developing interim targets and timeframes and generating greater political will for disaster risk reduction, championing preventative approaches on the international stage (especially EU).

e) Urbanisation: Between 2000 and 2030, the urban areas of the less developed regions will absorb 95 per cent of the world's population growth.22 There is an urgent need to support national governments, all development agencies, civil society and key institutions in cities with resources and technical capacity to address challenges posed by rapidly urbanising environments.

f) Rural Development: Agriculture is central to the livelihoods of the rural poor who, in spite of rapid urbanization, still account for the majority (around 70 per cent) of the world’s poor.23 Hence support national governments, development agencies, civil society and key institutions responsible for agriculture, natural resource management (e.g. water, forestry and fisheries) and rural development with resources to address the inequalities in rural areas by encouraging investment to promote social equity and environmentally sustainable agriculture.

g) Marginalised groups: Explicit targeting of support for and recognition of the importance of including marginalised groups and communities (including women, elderly, children and indigenous people) in consultations, planning, projects, programmes and decision-making processes. Gender issues need to be mainstreamed to ensure policies and practice are line with internationally agreed instruments such as the Convention on the Elimination of Discrimination Against Women (CEDAW), the subsequent Beijing Platform for Action, and Security Resolution 1325. DFID and HMG should do more to recognise and support reproductive health rights for women, and mainstream equity, reproductive health and population issues within the international agenda.

h) Ecosystems and natural resources: DFID should deliver on its intention to ensure environmental needs are mainstreamed in development planning.24 HMG, through DFID, needs to give much more attention to supporting developing countries to identify, monitor and measure their environmental assets, effectively analyse and use environmental information. Including using these to meet national, regional and international environmental commitments, for poverty monitoring, development and strategic planning, national accounting and budgeting, and the development of policy and legislation. This includes mainstreaming environmental concerns into governance systems, strategic plans and budgets, key sectors and into investment protocols. In doing so, DFID should build on key country experience and research (e.g. in Tanzania and Ghana, and the 2005 PEP recommendations25).

DFID should also deliver on its intention to invest directly in environmental assets that are important for poverty reduction:26 greater funding is needed to support investment in the productivity, restoration and protection of biodiversity and ecosystem services that generate critical resources for livelihood security and underpin development, and into systems that improve and guarantee poor people’s access and rights to natural resources.

Responding To Poor Peoples’ Needs: Reforming the International Development System

9. Championing fundamental international architectural shifts to ensure long-term environmental sustainability and poverty eradication. HMG should support multilateral system reform (including UN, World Bank, IMF and WTO) to ensure genuinely democratic processes and institutions that give an equal voice to developing countries and ensure social and environmental objectives are properly safeguarded. HMG and DFID should also be pro-active in reforming IFI positions to support pro-poor sustainable development and ensure that the UK's own position in multilateral negotiations promotes pro-poor sustainable development.

10. Championing “no economic policy conditionality” in donor circles and multilateral processes (whilst recognising and listening to developing country CSOs who tend to be more favourable towards the use of political conditionalities).27 HMG should seek strategic ways to ensure accountability of funding to IFIs and support transparency over resource-related decision-making. DFID should not fund bilateral programmes with multilateral intuitions that are using economic conditionality and DFID should use its leverage within these institutions to influence them to support DFID’s no economic conditionality position. DFID should also ensure its support for multilateral institutions upholds and advances best practice related to establishing social and environmental safeguards (with reference to international standards and conventions).

11. Strengthening civil society participation in strategic planning and decision making at all levels. Support the poor and marginalised (including women, elderly, children and indigenous people) to increase their participation in planning and decision-making and increase government accountability. HMG should promote Principle 1028 for access to information, justice and participation in decision-making. Promote pro-poor improvements in environmental governance and decentralisation by supporting and funding appropriate institutions, legislation and policy decentralisation frameworks focusing on rights, entitlement and sustainable use.

12. Stopping “Forced Liberalisation” of developing country’s markets, restoring their discretion over trade and other policies. DFID should call for and promote an urgent and objective review of the Doha Round WTO negotiations to consider consistency with global needs for poverty reduction and reducing carbon emissions. There is a need to re-assess the merits of further liberalisation in the trade of natural resources (including agricultural products) and consider what fresh multilateral rules are needed to ensure trade in resources helps rather than hinders poverty reduction and sustainable development.

13. Promoting transparency, accountability and regulation of the private sector (particularly Trans National Corporations) - especially with regard to private sector operations in developing countries and in conflict areas. HMG should prioritise regulation of UK and EU companies operating in developing countries as called for by CORE Coalition.29 Specifically new laws in 3 key areas: mandatory sustainability reporting, directors' duties, and access to justice.

14. Supporting alternative models of economic growth and poverty reduction. HMG and DFID should promote shifts in the global economic system, enabling collective and effective decision-making in the long-term interest and support well informed participatory democracy, accountability and transparency to truly deliver sustainable development, including by revitalising local economies and small enterprise. Where it is more difficult to reconcile economic, social and environmental priorities, decisions should be made through fully informed open and transparent decision-making processes through multi-stakeholder and cross-sector debate and sound analysis.

15. Recognising environmental trends and uncertainties as key opportunities as well as threats for future development paths. HMG should use and support models and tools such as impact assessments, scenario building and ‘horizon scanning’ to help themselves and others, including in developing countries, better understand the implications of present and future issues and choices linked to sustainable development and achieving poverty eradication in a rapidly changing world. Environmental challenges will need increasing political commitment and civil society engagement at all levels to maximise the potential for increased cooperation and coordination, and to avoid possible conflict (for example, linked to water resources).

This response was prepared by the Development and Environment Working Group (DEG) of BOND (British Overseas NGOs for Development) through a consultative process with BOND members and developing country partners. BOND is a network of more than 300 UK based voluntary organisations working in international development. http://www.bond.org.uk/. DEG works for a powerful collective voice demonstrating critical evidence and workable solutions for poverty eradication, environmental management and sustainable development. http://www.bond.org.uk/wgroups/environment/index.htm. This is the first (summary) of a two-part response, the final more detailed submission will be sent by 7th April 2006.

Contact DEG Co-Chair: Joanna Phillips, Head of Trade and Development Policy, RSPB, The Lodge, Sandy, Bedfordshire, SG19 2DL, UK. Tel.: +44 (0) 1767 680551 Email: Joanna.Phillips@rspb.org.uk

TABLE OF CONTENTS

PREFACE: DEG WHITE PAPER SUBMISSION ONE............................................................................2ELIMINATING WORLD POVERTY: FOR PEOPLE AND PLANET.....................................................2INTRODUCTION AND OVERVIEW......................................................................................................111. PEOPLE AND PLANET: ELIMINATING POVERTY AND ACHIEVING SUSTAINABLE

DEVELOPMENT....................................................................................................................................14Background and Context: The Environment is Critical for Poverty Elimination.........................................14The Multi-Dimensional Nature of Poverty...................................................................................................15Understanding Environmental Challenges and Opportunities......................................................................16Investing in the Environment is Vital for Poverty Elimination....................................................................21The Environment and Development Context – Critical Challenges on the Horizon....................................22Recommendations........................................................................................................................................24

2. RESPONDING TO THE CHALLENGES OF CLIMATE CHANGE..................................................29Background and Context..............................................................................................................................29The Impacts of Climate Change...................................................................................................................31The Harsh Impacts of Climate Change upon the Poor..................................................................................32The Challenges of Climate Change..............................................................................................................33Tackling the Challenges of Climate Change and Creating UK Government Coherence..............................34Recommendations........................................................................................................................................35

3. THE CURRENT MODEL OF DEVELOPMENT: IS GROWTH THE SOLUTION OR PART OF THE PROBLEM?.....................................................................................................................................38

Background and Context..............................................................................................................................38Global Growth: Part of the Solution or Part of the Problem?.......................................................................39What Needs To Be Done – Addressing the Global Economic Failure.........................................................41Recommendations........................................................................................................................................44

4. TRADE, GROWTH AND THE PRIVATE SECTOR...........................................................................47Background and Context..............................................................................................................................47Developing Coherence Across UK Government..........................................................................................48Coherence of Funding Approaches...............................................................................................................49Maximising Opportunities of Natural Wealth..............................................................................................50Leading the Corporate Social Responsibility Debate...................................................................................52Recommendations........................................................................................................................................52

5. GOOD GOVERNANCE, POWER AND NATURAL RESOURCES..................................................56Background and Context: Good Governance and Development..................................................................56Good Governance for Poverty Elimination and Environmental Sustainability............................................57The Way Forward for Supporting Good Governance and Poverty Elimination...........................................64Recommendations........................................................................................................................................66

6. CHANGING AID ARCHITECTURE: DELIVERING AID EFFICIENTLY AND COHERENTLY. 69Background and Context..............................................................................................................................69Overview: The Debate on the International Aid System - Which Way Forward?.......................................69Why We Need to Change the International Aid Architecture......................................................................71Current Efforts to Improve the Aid Architecture..........................................................................................71Recommendations........................................................................................................................................72

7. POVERTY, PEACE, CONFLICT AND THE ENVIRONMENT.........................................................76Background and Context..............................................................................................................................76Overview: Poverty Peace and the Environment...........................................................................................77Recommendations........................................................................................................................................79

8. HORIZON SCANNING........................................................................................................................82Background and Context..............................................................................................................................82Overview: Horizon Scanning for International Development......................................................................82Recommendations........................................................................................................................................83

INTRODUCTION AND OVERVIEW

“DFID’s mandate is expressed by the International Development Act (2002), which stresses sustainable development as the principle purpose.”

DFID’s Approach to the Environment, 2006

The forthcoming White Paper on ‘Eliminating World Poverty’ offers a unique opportunity for DFID and Her Majesty’s Government (HMG) to realise the full returns that investment in the environment brings, and the vital role that ensuring environmental sustainability (MDG7) plays in meeting all the Millennium Development Goals (MDGs).

Effective and sustainable development is required to eliminate world poverty. DFID and HMG are urged to act now and use the White Paper to lead a coherent new vision for international development to achieve this. If this current opportunity is missed, and the degradation of environmental assets and systems continues, current development investment is likely to be jeopardised, future costs to reduce poverty will increase, and achieving the MDGs will become even more elusive. DEG offers this report, which brings together many key lessons and recommendations, and its support to help DFID and HMG grasp this opportunity to help eliminate world poverty based on truly sustainable development.

We face many pressing and interdependent global challenges: poverty and inequity; climate change and other natural system risks; changing patterns of resource demand and production; an unfair international trading system; changing geo-political dynamics. Many of these challenges are linked by two mutually supportive global imperatives - eliminating poverty and ensuring environmental sustainability. Through synthesis of the best available information and by building on existing initiatives and the outcomes of 2005ii, this report addresses many of these challenges and shows that a healthy environment is vital to ‘Making Poverty History’.

DFID’s White Paper consultation and the Secretary of State’s speeches have offered substantial context around the challenges facing development. These include: ‘we are fast depleting natural resources including soil, oil, forestry, fisheries and water’, ‘the symptoms of today’s problems will become the catalysts and causes of tomorrow’s crises’, ‘endemic short-termism in our politics and economics under values the future relative to the present.’ This report demonstrates that many of these challenges are cross cutting and require integrated solutions. Most importantly it shows how solutions to poverty, regardless of sector, rely consistently on addressing environmental and developmental issues coherently and in concert.

Environmental issues are complex and interconnected, and systems and situations are dynamic. There is no ‘silver bullet’ or clear roadmap and one size will not fit all. Climate change, nevertheless, unmistakably demonstrates the potential repercussions of ignoring the health of the environment on which we all, but particularly the poor, depend. The UN Millennium Ecosystem Assessmentiii must be a wake-up call – in 2005 over 1300 scientists from over 95 countries carried out research that collectively warns that: “long term success in meeting all of the Millennium Development Goals (MDGs) depends on environmental sustainability. Without it the gains will be transitory and inequitable.”

ii Including the outcomes of the 2005 World Summit, the UN Millennium Project coordinated by Jeffrey Sachs, the UN Millennium Ecosystem Assessment, and the DFID supported ‘Poverty and Environment Partnership’.iii Launched by United Nations Secretary-General Kofi Annan in 2001, the Millennium Ecosystem Assessment (MA) is a comprehensive study of the state of the global ecosystem. More than 1,300 scientists in more than 95 countries spent 5 years synthesising what we know about how the world's ecosystems influence human well-being, and how changes in these ecosystem impact people.

This report “Eliminating World Poverty for People and Planet” forms a second submission to the DFID White Paper consultation process from members of the Development and Environment Group of BONDiv. The first submission can be found as the preface to this report (pages 2-9) - this was developed in collaboration with key DEG members and members of the wider development community, and is supported by 46 national and international NGOs and organizations. This additional report provides wider context and evidence to support the recommendations outlined in the first submission, it offers a synthesis of the current debate and provides evidence based analysis and examples of key poverty and environment issues – essential to effective poverty elimination. It has been prepared by a DEG working group.

There are eight chapters to the report, each addressing issues critical to development. Recommendations are made to support effective poverty elimination and sustainable development based on current trends, key poverty-environment concerns and opportunities.

The first chapter, People and Planet: Eliminating Poverty and Achieving Sustainable Development, provides a clear argument for investing in the environment. It demonstrates the high returns effective long term sustainable development bring, as well as the importance of understanding the dynamic and complex relationships between the environment and development, essential to effective poverty elimination.

The second chapter, Responding to the Challenges of Climate Change, stresses the disproportionate impact that climate change is having, and will continue to have, on the poor. It calls for better policy coherence across UK Government to address increasing UK carbon dioxide emissions, and the need for significant investments to support mitigation and adaptation for sustainable development in developing countries.

The third chapter, The Current Model of Development: Is Growth the Solution or Part of The Problem?, makes the economic argument that current models of growth are in many cases exacerbating poverty and degrading the environment. It recommends solutions to current failures in the dominant global economic growth model, stresses growth alone is not enough, and calls for a more holistic ‘assets based’ approach to development.

Chapter four, Trade, Growth and the Private Sector, builds on chapter three by considering how international trade rules and elements of the private sector currently act as barriers to poverty eradication. A number of key recommendations are offered to help address the current situation.

Many of the issues raised in chapter five under, ‘Good Governance, Power and Natural Resources’ are cross-cutting throughout all of the eight chapters. It demonstrates the significance of environmental governance to ‘good governance’ at all levels, highlights governance failings and provides options to support good governance processes.

Chapter six, Changing Aid Architecture: Delivering Aid Efficiently and Coherently, draws on some of the themes in the chapter on governance, and further argues that the current Aid Architecture is failing the poor and degrading the environment. Recommendations are made to improve the efficiency and effectiveness of aid and the system.

The seventh chapter, Poverty, Peace, Conflict and the Environment, discusses how the environment and natural resources too often trigger or exacerbate conflict and poverty. iv BOND (British Overseas NGOs for Development), is a network of more than 300 UK based voluntary organisations working in international development. Through DEG, it is actively working to build a collective and powerful voice around development and the environment.

Importantly, it demonstrates and recommends how natural resource management can also offer opportunities for peace building and conflict resolution, and effective environmental management.

The final chapter (eight), Horizon Scanning, looks to the future and identifies a number of critical environment and development challenges. It demonstrates that horizon-scanning can be an essential and effective tool in the fight to eradicate poverty and secure sustainable development.

The authors believe this report is particularly timely, given that the environment is climbing the international development agenda and is of increasing concern both within the UK and internationally. Indeed, the serious threats posed by climate change are galvanising both public and professional opinion worldwide towards action to address environmental and development problems.

DFID and HMG have the opportunity to use this tide of popular concern and awareness to catalyse commitment and action to coherently address global challenges, ensuring sustainable development and poverty elimination. The White Paper offers a vital opportunity to improve coherence and drive across HMG for sustainable development and to build on local and international political and social capital for a more progressive, sustainable and equitable approach to development. “The path forward is clearer now than at any time... At no time has so much been at stake, and at no time are we better able to respond”vvi We must eliminate world poverty and enable all people to enjoy a decent quality of life, within the carrying capacity of one planet.

DEG welcome the opportunity to contribute to this important process and look forward to further collaboration with HMG on the formation and delivery of this critical White Paper.

The Development and Environment Group of BOND, will actively continue to build a collective and powerful voice, recognising that progress towards the MDGs and a safer, more healthy, equitable, just and sustainable world will be faster and more effective if development and environment are addressed coherently and in tandem, at all levels, in all policy areas and in all actions. The 47 signatories to the first DEG submission demonstrate this is rapidly becoming mainstream development thinking, seen as essential to ‘Eliminating World Poverty’.

v From World Resources (2005). The Wealth of the Poor – managing ecosystems to Fight Poverty, UNDP, UNEP, The World Bank and World Resources Institute, Washington D.C.vi ‘Shared goals’ by Lena Sommestad, Minister of the Environment, Sweden, and Richard Manning, Chair of the OECD Development Assistance Committee (DAC), OECD Observer, March 2006 at http://www.oecdobserver.org/news/fullstory.php/aid/1819/Shared_goals.html

1. PEOPLE AND PLANET: ELIMINATING POVERTY AND ACHIEVING SUSTAINABLE DEVELOPMENT “The environment matters greatly to people living in poverty. The poor often depend directly on a wide range of natural resources and ecosystem services for their livelihoods; they are often the most affected by unclean water, indoor air pollution, and exposure to toxic chemicals; and they are particularly vulnerable to environmental hazards (such as floods, prolonged drought, and attacks by crop pests) and environment-related conflict. Addressing these poverty-environment linkages must be at the core of national efforts to eradicate poverty”

DFID, EC, UNDP, and the World Bank (2002)30

Background and Context: The Environment is Critical for Poverty Elimination

Poverty eradication and sustainable development depend upon ensuring environmental sustainability; otherwise, any gains will be transitory and inequitable.31 This fact has been acknowledged at the highest level: “We fundamentally depend on natural systems and resources for our existence and development”, and “Our efforts to defeat poverty and pursue sustainable development will be in vain if environmental degradation and natural resource depletion continue unabated” (Kofi Annan, UN Secretary General, 2005).32 The Millennium Development Goals (MDGs),33 which all 191 of the UN member states have pledged to meet by 2015, recognises the critical link between poverty and the environment, enshrined within MDG7 ‘ensure environmental sustainability’.vii Sound environmental management can unlock natural resources as the wealth of the poor, as well as provide a vital buffer for coping with social, economic and environmental shocks.34

The environment refers to the living (biodiversity) and non-living components of the natural world, and to the interactions between them, that together support life on earth. The environment provides goods (natural resources) and services (ecosystem functions) used for food production, the harvesting of wild products, energy, and raw materials. The environment is also a recipient and partial recycler of waste products from the economy and an important source of recreation, beauty, spiritual values, and other amenities. Amongst their many pressing development challenges, however, developing country governments generally lack capacity and resources to identify, invest in, sustainably use, measure, monitor and regulate their environmental assets.35

The development community, and specifically DFID, urgently needs to increase its understanding and application of how environmental management constructively underpins poverty eradication and sustainable development. In working to support development, it is vital that the interconnectedness of human wellbeing and natural systems are properly considered and addressed in all development activities. Through its Environment Approach Paper (2006),36 DFID has taken important and welcome steps to provide a framework for integrating environmental considerations into its work in developing countries. This provides a good starting point for many of the issues that must be addressed in the forthcoming White Paper, including the need for ensuring environmental sustainability to be prioritised and mainstreamed as central policy.

Some 2.7 billion people - almost half the world population - still live below the $2 a day poverty line.37 Those living in poverty are disproportionately dependent on utilising environmental goods and services for livelihood security.38 Positive environmental management, linked to improved and

vii Under MDG7 the specific goals are to: integrate the principles of sustainable development into country policies and programmes; reverse loss of environmental resources; reduce by half the proportion of people without sustainable access to safe drinking water; and achieve significant improvement in lives of at least 100 million slum dwellers, by 2020.

more equitable governance at all levels, offers opportunities to realise untapped wealth for billions of poor people, whilst protecting natural resources for present and future generations.

Mounting evidence shows that the international development system is failing to sustainably utilise and manage the environment, with severe consequences for the world’s poor.39 MDG7 (ensuring environmental sustainability) is way off track and threatens the achievement of other MDGs.40 The world is facing a number of accelerating environmental challenges - climate change, biodiversity loss, declining ecosystem services - increasing vulnerability and tension and conflict. Climate change, largely fuelled by rich nation’s over-consumption, threatens the livelihood security, health, food production and water supplies for billions of people,41 undermining development gains and disproportionately impacting the poorest.42

The Multi-Dimensional Nature of Poverty

Poverty is multidimensional – this means not only a lack of sufficient income but also lack of voice, power and equal justice under the law, social capital and access to assets and services.43

Thus, poverty is caused by more than a lack of money and is evident in many other forms of deprivation and marginalisation, many of which need to be tackled at local levels. Most of the deprivations faced by the poor people are local in fact. Development interventions, therefore, need to focus on the poor themselves and on local organisations. This requires making resources available to low-income groups and their organisations in response to their needs and priorities, responding to and supporting local democratic processes and recognising the rights of all citizens to basic services, the rule of law and accountable institutions.44

The multidimensionality of poverty means that economic solutions are only part of the answer. For the poorest people, access to environmental resources (soils, forest, pasture, water) are often key to livelihood security; conversely, environmental hazards (floods, droughts, climatic change) have a disproportionately high impact on the poor. This combination of reliance and threats creates complex relationships between environmental conditions, people’s control over environmental resources, and poverty. Understanding these relationships is a prerequisite for lasting success in the fight against poverty and meeting all of the MDGs. However, the central importance of the environment for poverty reduction remains unacknowledged in many key contexts, as does the economic case for pro-poor investment in environmental assets.45 As a result, the environmental concerns of the poor are all too often marginalised within the context of national development planning and efforts that prioritise achievement of other MDGs before MDG7.46

In many development contexts, ‘environment’ is associated principally with checks and barriers to development. In the development project cycle environmental factors are often introduced at a relatively late stage as part of a screening process, and can result in a dichotomy between ‘development progress’ and ‘environmental status quo’. This is a false distinction - a better understanding and recognition of the range of ways in which environmental factors underpin sustained (and sustainable) development is essential if we are to realise a more coherent vision for poverty elimination, sustainable development and meeting all the MDGs.

Poor countries and poor households rely heavily on environmental assets as sources of wealth from which to generate income and improve their livelihoods.47 One compelling source of evidence for poor people’s reliance on environmental assets stems from participatory poverty assessments (PPAs).48 A DFID review of 23 PPAs in 14 countries in Asia, Africa, Latin America and Europe showed that in all cases environment was considered a crucial component of well-being, especially where environmental resources were of low quality or subject to deterioration.49

For example in South Africa, Nigeria, Uganda, Malawi, Bangladesh and India poor people

“identified those living in areas prone to natural disasters such as earthquakes, cyclones, landslides and annual flooding or drought as being a special category of poor. The level of impact on poor people of these kinds of shocks was graphically described and was clearly a contributory factor to falling into poverty or of moving down to a lower state of wellbeing.”

Poor people, particularly women and the poorest members of communities, frequently cite poor governance – weak rights and the lack of government services and accountability – as important constraints to better environmental management.50 Action to address ecosystem stress, build resilience to change, and empower poor people to have stronger control over their assets is most critical at local level, through development of effective local governance systems. Of particular importance are local-level institutions that are accessible to poor people and adapted to the complex set of resource rights that have evolved over time in specific locations. These issues are further considered in the Governance Section.

At a national level, environmental assets make up a far larger proportion of national wealth in developing countries than in high-income countries.51 A World Bank study estimates that environmental wealth accounts for 26% of the total wealth of low-income countries versus 13% in middle-income countries and only 2% of wealth in OECD countries.52 Development entails investing in those assets and their productivity, ensuring sustainable use, and protecting non-substitutable assets in the national and global interest (see Box 1).

Understanding Environmental Challenges and Opportunities

DFID and HMG need to better understand dynamic environmental challenges and opportunities to ensure effective long term development. Capacity, resources and power-imbalances need to be addressed, particularly in developing countries, to ensure that the long term value and significance

Box 1: A Sustainable African Economy?

Environmental assets currently form 24% of Sub-Saharan Africa’s national wealth. Development entails investing in those assets and their productivity, and protecting non-substitutable assets. If Africa is not to fall prey to the asset-strippers that have bedevilled forestry in particular, a clear vision is required of what might constitute a sustainable African economy. For example, by 2015, African countries should be able to:(i) Access information on the potentials and limits of their environmental assets, and the costs and

benefits of using them for poverty reduction – and use them at the heart of development planning

(ii) Attract appropriate investment in environmental management, including through locally-based seed funds

(iii) Manage any draw-down of natural capital so as to (a) ensure governments capture adequate rent and use it to invest in pro-poor social and economic enterprise, and to sustain the resource base; (b) not eat into ‘critical natural capital’ such as irreplaceable biodiversity or cultural heritage; (c) make allowances for precaution

(iv) Receive global transfer payments for global public goods (conserved biodiversity and managed carbon sinks)

(v) Receive additional market-based payments for private environmental goods (nature tourism, bio-prospecting, ‘sustainable’ timber and food)

(vi) Invest in strong local institutions to ensure poor people thrive as much as possible through the above – having secure access both to environmental assets and to technologies and markets to use them

Source: Hamilton, K. (2005). Where is the Wealth of Nations? Measuring Capital for the 21st Century. World Bank, Washington D.C.

of natural assets are addressed in planning and decision making. This requires well informed environment advisors and in-country environmental officials being fully engaged in strategic decision making processes - working alongside economists and planners. Environmental competency is needed for effective institution building, legislation and policy development, and training.

This report highlights many of the direct and indirect challenges and opportunities faced by development and environment communities, which require much greater synergy and cooperation to ensure a viable future for all, but particularly the poor. Active and competent environmental engagement is vital to effectively address key challenges and to realise opportunities:

Ecosystem services and biodiversity The 2005 Millennium Ecosystem Assessment (MA) concluded that ‘The loss of services derived from ecosystems is a significant barrier to the achievement of the MDGs’.53 Ecosystem decline is accelerating: the MA found that 15 of 24 essential services provided by ecosystems are being used unsustainably, ranging from food production to water quality and availability, disease management and climate regulation. In addition, the capacity for continued delivery of these services is being steadily eroded. Climate change is the most obvious example of the system-level impacts of environmental degradation that can put national and international efforts to reduce poverty in jeopardy, but the MA highlights that ecosystem degradation should be viewed in the same light.

Contrary to popular belief, most environmental degradation is driven by the over-consumption of the rich, and evidence from poverty mapping studies confirms that the poor tend to be pushed into areas with stressed, low-quality environmental resources, such as land of low soil fertility, polluted air, contaminated water and water shortages.54 Over 250 million people are directly affected by desertification and one billion people are at risk. These people include many of the world's poorest, most marginalised, and politically weak citizen’s.55 By 2050, a quarter of the world’s population will live in countries affected by chronic water stress.56

Box 2: Global Biodiversity Outlook 2006 - What are the Current Trends in Biodiversity Loss?

Biodiversity loss is increasing at all ecosystems levels across the planet Alarmingly high rates of deforestation- since 2000, 6 million hectares of primary forest lost

annually Marine-coastal ecosystems in decline, Caribbean average hard coral cover declined from 50% to

10% in three decades and 35% of mangroves lost in the last two decades Protected areas cover 13% of the world’s land area, but are unevenly distributed, with only 2/5 of

the world’s eco-regions reaching the 10% benchmark Average species abundance is declining – 40% loss between 1970 and 2000. Species present in

rivers, lakes and marshlands have declined by 50%. Declines are particularly evident in amphibians, African mammals, birds in agricultural lands, corals and fish species

Forests and river systems increasingly fragmented, affecting biodiversity maintenance and delivery of ecosystem services

Intensive fishing has led to North Atlantic declines of 66% in the last 50 years. Unsustainable consumption continues, indicated by our growing ecological footprint at the global

level now exceeding the biological capacity of the Earth by some 20%

Source adapted from The Global Biodiversity Outlook 2 main messages. Convention on Biological Diversity (2006). http://www.biodiv.org/gbo2/main-messages.shtml [2/4/2006]

Healthy, biodiverse ecosystems provide the goods and services that humans need for their well-being. The loss of biological diversity destabilizes ecosystems and makes them more vulnerable to shocks and disturbances such as hurricanes and floods, which may further reduce the ability of environments to provide for human well-being. The current trends in biodiversity loss are alarming (see Box 2) - the negative consequences are felt most harshly by the poor and pose significant barriers to achieving the MDGs.57

Environmental disasters In recent decades, there has been an increase in the occurrence of environmental disasters and associated damage, with floods affecting 140 million people each year.58 Where natural disasters occur in poor countries they often absorb a significant proportion of GDP, and further constrain development. In fact, 97% of deaths from environmental disasters occur in developing countries.59

It is vitally important therefore, to ensure that poverty reduction policy is in line with the anticipated impacts of environmental change.

National development strategies such as PRSPs and other planning processes should appropriately integrate disaster risk management. The conservation of natural resources such as hillside forests and mangroves are crucial in reducing flood damage and maintaining valuable ecosystem services. According to the Annual World Disasters Report (2004), in the past two decades alone, economic cost of natural disasters multiplied five fold to US$629 billion.60 Annual direct losses from weather-related events increased from an estimated $3.9 billion in the 1950s to $63 billion in the 1990s.61. In 2003, there were about 700 ‘natural’ disasters which killed about 75,000 people and caused about US$65 billion damage.62 Between 1980 and 2003, the World Bank financed 147 post-catastrophe reconstruction projects worth about $12.5 billion. The Red Cross Report warns that the frequency and cost of natural disasters is likely to further increase because of: environmental degradation, climate change, population growth (in particular, unplanned urban growth), and the negative impacts of economic globalization.63 (See sections on economic growth, trade, governance and climate change for further discussion of these global challenges).

Disaster risk reduction, including as a key component of adaptation to climate change, can be highly cost effective and needs to be mainstreamed into all development policies and programmes. Governments, donors and civil society need to work together to fulfil the commitments made at the World Summit on Sustainable Development (2002) and the World Conference on Disaster Reduction (2005) to this end – specifically, the Priority Areas for Action outlined in the Hyogo Framework for Action 2005-2015.64

Box 3: Tear Fund - Cost Benefit Analysis Study on Local Disaster Mitigation and Preparedness

Cost benefit analysis was applied to local Disaster Mitigation and Preparedness (DMP) measures in the Indian states of Andhra Pradesh and Bihar, to research the economics of pro-active DMP interventions. The research findings highlighted a strong economic argument in favour of investing in DMP activities: For every Rupee invested in DMP activities in Bihar there was a return of Rupees 3.8; for every Rupee invested in DMP activities in Andhra Pradesh there was a return of Rupees 13.4. There were also other benefits, including new income revenue created by the hiring out of rescue boats, improved infrastructure and community empowerment. DMP assistance, provided through the Discipleship Centre (a Tearfund Partner), included material provisions as well as training to flood-prone communities. Volunteers were trained in early warning, first aid and evacuation procedures, as well as building raised embankments to connect villages to the main road and ensure an escape route during flood season. Culverts were constructed and wells with raised hand pumps.

Source: Cabot. C. and P. Venton (2004). Disaster preparedness programmes in India: a cost benefit analysis’ Network Paper No. 49,. Tear Fund and Overseas Development Institute, London.

Community-based approaches should be at the heart of effective risk reduction; but scaling up disaster risk reduction requires a strong political focus and higher levels of investment. Donor institutions and governments should ensure that every development and poverty reduction policy decision and programme proposal in a disaster-prone area takes account of disaster risks and seeks to minimise them. Measures to reduce future disaster risks should also be incorporated into all relief, reconstruction and rehabilitation programmes.

The European Commission in particular needs to make faster progress with mainstreaming disaster risk reduction into its development planning and programming – and with supporting governments to address risk reduction in their poverty reduction and sectoral planning. The decision by DFID to allocate at least 10% of their humanitarian assistance budgets to disaster risk reduction is to be commended – such measures now need to be translated into integrated relief and development programmes at the country level.

Vulnerability is due to unsustainable patterns of development: preventing disasters depends in part upon our ability to build just and equitable social, economic and political structures and processes. There are tried and tested, simple ways to reduce vulnerability: The science, tools and methods needed to predict disasters and reduce their impact are readily available.

Achim Steiner, the newly appointed Executive Director of UNEP, has asked “How much longer can we afford the kinds of bills we are paying for misinterpreting the interrelationships between people and nature? New Orleans, US$62 billion; Switzerland, one night’s rainfall US$300 million; in central Europe, flooding; in Western Europe, fires; in Indonesia, fires; and in Northern Africa, droughts. Billions of dollars of assets being lost – and the poor are the first to lose their assets when these things happen, but they’re not the ones who are able to change the situation.”viii

Support for wise environmental management and adaptation and mitigation strategies to cope with the effects of climate change and natural disasters are fundamental to livelihood security and effective development.

UrbanisationThe rate of urbanisation is increasing in many developing countries. 95% of the world’s projected population growth between 2000 and 2030 is predicted to be in the urban centres of developing countries; a quarter of this growth will be in Africa alone.65 Partly because of current levels of urbanisation, global aspirations for sustainable development will be dependent on how successfully urban centres address their poverty and reduce their environmental burdens. Urbanisation is providing opportunities, as well as challenges, for efforts to achieve poverty reduction and sustainable development. The development agencies of most OECD Governments do not engage sufficiently with urban initiatives, and DFID is no exception. There is scope for the UK Government to play a much greater role internationally in addressing urban challenges.

Land rights, tenure and access Land lies at the heart of social, political and economic life in many poor countries, especially in sub-Saharan Africa. Agriculture, natural resource use and other land-based activities remain crucial to livelihoods, income and employment for all African nations. African income levels per capita are the lowest on the planet, despite abundant land and natural resources. Hopes for equitable and sustainable growth depend on securing the benefits of economic growth and development for the large majority of the population. Strengthening institutions to be accountable at local and national levels to manage land and resource rights is key to such broad based growth (See Governance chapter for further discussion).

viii Achim Steiner, DG of IUCN, speaking alongside Hilary Benn at Poverty Environment Partnership meeting 14 September 2005.

In Eastern and Southern Africa, the share of land with formal documentation is somewhat higher than elsewhere on the continent, given the legacy of colonial settlement, but highly unequal property relations generate their own political risks. Insecure rights to land tenure and shelter provide a major obstacle for promoting investment. Land competition can also trigger and exacerbate wider conflicts. Despite being central to peaceful and sustainable growth, land issues have often been ignored in the Poverty Reduction Strategy process. Over recent years major progress has been made in piloting new approaches to securing land rights in urban and rural settings. These pilots demonstrate the value of simple, low cost, locally tailored methods that are rooted in local values and build on existing practice. Increasingly governments are recognising the value of diverse systems, rather than seeking to impose a standard set of measures in all contexts. From this array of approaches stem valuable lessons to be shared between governments, civil society groups and land professionals.66

Agriculture is central to the livelihoods of the rural poor who, in spite of rapid urbanization, still account for the majority (around 70 per cent) of the world’s poor.67 There is an urgent need to support national governments, civil society and key institutions responsible for agriculture, natural resource management (for example water, forestry and fisheries) and rural development to work coherently to address inequalities in rural areas and to promote sound environmental management, including through investment promoting social equity and environmentally sustainable agriculture.

Education for sustainable developmentEducation, capacity building and empowerment are vital to improve governance, increase accountability and to enable people to participate in and benefit from new economic opportunities that sustainable development and globalisation can offer. There is need to support education for sustainable development (noting the present UNESCO led Decade for Education for Sustainable Development (DESD)).ix The overall goal of the DESD is to integrate the principles, values, and practices of sustainable development into all aspects of education and learning. This educational effort could encourage changes in behaviour, creating a more sustainable future in terms of environmental integrity, economic viability, and a just society for present and future generations.

As recognised by UNESCAP:68 “In any society, once a lifestyle is established, it is quite difficult to change it later. Thus, it is all the more important for a country to adopt an ecologically efficient way of producing and consuming early in the course of its economic growth”. Education for Sustainable Development (ESD) is essential to enable people to understand the links between environmental degradation and management, health, quality of life and poverty. It enables people to develop the knowledge, values and behaviours for living in a sustainable world. This is an essential, but currently lacking, aspect of DFID’s focus on education.

Box 4: RSPB & Birdlife International’s Learning for Sustainable Living Programme

Learning for Sustainable Living Programmes has been established in Africa and India with support from local corporate donors and the State Government. They have been developed through a partnership with NGOs, Government, education institutions and teachers. The partnership has worked locally to identify the country’s environmental and development priorities, to develop relevant teaching materials for schools linked to national curricula and to help supply these. Phase 2 involves a training programme for teachers linked to the materials produced. The programme received support from DEFRA in the run up to the WSSD. Source: Cooper, B. (2006). Learning for Sustainable Living Programme Coordinator, RSPB, UK.

Investing in the Environment is Vital for Poverty Eliminationix The primary goal for the Decade of Education for Sustainable Development (DESD) is laid out in the UN General Assembly resolution 59/237: “encourages Governments to consider the inclusion … of measures to implement the Decade in their respective education systems and strategies and, where appropriate, national development plans”.

For many years, economic orthodoxy held that environmental quality was a luxury that could be sacrificed in the short term in order to secure greater economic gains in the longer term. There is increasing consensus that this assessment is both invalid and dangerous, particularly for the world’s poor.69 Pursuing a development path that accepts environmental degradation as the price of progress can lead to situations in which the benefits of rising incomes are largely offset by economic losses from damage to ecosystems and their ability to provide essential services, such as clean air and water. In some cases, such losses may outweigh the benefits of rising incomes entirely – particularly where losses are non-reversible such as biodiversity extinction and climate change. Even so, the perception remains that scarce development finance should not be allocated towards environmental investments because they secure a lower rate of return than investments in other forms of capital. However, recent economic research70 on the complex interrelationships between poverty and the environment has shown that the returns to environmental investments are multifaceted and extremely significant,x for example:

Improved water supplies and sanitation create time savings (reduced distances to fetch water) that translate into higher economic output and productivity as well as greater school attendance. Cost savings from reduced incidence of water-borne diseases are also a significant source of benefits.71 Managing water resources wisely, through effective integrated water resource (river basin) management (IWRM) is crucial to long term and effective supply, as well as environmental sustainability.

Investment in soil conservation greatly enhances sustainable agricultural practices, especially in dry-land regions. A 15-year programme to combat land degradation, costed at between £9 billion and £21 billion, and is estimated to yield benefits 1.5 to 3.3 times higher in terms of avoided agricultural production losses alone.72 There are further benefits in improved food security, education, environment (biodiversity, tree cover, rising water tables) and access to finance (improved land enhances farmers’ credit-worthiness).

Increasing access to sustainable energy sources is essential to tackle poverty. The International Energy Agency73 estimates that investments of about £10 billion per year for 12 years will be needed to provide an additional 500 million people with access to electricity by 2015 (consistent with MDG1 of halving extreme poverty).xi A further £6.5 billion per year is needed to replace the traditional biomass fuels (wood, dung, charcoal) used by the poor for cooking and heating with cleaner modern fuels.74 Although fully costed figures are not available, benefits of £25-35 per person per year would be sufficient just to offset the costs.xii

Since this represents less than 10% of average rural energy expenditure and about 2-3% of average urban expenditure,75 such investments would have positive cost-benefit ratios. In addition, replacing traditional fuels would yield multiple benefits in terms of time savings, improved human health, reduced environmental damage and improved soil quality.76

Investment in climate change adaptation is critically needed to help poor, vulnerable communities cope with the effects of environmental change. Studies of economic damage from global climate change consistently show that the poor will lose a far greater proportion of their assets than the rich – despite their relative lack of responsibility for the emissions that are

x In most instances, the ability of the poor to invest in and benefit from improvements to their environmental assets depends on their having clear rights to the resource in question, especially through locally defined, enforceable controls on resource access. Thus the returns to investment given here are predicated on, and in fact may be highest for, the transfer of rights over resources towards decentralised, participatory systems that support community-based organisations and local rights.xi The estimates are for extending access to electricity to an additional 500 million people, over and above those expected to have electricity with ongoing programmes.xii This is based on an aggregate cost of US$28 billion per year and coverage of 500-700 million people.

causing the problem.xiii Among many potential and current threats, it is estimated that global warming will reduce agricultural productivity. One study estimates losses by 2050 that range from 11% (no adaptation at all) to 2% (maximum adaptation) of GDP in Africa.77 A key aspect of adaptation to environmental change is reducing vulnerability to natural disasters – including storms, floods, fires and crop failures – which experts predict will increase in frequency and severity because of climate change. With 97% of all deaths from natural disasters occurring in developing countries, investments in disaster prevention are a high priority, protecting human lives as well as saving on average £7 in recovery costs for every £1 spent on prevention.78 (See section on climate change for further discussion).

Protecting and restoring ecosystems can produce substantial benefits, especially for the poor. Investments in conservation can protect intact ecosystems from conversion to less diverse uses, such as agriculture. When carefully designed and managed, conservation can bring significant dividends for poor people. Agro-forestry, a conservation option that incorporates trees and enhanced wildlife habitat into cropland, produces high returns on investment, with benefit-cost ratios ranging from 1.7:1 to 6.1:1.79 Economic studies of wetlands and mangroves consistently show that conservation is economically attractive, with benefit-cost ratios of between 1.2:1 and 7.4:1.80 And supports resilience to natural disasters. Another key aspect of natural systems is ecological resilience – that is, the cushioning provided by genetic and species diversity that buffers ecosystems against stresses and shocks, and promotes their continuing ability to provide the environmental services needed to support human life and livelihoods. A study by leading economists has also shown that the overall benefit: cost ratio of an effective global programme for the conservation of remaining wild nature is at least 100:1.81

As the UK Chancellor Gordon Brown said in his speech to G8 environment and energy ministers in March 2005, “If our economies are to flourish, if global poverty is to be banished, and if the well-being of the world's people enhanced - not just in this generation but in succeeding generations - we must make sure we take care of the natural environment and resources on which our economic activity depends.”

The Environment and Development Context – Critical Challenges on the Horizon

Effective development entails anticipating and managing uncertainty, risk and opportunity. Systems to undertake such ‘horizon scanning’, as well as capacities to respond to its findings, are essential components of good governance, including in developing countries. They reduce vulnerability and confer resilience. HMG should support horizon scanning in developing countries. HMG itself requires a forward-looking system to assess information and insights relevant to the future of international development: DFID and the UK Sustainable SDS82 might be the best focal points for such a system. (See section on horizon scanning for further discussion).

Currently there are a number of key global environment and development challenges. MDG7, ensuring environmental sustainability, is already one of the most off-track MDGs.83 At the international level, UNEP’s Global Environmental Outlook report notes that, of the 23 most pressing environmental issues facing the world today, only 6 have clear international targets and only one has a clear, costed action plan.84 Yet, environmental challenges will increase in the future:

Climate change: Climate change is happening now, The Intergovernmental Panel on Climate Change (IPCC)85 concludes incidences of extreme weather events, and associated damage to

xiii See also Secretary of State Hilary Benn’s speech ‘Development beyond Aid’ at Chatham House on 23 February 2006: “climate change is a problem caused by the rich countries which is having the greatest impact on poor countries”.

water regulation, food production and energy systems and infrastructure, will increase. These changes will be the unavoidable effects of historic greenhouse gas (GHG) emissions. This reality urgently requires development assistance (for example to deal with regular delta and island evacuations and crop failures);86 it will have increasing and major adverse impacts on achieving poverty eradication and on meeting all of the MDGs. (See section on climate change).

Other natural system risks: The Millennium Ecosystem Assessment (MA), which followed similar procedures to the IPCC, recently concluded that a wide range of other non-gradual risks is increasing – from local collapse of crop pollination and species extinction, to regional climate shifts and fisheries collapse, to zoonotic disease emergence with possible global consequences.87 Many of them will interact, forming ‘perfect storms’ in risk terms. Long-term significant environmental risks are already routinely worrying (re)insurers and long-term investors such as pension funds and increasingly also recognise that biodiversity decline is a ‘material risk’ (in part due to a recent study supported by DFID and SwissRe). The World Economic Forum (WEF) has also ranked biodiversity loss as one of two significant ‘outlier risks’, i.e. where there is less information and public awareness, but nonetheless ‘severe consequences’; climate change and pandemics are on WEF’s ‘headline risk’ list.88

Changing patterns of resource demand and production – by 2050 crop yields are expected to rise by 70-85% to meet food demand; freshwater withdrawals will increase by up to 85%; and 10-15% of all plant species may become extinct.89 Huge material demands are being made by the combination of population growth, rising spending power, and prevalence of high-input, low-efficiency, high-waste methods of production in rapidly growing countries and cities. Countries such as India and China, and mega-cities, will tend to place material and waste burdens on those weaker countries (and rural areas), if such activities are driven out of richer countries by legislation and/or public concern. This will become a major problem where weaker areas are unable to exercise negative feedback. Those who are excluded from some resources – such as poor people who cannot access clean energy – may place high pressure on other resources, leading to for example fuel wood crises. A key unknown is how far we will see a big increase in developing countries of private consumption, private transport/housing, and prestige projects – as opposed to investment in efficient public goods (public transport and investment in environmental management). Environmental information, availability of technology, and regulation regarding burdens will be key.

Technological change – this is often best addressed in terms of the likely date and magnitude of ‘key events’ that will have large impacts. For example, reaching critical quantities of new forms of e-waste that breach ecological thresholds, major expansion of cropping to meet bio fuel demand and/or consequent food price rises, nanotechnology making photovoltaic storage possible, wireless energy transfer making orbital solar possible, accessibility of high-resolution satellites to make the monitoring of people and ecosystems possible, safe radioactive waste disposal methods. The key issues are (a) whether efficiency gains can overcome the growth in population and spending power; and (b) the side-effects of technologies, and how can they how managed.

Geo-politics of environmental issues – climate change is increasingly becoming both a driver of cooperation and a source of conflict. BRICSxiv countries are likely to develop certain ‘environmental superpowers’ as holders of much of the world’s biodiversity and terrestrial carbon stores, as well as high GHG potentials. We need to consider the implications of the

xiv Rapidly industrialising countries. BRICS stands for Brazil, Russia, India, China and South Africa. Some of the other Asian Driver such as Vietnam and Malaysia may also be included.

USA taking various collaborative (technology) or non-collaborative (burden-sharing) positions, as well as the environmental impacts of new efforts to create energy security.

All of these issues suggest that the UK public and NGOs, which are at least as ‘noisy’ about the environment as they are about poverty reduction, will increasingly, link the issues of environmental degradation with those of poverty reduction. They will expect HMG’s international development policy and practice to be robust to environmental uncertainties and to deliver sustainable development.

THIS REPORT OFFERS THE FOLLOWING RECOMMENDATIONS TO SUPPORT EFFECTIVE POVERTY REDUCTION AND ENVIRONMENTAL MANAGEMENT

Recommendations

1. Recognise that ensuring environmental sustainability is a prerequisite for sustainable growth and development. HMG should identify the necessary policies, tools and systems to commit to action and articulate a vision for ‘green’ economic prosperity within the context of the UK Sustainable Development Strategy.90 DFID should make stronger, higher-profile efforts to promote, operationalise and strengthen its Environment Approach Paper91 (including reviewing and updating its Environment Guide and screening processes) and its Sustainable Development Action Plan, committing to and investing in achieving MDG7 (ensuring environmental sustainability) as the foundation for poverty eradication, sustainable development and achieving all other MDGs.

2. Promote pro-poor improvements in environmental governance – such as strengthening of property and resource rights to private and communally-held land. This will be needed to empower the poor and marginalised groups (including women, elderly, children and indigenous people) and enable them to invest in, and secure the benefits of, improved management of environmental assets. This will require investing in and supporting local institutions and processes.

3. Support off-track MDG7, including through fostering the integration of environmental assets and environmental policy into current and future MDG-based national poverty reduction strategies and other national and local development plans. HMG, through DFID needs to:(i) Deliver on its intention to ensure environmental needs are mainstreamed in development

planning.92 (ii) Give much more attention to supporting developing countries to identify, monitor and

measure their environmental assets, effectively analyse and use environmental information. Including using these to meet national, regional and international environmental commitments, for poverty monitoring, development and strategic planning, national accounting and budgeting, and the development of policy and legislation. This includes mainstreaming environmental concerns into governance systems, strategic plans and budgets, key sectors and into investment protocols.

(iii)Build on key country experience and research (for example in Tanzania and Ghana, and the 2005 PEP recommendations).93

(iv)Deliver on its intention to invest directly in environmental assets that are important for poverty reduction:94 greater funding is needed to support investment in the productivity, restoration and protection of biodiversity and ecosystem services that generate critical

resources for livelihood security and underpin development, and into systems that improve and guarantee poor people’s access and rights to natural resources.

4. Recognise the multi-dimensional nature of poverty and development, and develop, use and promote measures that reflect this. DFID and HMG should develop, use and promote a more nuanced basket of indicators that reflect and measure real progress in eliminating poverty rather than focusing on simplistic monetary GDP or dollar per day measures that address neither deprivations in human development (for example health, education and gender equality) nor non-reversible reductions in natural assets and environmental damage.

5. Support national governments, development agencies, civil society and key institutions responsible for agriculture, natural resource management (for example, water, forestry and fisheries) and rural development with resources to address the inequalities in rural areas by encouraging investment to promote social equity and environmentally sustainable agriculture. Agriculture is central to the livelihoods of the rural poor who, in spite of rapid urbanization, still account for the majority (around 70 per cent) of the world’s poor.95

6. Support national governments, all development agencies, civil society and key institutions in cities with resources and technical capacity to address challenges posed by rapidly urbanising environments. The rate of urbanisation in many developing countries is increasing. Between 2000 and 2030, the urban areas of the less developed regions will absorb 95 per cent of the world’s population growth.96

7. Explicit targeting of support for and recognition of the importance of including marginalised groups and communities (including women, elderly, children and indigenous people) in consultations, planning, projects, programmes and decision-making processes. Gender issues must be mainstreamed to ensure policies and practice are in line with internationally agreed instruments such as the Convention on the Elimination of Discrimination against Women (CEDAW), the subsequent Beijing Platform for Action, and Security Resolution 1325. More recognition and support is needed for reproductive health rights for women, and mainstreaming equity, reproductive health and population issues within the international agenda.

9. Promote the integration of disaster risk management into national development strategies (especially the Poverty Reduction Strategy Papers) and ongoing planning processes (for example national environmental action plans and the implementation of the UN MDGs). DFID should also increase support for reducing disaster risks and lead in implementing the Hyogo97 Framework for Action including developing interim targets and timeframes and generating greater political will for disaster risk reduction, championing preventative approaches on the international stage (especially EU).

2. RESPONDING TO THE CHALLENGES OF CLIMATE CHANGE

“Our lifestyles are killing the poor” Archbishop of Canterbury, speaking on the ‘today’ programme, Radio 4, 28/03/2006

“The truth is that if we don’t do something about climate change, aid from rich countries will look pitiful by comparison with the consequences and the costs for developing countries-and yet climate change is not primarily the fault of developing countries”

Speech by Hilary Benn, ‘Development beyond Aid’, Chatham House, London, UK, 23/02/2006

“Britain's credibility as a leader in the fight against climate change has suffered a massive blow with the Government being forced to announce it will not meet its flagship target for cutting the carbon dioxide emissions causing global warming”

The Independent Online Edition 29/03/200698

Background and Context

Climate change is happening and the consequences for poverty reduction, biodiversity and humanity are potentially devastating. The quotes above clearly illustrate that climate change, linked to unsustainable lifestyles in rich and industrialised countries, is a massive constraint to development and poverty reduction, and that the UK government is failing to deliver a coherent strategy for climate change policy and action.

The UK government recently conceded that its Climate Change Programme Review, on which it has spent more than a year, will not deliver its key global warming target to cut CO2 emissions to 20 per cent less than 1990 levels by 2010.99 Whilst DFID is increasingly recognising the need to tackle climate change and poverty, its efforts are severely undermined by the failure of the UK government to reduce greenhouse gas emissions and meet its manifesto commitment.

In a recent contribution to the Stern Review, DFID highlights the huge costs of inaction, including that 22-53% of total ODA in Bangladesh ($1bn) alone is at risk from climate change.100 It also forecasts that climate change threatens to reduce India’s farm output by as much as a quarter; that in Africa, the number of people at risk from coastal flooding is likely to rise from one million in 1990 to 70 million by 2080; and that biophysical effects associated with climate change will in turn impact on human development and the achievement of the MDGs. DFID stresses that UK responses require both mitigation and adaptation, and that whilst total emissions must decrease (mitigation), developing country share of emissions must be allowed to increase.

Archbishop Desmond Tutu has articulated wider recognition of this: “The world’s wealthiest countries have emitted more than their fair share of greenhouse gases... Rich countries must therefore help poor countries in two ways. They must reduce their greenhouse emissions... They also have an obligation to help poor countries adapt to the negative impacts of climate change which cannot be avoided’. 101

Whilst the UK government is committed to cutting emissions by 20% below 1990 levels, under the current Labour government, carbon dioxide emissions have actually increased by 1.9%.102 More action is needed domestically to reduce our carbon footprint and to minimise the impact it will and does have upon developing countries. There are clearly current contradictions within government in relation to climate change. Hilary Benn identified that - “one short haul flight to Europe emits over a fifth of our annual carbon “allowance”103 and yet not enough is being done to ensure the true cost of air-transport is reflected in ticket prices. It is also interesting to note that it was a petroleum based energy giant, Shell (an Anglo-Dutch corporation) that generated a UK record

with profits of $17.59bn in 2004, and had increased profits again this year up a third to $22.94bn104

This is more than twice DFID’s entire aid budget.

The recent collaborative report Up in Smoke, says that climate change threatens to reverse human progress, and make the international targets on halving global poverty by 2015 (the Millennium Development Goals), unattainable.105 It clearly demonstrates that developing countries, and specifically the world’s poorest people, will be affected first and hardest. Yet, perversely the poor are least responsible for the causes of climate change and have the least resources to adapt, or power to stop climate chaos.

The progressive statements on climate change, made by the Secretary of State for International Development in the recent white paper consultation process, are welcomed, however the focus has been on supporting adaptation strategies of the poor rather than tackling root causes of the problem and specifically reducing UK emissionsxv. DFID, speaking on behalf of developing countries and the poor who they are tasked to support, should have much louder voice to ensure UK emission reduction targets are met, and that UK government develops a coherent and systematic approach to reducing its own greenhouse gas emissions.

Whilst enabling ‘climate space’ for developing countries to develop, there is real need for DFID to re-think its dominant macro-economic growth agenda xvi, a global model that has been a key driver of climate change (see economic growth section). Research shows that in avoiding dangerous climate change, the correct choice of development pathway, which affects vulnerability and adaptive capacity, is vital.106 As DFID has recognised, climate change needs to be a mainstream element of investment decisions especially for long-term projects (e.g. infrastructure).107 All public sector flows of money need to reflect climate change policy - unfortunately this is not the case at present, and DFID continues to support public finance lending to carbon-intensive projects inconsistent with international policy commitments.

The projects DFID oversees in relation to Multilateral Development Banks (MDBs) are particularly controversial when they are designed to provide oil and gas for export to western markets. Such projects seem to be representative of northern governments pursuing a carbon intensive energy security agenda at the expense of the poor and the environment in the south. The failure of northern governments to deliver sustainable domestic energy solutions exacerbates this situation. This is also an opportunity cost as there is a real need to divert resources to stimulating renewable technologies in countries such as China and India, who are predicted to experience a huge growth in energy demand in the next decades.

Climate change provides clear recognition that environmental failures are development failures – and the poorest suffer the most. In fact, climate change is a stark and portent example of the multiple inter-linkages between current development models and the impacts of environmental degradation, that now jeopardise national and international efforts to reduce poverty. Increasingly research is demonstrating how efforts to tackle climate change and eliminate poverty are further compounded by other environmental problems. The Millennium Ecosystem Assessment (MA) highlights that ecosystem degradation should be viewed in the same light as climate change.108 xv Mitigation of climate change refers to activities that reduce the greenhouse gases (GHGs). It primarily involves the energy and transportation sectors in industrialized countries but, to an increasing extent, the energy, forestry and agricultural sectors in rapidly industrialising countries also play a role. Adaptation to climate change refers to adjustments in practices, processes, or structures in response to projected or actual changes in climate and extreme climate events.xvi Economic growth is promulgated by DFID as the main means to eradicate poverty and forms a dominant component part of the white paper speeches. However the Growth based paradigm for poverty elimination is coming under increasing scrutiny and criticism (for further discussion see the section on the economic growth within this report)

The MA highlights that unsustainable and cumulative human actions are rapidly degrading ecosystems throughout the world, yet maintaining healthy ecosystem services are critical to human well-being. For example, wetlands provide services to humanity valued as high as $15 trillion annually, including the water supply on which an estimated 1.5 -3 billion people depend, but current human practices are degrading and destroying wetlands at a faster rate than any other type of ecosystem.109 Climate change will exacerbate existing problems and will bring new challenges, particularly to natural resource based activities such as agriculture, forestry and fisheries – impacting the livelihoods and security of the poorest most severely.

Climate change, more than any other global challenge, demonstrates the increasingly interconnected nature of our global society, for instance:

Demonstrating effects of excessive northern consumption on increasing vulnerability in the south

Demonstrating that global economic growth is a blunt instrument for poverty reduction Highlighting the need for equitable situations for fossil fuel utilisation and consumption Showing how natural systems and human processes are intimately connected

Nevertheless, whilst the threat of climate change is increasingly recognised, the urgent requirement for globally coherent, mitigation and adaptation strategies remains woefully unfulfilled. There is a pressing danger that future developmental gains for the eradication of poverty will be outweighed by the political and institutional failure to address climate change. DFID itself recognizes that ‘Climate Change impact is a structural factor that will exacerbate inequality and thwart pro-poor growth’.110 Greater political leadership - nationally, regionally and internationally – is urgently needed by the UK Government to deliver on its climate change commitments. Bold action is required to reduce emissions, support adaptation and implement sustainable development.

The Impacts of Climate Change

If everyone on the planet were to consume natural resources and generate carbon dioxide at the same rate as we do in the UK, we would need three planets to support the global population.111

Scientific assessment suggests that we have a window of opportunity of only ten years in which to act: global greenhouse gas emissions need to start to decrease from around 2015 if we are to have a chance of keeping the rise in average global temperature at the two degrees Celsius above pre-industrial levels, that is widely accepted to be the ‘safe’ limit of climate change. Beyond this point, there are risks of positive climatic feedback accelerating further climate change increases and sending the system into dangerous and unknown territory.112 Climate models predict that the world’s global average surface temperature will rise by 1.4 – 5.8 degrees Celsius over the 21 st

century, largely in addition to the 0.6C rise over the 20th century.113 Even minimal change would be much greater than any climate change experienced over at least the last 10,000 years and at a rate at least 10 times faster than that at the ending of the last Ice Age. In general, the faster the climate changes, the greater will be the risk and magnitude of damage.

Evidence is gathering that specific impacts of climate change are already taking place. The WWF ‘climate witness’ project114 records changes observed by ordinary people around the world. For example:

Coral bleaching, coastal erosion and reduction in fish catch in Fiji (Penina Moce, Kabara Island)

Loss of agricultural land, livestock loss and saltwater incursion (Tulsi Khara, Sundarbans, India)

Glacier retreat and flooding (Ngawang Tenzing Janpo, Khumba, Nepal)

In 2000, climate change was estimated to be responsible for approximately 2.4 percent of worldwide diarrhoea, and six percent of malaria in some middle-income countries and 150,000 lives a year may already be being lost to climate change.115 Regional effects are already evident, including an increase in extreme weather events, severe droughts, heat-waves and storms, changes in agricultural productivity and water supplies, sea level rise, and damage to vulnerable and often economically important ecosystems such as coral reefs. Even in Europe, 35,000 extra deaths were attributed to the hot summer of 2003, in conditions that are expected to be commonplace later this century.

The Harsh Impacts of Climate Change upon the Poor

The people least able to adapt and least responsible for causing climate change - such as indigenous people, poor inhabitants of small island states and Sub-Saharan Africa - are the ones to feel the most immediate and direct impacts of climate change. It is estimated that climate change will place an additional 80-125 million people at risk of hunger by the 2080s, 70-80% of whom will be in Africa.116 DFID has already acknowledged many risks and impacts from climate change and that it is a significant barrier to achievement of the Millennium Development Goals (MDGs).

The poorest are most vulnerable as they often live in marginal areas more prone to flooding and droughts and have little capacity to adapt to such shocks, and are predominately dependent on climate-sensitive sectors such as fisheries and agriculture. Poor countries have limited national capacities - practical, financial, institutional and human - to anticipate and respond to the direct and indirect impacts of climate change. Greater population densities in many parts of the world have also made some sensitive areas more susceptible to hazards such as storms and floods.

Under the UNFCCC (in Article 4.8), two groups of countries are recognised as being especially vulnerable to the negative impacts of climate change, small island developing states (SIDS) and the Least Developed Countries (LDCs)xvii.117 The UK needs to specifically support LDCs and SIDS (including recognising commitments to the UK Overseas Territories) to address of climate change that is happening now. With this in mind, it is important to note that the main international fund created so far under the UNFCCC, namely the LDC Fund, to help poor countries identify and adopt measures to adapt to climate change has to date not received any contribution (or pledge) from the UK government.

The effects of Climate Change will make the MDGs significantly more difficult to achieve and greater commitment will be required to offset negative impacts. Developing countries setting their own development goals need considerable support to address and understand the impacts that climate change will have, including on their plans, goals and targets. DFID’s contribution of £10 million to UNFCCC Special Climate Change Fund to integrate climate risks in development planning and policies is a welcome start.118 Development agencies which aim to reduce poverty and secure livelihoods need to take on the challenges raised by climate change and focus on mitigation and adaptation strategies informed by high quality, evidence based research.

The Challenges of Climate Changexvii LDCs consist of 49 of the poorest countries in the world, most of which are in sub-Saharan Africa and have a combined population of close to a billion people. Many (if not most) of the LDCs are also priority countries for bilateral aid from the UK (through DFID) as well as from the multilateral development funding institutions (for example the World Bank, UNDP, Regional Development Banks), through which the UK also passes funds for development.

Global agriculture - faces many challenges - reduction in agro-biodiversity, degrading soils and declining agro ecosystems and water scarcity (and completing demands) will place enormous strains on achieving food security for growing populations. Conditions will be worsened by climate change requiring changes in agricultural systems, markets and input supplies as well as demand for land. These factors combined with a warming of more than 2.5 degrees could reduce global food supplies and contribute to higher food prices.

Coastal zones - and small islands are extremely vulnerable. Coasts have often been modified and intensively developed and are very vulnerable to higher sea levels. Developing countries with weaker economies and institutions face the gravest risks, but the low-lying coastal zones of developed countries will also be seriously affected. Sea level rise could damage key economic sectors. A great deal of food is produced in coastal areas, making fisheries, aquaculture, and agriculture particularly vulnerable. Other sectors most at risk are tourism, human settlements, and insurers, which have already suffered record losses recently due to extreme climate events. The expected rise in sea-level would inundate key areas of the world’s coastal lowlands, damaging coastal cropland, polluting fresh water sources and displacing millions of people from coastal and small island communities.

Tropical deforestation - is responsible for 20 to 25 per cent of carbon dioxide emissions and has negative impacts on biodiversity, local communities and indigenous peoples, sustainable long-term economic growth, air quality and other environmental and socio-economic goods and services. Reducing tropical deforestation can contribute to reducing overall global greenhouse gas emissions and to staying below 2°C global warming, the target set by the European Union. However, including tropical deforestation in the climate regime requires careful attention to the critical issue of ensuring that biodiversity, development and climate protection goals can be met.

Biological diversity - is the source of enormous environmental, economic and cultural value. This wealth will be threatened as the nature and geographic distribution of ecosystems change and as individual species adapt to climate change or are lost. Species that cannot adapt quickly enough may become extinct – an irreversible loss. Biodiversity in ‘natural’ ecosystems and the simplified nature of anthropogenic-influenced ecosystems, including agriculture and forestry are very vulnerable to the impacts of climate change, including invasion from pests and diseases. The synergistic effects of habitat degradation and species loss in response to other human pressures will be further exacerbated by climate change, with knock on effects of livelihoods and resilience to global change.

Water supplies - changing precipitation patterns already affect water supplies and agricultural productivity. Increasingly heavy rain and snow are falling on mid and high latitudes of the Northern Hemisphere, whilst rains have decreased in the tropics and subtropics of both hemispheres. Surface water storage could decline as extreme rainfalls and landslides encourage silting and thus reduce reservoir capacity. These impacts will increase existing pressure on freshwater supplies and substantially increase the risks of conflict in many places - climate change is expected to shrink many African rivers dramatically, triggering massive refugee movements and even war119. The glaciers, which regulate the water supply to the Ganges, Indus, Brahmaputra, Mekong, Thanlwin, Yangtze and Yellow rivers are believed to be retreating at a rate of about 10-15m (33-49ft) each year.120

Oil, Gas and Renewable Energy - Countries relying on fossil fuels and their derivatives face major medium and long term re-adjustments of priorities for energy and transport. If carbon emissions are reduced in line with global agreements and dwindling oil and gas supplies become more expensive, then economies dependent on relatively cheap energy supplies will become most vulnerable. Opportunities exist to mitigate impacts, for example supporting renewable energy

strategies and it is essential that financial flows are redirected to shift the energy portfolio towards renewables.

Human health - climate change is expected to have wide ranging consequences for public health. Basic human health depends on sufficient food, safe drinking water, secure shelter, good social conditions, and a suitable environmental and social setting for controlling infectious diseases. Increased rainfall and temperatures could lead to significant increases in vector-borne and water-borne disease. In South Africa it is estimated that the area suitable for malaria will double as a result of climate change and that 5.2 million additional people will be at risk of the disease as a result.121

Natural Disasters - climate change is already increasing the frequency and intensity of natural disasters placing an ever greater strain on developing countries and livelihood security. There is likely to be an increase in the intensity of rainstorms river floods, cyclones and other extreme weather events.122 Disaster risk reduction, included as a key component of adaptation to climate change, can be highly cost effective and needs to be mainstreamed into all development policies and programmes. Governments, donors and civil society can work together to fulfil commitments made at the World Summit on Sustainable Development (2002) and the World Conference on Disaster Reduction (2005) specifically, the Priority Areas for Action outlined in the Hyogo Framework for Action 2015-2015. (See the People and Planet section for more detail on environmental disasters and poverty elimination).

Human settlements - that depend heavily on fishing, subsistence agriculture and other natural resources are particularly vulnerable to climate change. Low-lying areas and deltas, large coastal cities, squatter camps located in flood plains and on steep hillsides, settlements in forested areas where seasonal wildfires may increase, and settlements stressed by population growth, poverty and environmental degradation are also at risk. Bangladesh expects to have around 20 million environmental refugees in the coming years, and globally it has been estimated that there could be some 150 million displaced people due to climate change.123

Tackling the Challenges of Climate Change and Creating UK Government Coherence

Tackling the challenges of climate change rests on good science, political will and providing a dynamic blend of adaptive and mitigation responses. The prudent response to climate change is to adopt a portfolio of actions aimed at mitigation, adaptation and research; scientific literature suggests that the optimal policy mix will necessarily differ among countries and over time.124

If DFID and the UK Government are to rise to the challenge of tackling climate change and eliminating poverty, then they must start to work coherently at home. This entails raising the status of climate change issues across Whitehall and ensuring coherence on climate change policies across all government departments. DFID has acknowledged that many of the communities it is mandated to support will be first and hardest hit by climate change impacts. DFID must now take a strong and public position to support mitigation activity in the UK, as well as adaptation for countries least responsible or able to cope. Environment and Development NGOs in the UK are gaining increasing cross party parliamentary support to address climate change, for example ‘Stop Climate Chaos’125 and the Up in Smoke coalition, and can add support.

THIS REPORT OFFERS THE FOLLOWING RECOMMENDATIONS TO HELP EFFECTIVELY ADDRESS CLIMATE CHANGERecommendations

1. Increase commitment to creating a low carbon future and ensure all development assistance minimises climate and disaster-related risks. Use climate safeguard policies to continually endorse the strong scientific evidence for climate change and champion the issue at all available opportunities and levels. Promote developing countries participation in the formal UN process to negotiate a post-2012 climate framework based on a strengthened and expanded Kyoto architecture. Stress the urgent need to help developing countries adapt to climate change and champion (i) the LDC Fund created by the UNFCCC (at COP7 in Marrakech) (ii) the Kyoto framework and (iii) the five year programme of work on adaptation agreed at COP 11 and COP/MOP1, including the provision of substantial funding and technical support to assist LDCs to adapt (as per Commission for Africa Reportxviii).126

2. Implement significant cuts in UK emissions and strongly encourage all developed countries to assess their consumption patterns and reduce carbon emissions, supporting a robust policy framework for G8 countries’ long-term action on climate change. HMG should establish a UK Carbon Budget to deliver a reduction in UK carbon emissions of three percent per year. Within such a framework, the UK Government must encourage behavioural change at all levels of society through tax incentives, effective education and awareness-raising. DFID and DEFRA should engage with the Treasury to shape ethical and environmentally friendly procurement strategies.

3. DFID champions HMG cross-departmental coherence on climate change. The UK government does not currently have a coherent approach to climate change, and the objectives of some departments undermine DFID’s poverty elimination objectives. All government departments must demonstrate commitments to sustainable development by collaborating and implementing a consistent, coherent and integrated approach for climate change.

4. DFID in partnership with HMG must carry out an assessment of costs, risks and benefits of all the main low-carbon alternative energy technologies available. Based on independent analysis from Ilex Energy Consulting, it is believed that sufficient technological mitigation options are available to reach atmospheric carbon stabilisation levels compatible with the 2°C threshold, without the need for new nuclear power.127

5. HMG should highlight the need for the UK economy to diversify away from carbon-intensive revenue sources, and price carbon in a manner that can deliver investment in renewable alternatives. Reliance on North Sea Oil revenues and UK corporate oil profits is not sustainable as production declines, nor is it compatible with scenarios to stabilise global temperatures. Northern lifestyles, homes and communities have significant impacts on the environment, both during their construction and occupation. Assess ways in which government can strengthen its action on reducing consumption, and suggest ways in which the UK can lead by example in reducing its ‘carbon footprint’.

6. DFID should provide increased technical guidance and institutional capacity building together with legislation and policy development that supports developing country governments from taking decisions which are environmentally damaging and economically inefficient in the long-term, and that could also cost more due to environmental degradation and jeopardise meeting MDGs.

7. HMG should support an ‘Ecological Budget UK’, producing a rigorous dataset as “the real national accounts”. This can be used as a basis for future scenario planning and policy analysis at national, devolved, regional and local levels. Support for extension of this budgeting process

xviii The Commission for Africa Report, HMG (2005) “from 2008 donors should make climate variability and climate change risk factors an integral part of their project planning and assessment and meet commitments on funding for adapting to the risks and impacts of climate change”.

to developing countries, enabling the impacts and causes of climate change to be considered in an integrated manner.

8. HMG should analyse the pace of technological change in countries with firm renewable or low-carbon technology obligations and set out a best-practice guide for governments to foster innovation in their economies. A quantification of the impacts of targets on the pace of technological change would be invaluable. Legally binding, mandatory emissions-reduction frameworks like the Kyoto protocol enable certainty for regional schemes like the EU Emissions Trading Scheme (ETS) to be established.

9. HMG and DFID should develop proposals to break the cycle of perpetuating fossil fuel dependence through its energy investments both in the UK and through multilateral funding mechanisms such as the World Bank. HMG should put the concept of a ‘One-Planet-Economy’ at the heart of Treasury policy, drawing on expertise in analysing the energy and material flows in the economy, alongside regular financial analysis. DFID should set work with MDBs and the UK Export Credits Guarantee Department (ECGD) to set targets for investment in renewable energy, energy efficiency and emissions reduction technology.

10. DFID must demonstrate its commitment to climate change issues by increasing its own capacity appropriately and by setting clear plans and targets to become a ‘low carbon’ institution in the foreseeable future. This should mean a separate, well funded, team to provide the expertise and resources required to ensure DFID's overseas work is ‘climate proofed’ and that DFID’s own positioning, within UK on mitigation is properly researched, developed and communicated

11. Disaster risk reduction (DRR), as a key component of adaptation to climate change, needs to be mainstreamed into all development policies and programmes. DFID should support and strengthen the capacity of local and national governments in developing countries to integrate climate change adaptation and disaster risk reduction measures in relief, reconstruction, development programming and poverty reduction plans. Governments, donors and civil society need to work together to fulfil the commitments made at the World Summit on Sustainable Development (2002) and the World Conference on Disaster Reduction (2005) to this end – specifically, the Priority Areas for Action outlined in the Hyogo Framework for Action 2015-2015. DFID has recently produced a DRR policy, but now needs a time-bound strategy for mainstreaming DRR with definable, realistic and measurable goals. The UK Government must urge the European Commission to make much faster progress with mainstreaming disaster risk reduction into its development planning and programming.

12. DFID should recognise the important links between poverty eradication and maintaining ecosystem function and resilience, including through reducing the rate of biodiversity loss. DFID has a responsibility as part of HMG to take forward commitments under UK obligations to international treaties such as UNFCCC, UN Convention to Combat Desertification (CCD), and Convention on Biological Diversity (CBD), and to ensure that their work is contributing to these commitments – as well as work towards meeting commitments supporting poverty eradication where appropriate. In particular, support proposals to reduce tropical deforestation, including as a contribution to overall global greenhouse gas emission reduction, whilst coherently ensuring that biodiversity, development and climate protection goals are met.

13. DFID and HMG should work effectively with the OECD (DAC and EPOC), to deliver the “Declaration on integrating climate change adaptation into development cooperation” (4th April 2006)128, and support the delivery of the “Framework for Common Action Around

Shared Goals” adopted by OECD Development and Environment Ministers on 4 April 2006 to work together for sustainable development and to reduce global poverty and ensure environmental sustainability.129

3. THE CURRENT MODEL OF DEVELOPMENT: IS GROWTH THE SOLUTION OR PART OF THE PROBLEM?

“I think there is little real debate about growth... On current trends, poor countries even with growth rates 2% per person per year, will take two generations to double the incomes of poor people… Progress is possible but only if that growth can be sustained by the world’s environmental carrying capacity”

Speech by Hilary Benn, ‘Growth and Poverty Reduction’, New Economics Foundation, London, UK 19/1/2006

"Growth alone is not enough… Economic growth does not necessarily translate into poverty reduction"

World Resources (2005)130

Background and Context

There is an urgent need for a frank and public debate about economic growth as the dominant mantra for development. Research is increasingly demonstrating that economic growth per se is not enough. At best economic growth is a very blunt instrument to achieve poverty reduction; at worst it is failing to eradicate even the most extreme poverty whilst rapidly degrading the environment.131 Economic growth alone cannot support poverty reduction; and if global growth is left unchecked, it will continue to threaten the planet and livelihoods of millions of poor people.

The outcomes of the Millennium Ecosystem Assessment132 should be a wake-up call - virtually all indicators show natural ecosystems (on which we all, but particularly the poor, depend) degrading, and extinction rates are the highest since the dinosaurs, 65 million years agoxix.133 Even though the White Paper speeches recognise some of the threats from climate change and Hilary Benn has stated that “Progress is possible but only if that growth can be sustained by the world’s environmental carrying capacity”, DFID appears to be focused on top down economic growth and environmental utilisation. This signals a worrying shift away from sustainable development, and ignores the recognition that achieving MDG7 is vital to all other MDGs. This needs to be urgently addressed as central to ensuring aid effectiveness.

The rate of reduction in extreme poverty has slowed dramatically since 1990, even as the current model of development has been consolidated since 1996 it has proceeded at less than a quarter of the rate achieved even in the “lost decade for development”, the 1980s. If recent (post-1990) trends continue, not only will we miss MDG1 by a wide margin, but 550 million people will live in extreme poverty even by 2050, and global carbon emissions will be four times the level required to avoid catastrophic and irreversible climate change.134

Economic growth is often cited as the main way to achieve poverty reduction. It is however, the nature of growth and the distribution of its benefits that determines its contribution to poverty eradication and its implications for long term environmental security. The evidence below shows that the nature of growth, experienced since the 1990’s has not only been ineffective as a means of eradicating poverty, it has also had serious and counterproductive environmental side effects – including climate change. A better understanding of growth, development, poverty eradication and the environment is urgently needed, with a much greater emphasis on distributional equity and long-term environmental sustainability.

xix Species are going extinct at rates 1,000 times the background rates typical of Earth ’s past (Global Biodiversity Outlook 2, 2006).

Global Growth: Part of the Solution or Part of the Problem?

The rate of poverty reduction based on the “$1-a-day” poverty line has slowed down dramatically over the last 25 years, from 1.4% pa in 1981-90 to 0.9% pa in 1990-96 and 0.3% pa in 1996-2001, (See Figure 1).135 This compares with an annual reduction required to meet MDG1 of 0.6% pa.

Figure 1: Rate of Reduction in "$1-a-day" Poverty, 1981-2001

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That poverty reduction in 1996-2001 should be only one-quarter of what it was in the 1980s – the “lost decade for development” – is a major danger signal, indicating that the current economic model and efforts to reduce poverty are failing significantly. More than two-thirds (nearly 450 million) more people were below the “$1-a-day” line in 2001, than if the 1980s rate of poverty reduction had been sustained (See Figure 2 below).136

Figure 2: Proportion of Developing Countries' Population below the "$1-a-day" Poverty Line, 1981-2001

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This dramatic deterioration in the progress in poverty reduction can be seen as a product of two factors. First, the growth rate of the global economy fell between the 1980s and 1990s, having already fallen dramatically in the 1970s, and further in the 1980s, (see Figure 3).137 Second, and more importantly, the share of the “$1-a-day” poor in the proceeds of growth also fell dramatically between the 1980s and the 1990s, both absolutely (by three-quarters) and relative to their share in income (by three-fifths).138

Figure 3: Growth of Global GDP per capita, 1960-2001

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Figure 4: Share of Poor Households in the Benefits of Global Per Capita Growth, 1981-2001

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In other words, global growth has both slowed and become strongly anti-poor, resulting in a dramatic slowdown in poverty reduction to barely half the rate required to achieve MDG1. If global growth and the share in proceeds of growth (relative to their share in income were to continue indefinitely at their post-1990 rates), MDG1 would be missed by a substantial margin: with 20%, 177 million, more people remaining below the $1 a-day line than if the target were achieved and, by 2050, more than 550 million peoplexx (including nearly a quarter of Sub-Saharan Africans) would be below the “$1-a-day” line.

Despite slowing, the nature of economic activity underlying global growth is having dire consequences on the environment and is confounding chances of ever stabilising greenhouse gas emissions at levels that could avoid dangerous climate change. If the post-1990 rate of change of the carbon-intensity of production were also to continue, global carbon emissions would not fall by 60% by 2050, as required, but would actually increase by 60% over the same period, to four times their sustainable level.139 Achieving the 60% reduction in carbon emissions necessary to avert irreversible climate change would require us to triple the rate of reduction in carbon use per $1 of GDP, from 1.5% pa to 4.5% pa.140 The increase of three percentage points is three times the

xx Based on extrapolation of the World Bank’s forecast population growth rate for developing countries (1.2% pa).

acceleration achieved between the period before the first oil crisis (0.6% pa in 1960-72) to the maximum rate of reduction achieved since (1.6% pa in 1980-90).

In other words, our present (post-1990) trajectory, if maintained, will result in a simultaneous failure to meet MDG1, to eradicate poverty even by 2050, and to avoid catastrophic and irreversible climate change.

The tension between poverty eradication and dealing with climate change would become considerably more acute if one were to consider a poverty line consistent with a tenable interpretation of human rights standards, such as the right to child survival established under the UN Convention on the Rights of the Child. Households living at the “$1-a-day” line are estimated to have a typical child mortality rate in the order of one in six to one in twelve, and in at least one case (Niger) more than one in three, while a third to half of surviving children at this income level are stunted.141 The ratio for developed countries is one in 140. Edward (2006), for example, proposes an “ethical poverty line”, based on life expectancy, of between $2.70 and $3.90 per day at purchasing power parity.142

What Needs To Be Done – Addressing the Global Economic Failure

The problem outlined in the first part of this chapter is a fundamental one, and simply throwing the global economy into reverse gear is not a solution. Through their dominant role in international economic organisations – not merely the IMF and World Bank, where they have a majority of the votes, but also in the WTO143 – the governments of the developed countries have for the last quarter century increasingly used their overwhelming political and economic dominance to create an ever greater dependency of developing countries on economic growth in the North. To end this, growth without relieving this dependency would therefore be little short of disastrous in terms of its human impact.

In terms of global economic relations, a first step is to stop placing pressure on developing countries to open their economies (“no forced liberalisation” was a key demand of the Make Poverty History campaign), whether through PRSPs, WTO Agreements or bilateral trade and investment agreements. This would require, inter alia, changes in the advice given by IMF and World Bank staff in relation to PRSPs; a major revision of the PRSP “Sourcebook”;144 suspension of developing countries’ obligations under the WTO Agreements (restoring some flexibility over their trade and other policies), further negotiations on trade in services under the General Agreement on Trade in Services (GATS), and negotiations on bilateral trade and investment agreements.145 It would also mean replacing the current Doha Round WTO negotiations with a process truly directed to the re-orientation of trade rules and policies to be in line with the moral imperative of poverty eradication and the urgent practical necessity of tackling climate change.

There is a need for a fundamental review of the current outward-oriented model of development, which depends disproportionately on foreign capital for investment and the global market for demand. After 25 years, it is apparent that this has failed the great majority of developing countries, particularly in terms of poverty reduction – still more clearly than the import-substituting industrialisation of the 1960s and 1970s, whose failure was the rationale for the present model. International trade can play an important role in poverty reduction and in generating scare foreign exchange resources to acquire much needed imports. Developing countries must however retain flexibility over their trade policies to enable them to choose their own development pathways and ensure that the benefits of trade are consistent with broader strategic priorities of poverty reduction, food security and maintaining environmental wealth.

The dominance of the current global economic model driven by neoliberal ideology and commercial interests, and its continuation long after it has clearly failed to serve the interests of the majority of the world’s population, is partly a consequence of an abject failure in the system of global economic governance. The decision-making structures of the IMF and the World Bank give the majority of votes (and the de facto right to appoint the heads of both institutions) to developed country governments on matters whose impact is felt overwhelmingly by the five-sixths of the world’s population who live in developing countries. These structures date back to the foundation of these institutions when their role was directed primarily to developed countries.

Major changes are required to deal with the global challenges of the 21st century such as poverty eradication and climate change. Equally radical changes are required if global institutions are to meet contemporary standards of democracy, accountability and transparency and if they are to be transformed into genuinely global institutions capable of dealing with global issues in the collective interest of the planet and world population as a whole. The current UN Reform process needs to address these issues.

Developing countries do not have to rely solely, or even predominantly, on the global economy to achieve poverty reductions. Income generating opportunities for the poor could be greatly enhanced by expanding supply and demand in parallel, and supporting local markets at the local, regional and national levels. This could be achieved by encouraging and facilitating the production of the goods whose demand will be increased by poverty reduction, by fostering forward and backward linkages in production, and by encouraging local procurement for public sector contracts from low-income areas.

Further benefits for local economic development could be obtained by harnessing and retaining domestic resources for investment, rather than focusing on attracting foreign direct investment (FDI). FDI is typically less labour-intensive than small-scale local investment, and has weaker forward and backward linkages and much higher balance of payments costs in the long term.146 In the current model, over-reliance on FDI, and competition for it, have been compounded by policies promoted by the IMF and World Bank, and, in terms of deregulation, by WTO Agreements (Trade Related Investment Measures (TRIMs) and GATS). The proposed inclusion of an Investment Agreement in the next round of WTO negotiations could further aggravate the problem.

Retention of local resources for investment could also be improved by measures to deal with capital flight, tax avoidance and tax competition on savings. Such measures could usefully include appropriate use of capital controls, coordination mechanisms for taxation on capital, and the closure of tax havens. This is a reversal of the logic of the current system, which has lowered barriers to capital flight, promoted tax competition and increased the role of tax havens. In the case of extractive industries, international coordination (coupled with increased transparency) could help to increase royalties for exporting countries.

Over-reliance on FDI has also promoted competition in the form of lower tax rates, tax preferences, subsidies and deregulation (diminishing the benefits of investment to the local economy). Coordinated international measures to control such competition, together with the measures described above, could substantially strengthen the public finances of developing countries. Tax losses to developing countries through assets held off-shore and the shifting of corporate profits between jurisdictions alone have been estimated to be in the order of $100bn pa;147 and relieving constraints on the taxation of capital could substantially increase the progressivity of taxation.

To the extent that the measures described above were successful in increasing local incomes, these could also ultimately contribute to a stronger tax base. Such a strengthening of public finances

would provide additional resources for critical interventions for poverty reduction, such as infrastructure development and maintenance, the development of administrative capacity, social safety nets, and the provision of universal public health services and education, free at the point of delivery (in contrast to the current model of encouraging “cost recovery” and parallel commercial markets). To the extent that the measures described above were effective in reducing poverty, the costs of universal health services could also be reduced substantially over the long term through lower disease incidence associated with improvements in nutritional and environmental health risks.

Strengthening the public finances would also help to reduce the reliance of Southern governments on what has proved to be an inadequate, vulnerable and insecure supply of official capital. The shortfall from the 0.7% target for aid is currently some $145bn pa, and the cumulative shortfall since the commitment was made in 1970, plus cumulative interest at a market rate, is $4,500bn, approximately double the total national income of all low-income countries. An estimated 61% of the aid provided in 2003 was “phantom aid”, which “never materialises for poor countries”.148

Growing dependency on aid, and its use both to leverage policy changes through conditionality and to undermine developing country governments’ positions in international forum such as the WTO, has also been a key instrument in promoting and enforcing the current model of development. DFID has begun to address this through its “no economic conditionality” policy and with the Secretary of State’s ‘Development beyond Aid’ speech.

The measures described above are unlikely to generate sufficient resources to achieve sustainable human development and poverty eradication within a reasonable timeframe in most low-income countries. The spectacular failure of the current discretionary system of aid indicates a need to shift towards greater pooling and automaticity in North-South transfers, by moving towards a system of redistributive and environmentally-focused global taxation. Such a system might include, for example, taxes on foreign exchange transactions, airline tickets, aviation fuel and greenhouse gas emissions.

More broadly, there is a need to develop a collaborative model of the global economy, rather than the current competitive model, in which the success of some economies comes at the expense of, and arguably depends on, the failure of others. The logic of competition between companies does not extend to competition between countries: the former works largely by driving weak companies out of the market, allowing them to be taken over by stronger competitors, or their assets and employees to be redeployed when they go out of business. Countries cannot simply go out of business like companies, few of their people can redeploy themselves to more successful economies in the North, and country takeovers have much wider ramifications than corporate takeovers.

As well as its direct role as an aid provider, DFID plays an important role in influencing the global economic system through its role in determining the HMG’s position in the World Bank (and indirectly the IMF and WTO). Particularly as an informal influence through HMG’s bilateral relations, on other developed country governments; as an opinion former; and as a funder of research, civil society organisations and technical assistance to Southern governments. In recent years, it has used this role to promote the current growth-focused and outward-oriented paradigm of development, reflecting the position taken in 2000 White Paper.149

Growth Alone Is Not EnoughIn the light of the above discussion, we believe that DFID should use its influence differently, to proactively re-orientate development interventions such as those outlined above, and the creation of an international economic system within which these strategies can be pursued successfully. DFID needs a new vision for economic growth and poverty eradiction for Environment and

Development, that places environmental well-being at the heart of all development, that recognises the interconnectedness of the global world, and environmental sustainability as a critical and necessary foundation for future economic growth and poverty eradication.

There is real need to focus on growth that matters to the poor - this must reflect growth in the full range of assets available to the poor and enhance their wellbeing. An ‘asset-based’ approach emphasises natural, social, human and political ‘capital’ and responds to the multi-dimensional nature of poverty. The problems with a focus on gross domestic product (GDP) as a measure of welfare are well known,150 and any overarching development strategy that does not have environmental sustainability or distributional considerations at its heart cannot meet the necessary or sufficient conditions for sustainable poverty eradication. Economic policies at the country level, and international support should therefore focus directly on the ultimate objectives of increasing the real wealth of poor households, improving their living standards, and ensuring environmental sustainability, rather than assuming they will be achieved as a by-product of faster GDP economic growth.

The severity of the problems, the urgency of their solution, and the evident inadequacy of the existing structure of global economic governance to deal with them, mean that this change needs to occur as quickly as possible. This will require a more assertive stance in relation to other major players, in the UK and internationally. The White Paper itself provides an invaluable opportunity to influence the debate by signalling a clear change of direction and for DFID to reaffirm its position as a leading development agency for the 21st century.

ECONOMIC GROWTH IS NOT ENOUGH - THE FOLLOWING RECOMMENDATIONS ARE MADE IN SUPPORT OF EFFECTIVE POVERTY ELIMINATION AND SUSTAINABLE DEVELOPMENT

Recommendations

1. HMG and DFID need to promote a clear vision for sustainable development and poverty eradication, which places environmental sustainability, equity and accountability at the heart of all development. This must recognise the interconnectedness of the global world and the perilous state of many natural systems on which we depend. Economic growth should be a means to achieve wellbeing and poverty reduction, and not an end in itself.

2. HMG and DFID should focus on the quality of growth. They need to promote a far more sophisticated understanding of what growth means. Where it is more difficult to reconcile economic, social and environmental priorities, decisions should be made through fully informed open and transparent decision-making processes through multi-stakeholder and cross-sector debate and sound analysis.

3. HMG and DFID need to ensure government policy is coherent, does not further exacerbate poverty and is in keeping with the UK’s Sustainable Development Strategy – all policy should be “climate proofed” and assessed against robust environmental and social standards. There is an urgent need to ensure the consistency of policies promulgated by other UK government departments (e.g. on immigration and domestic energy policies) with the needs of developing countries and the global environment.

4. DFID should shift support from a primary focus on exports alone to a diversified approach that also promotes the production of basic goods for local and regional

consumption. They should investigate possible changes for existing aid programmes and procedures, in-line with country-level, country-led approaches to increase local and regional procurement; use local economy multipliers in project design and appraisal; and to design income generation programmes to support these.

5. DFID should actively encourage the creation of social capital, and the participation of poor people in decision-making processes. This should go beyond workshops and one off meetings to on-the-job learning through support for local-level programmes and projects that build local capacity, invest in the local community, offer wide spread opportunities for lesson learning, feedback to influence donor and recipient policy, and provide a long lasting and beneficial legacy. Partnership approaches between different stakeholders can be particularly useful.

6. Develop and implement clear guarantees on meeting environmental targets and commitments, including the provision of necessary financial and technical support. Many environmental challenges are linked to unchecked economic growth and the unsustainable use of natural resources. Commitments to meet and support international, regional and global environmental targets need to be coherently supported by all government departments to ensure effective delivery and to support sustainable production and consumption.

7. HMG and DFID should use their power and influence coherently within the international system and through UN Reform to push strongly and proactively for:(i) Fundamental democratic reform of the system of global economic governance to

ensure; changes in the policies, programmes and operations of the international financial institutions enabling collective and effective decision-making in the long-term interest and support well informed participatory democracy, accountability and transparency to truly deliver sustainable development

(ii) Reforms to environmental institutions and governance, including the establishment of effective mechanisms to ensure that environmental targets are achieved

(iii) Comprehensive renegotiation of the existing WTO Agreements, through genuinely democratic processes, to accommodate social and environmental objectives, and to help revitalise local economies and small enterprise

8. Policy and performance standards on social and environmental sustainability (safeguards) for IFI and their clients. DFID should work to ensure that IFI policy and standards result in sustainable and equitable development, and protect the interests of poor, marginalised or indigenous people as well as areas of high cultural and/or environmental significance. Policy, standards and guidelines must use clear and unambiguous language, expressing minimum standards, using agreed terminology from relevant international standards and conventions - including to obligations under international environmental treaties and on human rights. Specifically DFID should set targets for providing technical assistance to conduct a number of Strategic Environmental Assessments each year and disseminate its experience. DFID should not support project finance for mega-projects that have not been subject to a Strategic Environmental Assessment and should promote this approach across the UK Export Credits Guarantee Department (ECGD) and MDBs.

4. TRADE, GROWTH AND THE PRIVATE SECTOR

“We can’t, and shouldn’t, deny poor countries the chance to grow their way out of poverty…Poor countries more than anyone else need a fair and transparent global trading system, and equally importantly they need to develop the capacity to take advantage of it [after all] the relationship between growth and sustainability is above all about equity and fairness.”

Speech by Hilary Benn ‘Growth and Poverty Reduction’, London, UK 19/01/2006

Background and Context

The global economy is currently driven by over $20 trillion worth of annual consumption, a four-fold increase since 1960.151 This consumption has been supported by a twelve-fold increase in world trade since 1945.152 It is true that this growth in consumption and trade can be linked to unprecedented levels of wealth in some parts of the world, and substantial numbers of people have been lifted out of ‘dollar a day’ poverty. However, these benefits are far from evenly spread, the disparity between rich and poor has grown, and it is increasingly clear that there are both social and environmental costs related to trade related growth (see chapter on Economic growth and Good Governance).

Production and consumption patterns in the developed world and increasingly in rapidly emerging economies such as China and India are set to put enormous pressure on the world’s natural resources. “Rising demand for energy, food, and raw materials by 2.5 billion Chinese and Indians is already having ripple effects worldwide,”153 says Worldwatch President Christopher Flavin. “Meanwhile, record-shattering consumption levels in the US and Europe leave little room for this projected Asian growth.”154 The resulting global resource squeeze is already evident in riots over rising oil prices in Indonesia, growing pressure on Brazil’s forests and fisheries, and the loss of manufacturing jobs in Central America.

With regard to the social impact of trade-based economic growth, a recent report by the International Confederation of Free Trade Unions155 highlights the social costs of China’s ‘economic miracle’ and also questions the presumed links between economic growth and poverty reduction. With economic growth averaging nearly ten percent over the last two decades, employment growth averaged only one percent in the 1990s. Hilary Benn has acknowledged that growth has to be both equitable and sustainable if it is to be effective as a means to achieve poverty reduction. To achieve growth that is both equitable and sustainable, it is necessary to look at the values, operating principles and methods of the key drivers of growth (see also the section on Economic growth).

Alongside the trend of rapidly increasing consumption and trade has been the changing role of business and industry at national and global levels. The last decade has seen significant growth in the size and influence of trans-national corporations (TNCs). The world’s top one hundred corporations, based almost exclusively in developed countries – are today the principle drivers of international production, investment and trade, wielding considerable power and influence, including over governments. A study in 2000 found that, of the 100 largest economies in the world, 51 were corporations, and only 49 were countries.156

DFID has identified the development of the private sector in poor countries as a key strategy in meeting the MDGs. The 2005 DFID paper on ‘Working with the Private Sector to Eliminate Poverty’ stresses the role of small-scale business in reducing poverty at a local level and the importance of improving the investment climate in developing countries.157 This perspective was echoed again by Hilary Benn in his speech ‘Growth and Poverty Reduction – creating more and better jobs in poor countries’ (19/01/2006), when he stated that a key factor in promoting growth is

“getting conditions right for the private sector and improving the investment climate”. Debate following the speech clarified that there is a substantial difference in the actions required to promote small-scale, local businesses which are likely to buy from local markets, compared to the actions required to promote international investment, which can indeed promote macro-level economic growth, but will not necessarily benefit the poorest sectors of societies.

Largely missing from the DFID paper on working with the private sector is recognition that most of the corporate driving forces behind global trade take little account of social or environmental factors. Instead their primary, and legally mandated, job in society is to deliver short term shareholder value returns. Thus in a globalised world, a company with no local roots can move on to exploit the next place as and when labour or as resources run out or become too costly. To make trade work effectively for the poor, there needs to be a coherent approach to policy and legislation, right across HMG government which helps to shape the conditions under which national and global markets operate, taking social and environmental concerns as well as long-term needs into account.

Developing Coherence Across UK Government

DFID is leading the UK Government’s fight against poverty. Yet, DFID have not engaged sufficiently in examining the role it can play in ensuring that companies are given an enabling environment within which to act responsibly. Such a role would need to engage with the debate which is now recognising that companies will rarely act alone to become sustainable and that often government will need to manage the market to address market mechanism failures.xxi

A report by WWF and SustainAbility, released in 2005,158 indicated that the vast majority of the one hundred largest global companies were lobbying in ways that contradict sustainable development. HMG needs to set clear standards and ensure transparency about how DFID, and other departments, are lobbied by the private sector.

DFID is to be applauded in its willingness to act appropriately in a few key sectors, as evidenced by their involvement in the Extractive Industries Transparency Initiative (EITI), support for the Forest Law Enforcement, Governance and Trade (FLEGT) Action Planxxii. In his speech 23/02/2006 on ‘Development beyond Aid,’ Hilary Benn stated that, with respect to the EITI, “we should be looking to apply its lessons to other sectors such as fishing or construction or forests or public procurement”. More evidence of this approach would be strongly welcomed.

However, there are also many cases where DFID’s past achievements and future success will be undermined by the activities of other parts of the UK government. These inconsistencies need to be recognised and dealt with through a more formalised approach to developing coherence in government policy, such as those in Sweden.xxiii

xxi For example, through The Corporate Responsibility (CORE) Coalition set up in 2001. This represents over 130 charities and campaigning organisations, faith-based groups, community organisations, unions such as AMICUS, GMB, UNISON and TGWU, businesses and elected representatives. http://www.corporate-responsibility.org/xxii The Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, adopted through Council Conclusions in October 2003, sets out a new and innovative approach to tackling illegal logging. One of its measures requires the Commission to propose EU legislation to prevent imports of illegally logged timber into the European market and negotiate, together with Member States, bilateral Partnership Agreements with wood-producing countries. These agreements will require partner countries to establish a scheme to license legally produced timber (harvested according to relevant national legislation) exported to the EU. Timber originating in a FLEGT Partner Country could not be imported into the EU without such a licence. http://www.defra.gov.uk/corporate/consult/flegt/index.htm xxiii In December 2003 the Swedish Parliament adopted ‘Shared responsibility - Sweden's policy for global development.’ … “Global development policy is a task for the whole government and not merely a development assistance issue. All policy

A good example of this lack of coherence is the Export Credit Guarantee Department (ECGD). Over the last two financial years the ECGD has provided loans for projects in a number of areas that could undermine DFID’s objectives. The UK ECGD is currently consulting on whether it should give a loan to the Sakhalin II oil and gas project in Far East Russia. The 2005 report ‘Pumping Poverty’159 by Platform Research highlighted the social and environmental impacts of the oil industry in developing countries. The report further highlights contradictions between DFID’s objectives and its ongoing support to the oil industry both bilaterally and through multilateral bodies such as the World Bank (see the Climate Change and Governance sections for further information). In 2005, DFID provided opposition to one of the key recommendations in the Extractive Industry Review, which would have pushed the World Bank to become more accountable for support to the oil sector.160

The UK government needs to develop a coherent strategy for poverty elimination based on an explicit recognition of the need to change the understanding and behaviour of individuals, institutions and corporations in the UK, as well as increasing aid budgets and changing policies for development aid. These principles are embodied in the concept of the ‘One Planet Economy’, one of the key elements of the UK Sustainable Development Strategy.161 This concept requires “an economic system of production and consumption which respects environmental limits, local and global, while being financially and socially sustainable.” However, the UK is exploiting the earth’s available resources (i.e. bio-capacity) at about three times its ‘fair’ share. Assuming the gap between rich and poor could and should narrow, the UK needs to re-think its whole approach to resource use, and the economic development that drives it. Research has shown that to move towards one planet living we need something like a 75% reduction in resource flow and ecological footprint - a ‘Factor-four’ reduction.162

Coherence of Funding Approaches

A significant percentage of DFID funds are channelled through multilateral institutions, a trend likely to increase in the future with a predicted growing budget and reduced staff. By 2013 DFID’s budget is set to be on a par with the World Bank’s budget is today, but with a sixth of the staffing resource. These multilateral institutions themselves often utilise further institutional layers such as financial intermediaries to distribute funds.163 As a result, Multilateral Development Banks (MDBs) can be indirectly supporting high impact activities such as mining or forestry, without minimum safeguards being applied. This loophole means a growing proportion of MDB fund distribution, especially aimed at micro-finance and SMEs, has minimal or no oversight. DFID needs to close this loophole and take action to ensure that use of financial intermediaries is subject to the same rigorous assessment of social and environmental impacts as other investments.

To achieve this, DFID will need to play a role in building capacity in finance institutions to align their investments with sustainable development. In many cases, countries do have their own environmental safeguards in place, and development banks are discussing how to use these for assessing investments.164 This approach would only be appropriate where these safeguards have been assessed as sufficient by international standards and the capacity exists in country to operationalise them. Policy, standards and guidelines need to use clear and unambiguous language, expressing minimum standards, using agreed terminology from relevant international standards

areas have a common overall objective for global development policy: to contribute to equitable and sustainable global development. …Equitable and sustainable global development can only be achieved by many forces pulling in the same direction. Coherence must characterise national and EU policies alike. Links must be made between security, trade, agriculture, public health and migration policies and global development.” From ‘Global development and development cooperation’, http://www.sweden.gov.se/sb/d/3102

and conventions - including to obligations under international environmental treaties and on human rights.

Maximising Opportunities of Natural Wealth

DFID and other parts of the UK government primarily perceive the ‘environment’ only in terms of threats to development. However, a more useful way to perceive the situation would be to acknowledge that we are facing a number of global challenges and that all of these (for example conflict and governance, climate change, poverty) have an environmental dimension. Some of these global challenges present significant threats, but some also present significant opportunities. Trade and private sector investment are critical instruments in respect of promoting good development, based on equitable and sustainable patterns of local growth where growth is needed, but there is real need to focus on more meaningful prosperity.

As a starting point, the UK government and DFID, through the European Commission, need to encourage a trade debate that extends beyond a simple focus on cutting export subsidies or extending market access for exports from developing countries (critical though these things are). There needs to be an understanding that the challenges implicit in the statement by Hilary Benn that “developing countries cannot go for growth and worry about environmental sustainability later on,”xxiv cannot simply be fixed through the application of market policies.

Fair global trade alone cannot address the issue of environmental sustainability given that the market processes which predominantly govern trading relations have no means of accounting for the externalities generated by economic activity. Environmentally damaging externalities such as carbon emissions from transport and those associated with biodiversity loss, are not presently born by private enterprise, meaning that the environment is treated as a free resource to be exploited and used as a free waste disposal sink. Environmental sustainability means ensuring that the trade rules adopted by the WTO are fully compatible with the requirements of international Multilateral Environmental Agreements (MEAs) do not undermine national environmental legislation.

Agricultural trade rules have major implications for the environment – on which the poor and agriculture depend. Trade rules shape agricultural markets, influence the price and availability of food, affect farmers’ livelihoods and ultimately shape how they manage their land. This directly affects the well-being, culture and economic prospects of the 1.3 billion people who depend on farming. The expansion and intensification of agriculture is also the greatest threat to global biodiversity and implicitly many other essential ecosystem services (see Box 1).

While continuing to work for the removal of unfair agricultural subsidies, the UK government should also work within international trade policy forums to recognise and promote financial incentives as mechanisms for supporting transition to more sustainable production of goods and services for local markets and developing country export that benefit the poor and use natural resources sustainably.

xxiv Chatham House speech, 23rd February 2006.

Government procurement – leading by exampleEuropean public procurement equals 16 per cent of GDP.165 As a positive example, the UK government could pursue a policy of procurement that demands preferential access for ‘green’ and ‘fair-trade’ goods and services (for example low energy technology), including sourced from developing countries where appropriate. In doing so, we would be helping to move developing countries ‘up the value-chain’ – assisting the development of growth premised on the export of sustainable goods and services (rather than for example un-sustainably sourced palm oil). This area of the global marketplace is poised to grow exponentially as we move towards a low-carbon economy and environmental limits are further realised.

Of course, such an approach could be considered contradictory to principles of reducing carbon emissions (from international movement of traded goods). An open debate is required on these issues to find the most appropriate way forward, addressing environmental concerns and securing development opportunities.

The UK government also needs to recognise the increasing role of emerging economies in determining the future trajectories of the poorest country economies. Support for horizon scanning initiatives provides one effective means to do this. For instance, the challenge of Chinese

Box 1: The Royal Society for Protection of Birds (RSPB) and Trade

The RSPB sees international trade rules – and getting them right - as vitally important. Regarding agricultural trade specifically, we believe trade negotiations must take into account these impacts to ensure the best social and environmental outcomes. This requires DFID and the UK government to support the European Commission to:Continue reform in domestic support (notably the Common Agricultural Policy) to a regime that

supports sustainable agriculture domestically and meets our international responsibility to end export dumping

End export dumping both through direct export subsidies, and indirectly through, for example, production related payments. Export dumping is environmentally damaging and socially iniquitous

Reform the WTO agricultural ‘box’ system – this currently overlooks the wider role of agriculture in society, in terms of the livelihoods it supports and its critical relationship with the environment and biodiversity. Green box support to be targeted specifically at delivering environmental and social benefit, i.e. ‘public’ benefit

Ensure flexibility for developing countries to allow them to ensure their food security, meet poverty reduction targets, and choose their own pathways to sustainable agricultural development that suit their specific circumstances

Accompany market access with sustainability safeguards - the Doha Development round is to deliver genuinely sustainable benefits, it is critical that the market access negotiations are informed by sustainability impact assessments and only proceed where they are accompanied by the necessary sustainability safeguards. Increasing market access for developing countries can be an important tool for eradicating poverty, but improvements in access should not be at the expense of long-term sustainability

The UK and EU need to include in negotiation packages a commitment to increase technical and financial support to developing countries to promote sustainable agriculture and conserve important pristine habitats and ecosystems that underpin sustainable development. This recommendation is in line with the EU’s and the UK’s commitments made at the Millennium Summit (2000), the Monterrey Financing for Development Conference (2002) and the Johannesburg World Summit on Sustainable Development (2002).

Source: RSPB and Birdlife International (2005). Thoughts for Food – Agricultural trade rules for a sustainable future. http://www.rspb.org.uk/Images/thoughtsforfood_tcm5-93639.pdf

investment in sub-Saharan Africa166 should be viewed in light of the UK’s continued capacity to encourage sustainable trade and investment policies on the part of large emerging economies. This can be achieved through:

The UK’s influence in bilateral, regional and multilateral trade negotiations The UK’s role as an important source of investment flows to emerging economies (see

section above on ‘coherence across government’) where the UK is investing in businesses which subsequently invest in LDCs

The role of the UK as an important market for goods from economies like China that are often manufactured from materials sourced in LDCs

The influence of the UK in the EU, a bloc which has vastly increased influence in the same areas listed above

The UK’s ability to support developing countries in understanding the natural assets they have, the value of them, and their options for using and managing them is vitally important – “asset stripping” rarely provides the best long term returns and countries should be afforded development alternatives.

Leading the Corporate Social Responsibility Debate

The current rise in the Corporate Social Responsibility (CSR) debate, exemplified by the CORE coalition of over 130 Civil Society organizationsi provides an excellent opportunity for DFID to pursue its development agenda within the UK. DFID needs to work across government to promote recognition that the pursuit of sustainable development requires government to adjust market mechanism failures through strong clear leadership of fiscal incentives, regulation and adjustments to trade tariffs and barriers.

THIS REPORT OFFERS THE FOLLOWING RECOMMENDATIONS TO SUPPORT PROGRESSIVE TRADE AND PRIVATE SECTOR ENGAGEMENT

Recommendations

1. Identifying and changing UK, domestic - international and EU policy (for example, energy, trade, agriculture, fisheries and foreign policy) to ensure coherence with international development objectives. HMG should develop new legislation (for example, Swedish international development legislation) for coherence on international sustainable development policy. An interdepartmental policy working group should be established to monitor and address constraints for increasing policy coherence across HMG – this could be moderated by the Sustainable Development Commission as part of its remit to follow up on the UK Sustainable Development Strategy.167

2. Support access to renewable and environmentally sound technologies to help developing countries leapfrog environmentally damaging development processes. This should include developing new industries and skills and capturing new markets based on a ‘green’ economy and provision of environmentally sustainable goods and services. HMG should work with the World Bank, other IFI and G8 countries to promote much more ambitious investment targets for renewables and to support sustainable and socially responsible businesses in emerging economies.

i The Corporate Responsibility (CORE) Coalition set up in 2001, represents over 130 charities and campaigning organisations, faith-based groups, community organisations, unions such as AMICUS, GMB, UNISON and TGWU, businesses and elected representatives http://www.corporate-responsibility.org/

3. Championing “no economic policy conditionality” in donor circles and multilateral processes (whilst recognising and listening to developing country CSOs who tend to be more favourable towards the use of political conditionalities).168 HMG should seek strategic ways to ensure accountability of funding to IFIs and support transparency over resource-related decision-making. DFID should not fund bilateral programmes with multilateral institutions that are using economic conditionality and DFID should use its leverage within these institutions to influence them to support DFIDs no economic policy conditionality position.

4. Policy and performance standards on social and environmental sustainability (safeguards) for IFI and their clients. DFID should work to ensure that IFI policy and standards result in sustainable and equitable development, and protect the interests of poor, marginalised or indigenous people as well as areas of high cultural and/or environmental significance. Policy, standards and guidelines must use clear and unambiguous language, expressing minimum standards, using agreed terminology from relevant international standards and conventions - including to obligations under international environmental treaties and on human rights. Specifically DFID should set targets for providing technical assistance to conduct a number of Strategic Environmental Assessments each year and disseminate its experience. DFID should not support project finance for mega-projects that have not been subject to a Strategic Environmental Assessment and should promote this approach across the UK Export Credits Guarantee Department (ECGD) and MDBs.

5. Stopping “Forced Liberalisation” of developing countries’ markets, restoring their discretion over trade and other policies. DFID should call for and promote an urgent and objective review of the Doha Round WTO negotiations to consider consistency with global needs for poverty reduction and reducing carbon emissions. There is a need to re-assess the merits of further liberalisation in the trade of natural resources (including agricultural products) and consider what fresh multilateral rules are needed to ensure trade in resources helps rather than hinders poverty reduction and sustainable development.

6. Promoting transparency, accountability and regulation of the private sector (particularly Trans National Corporations), especially with regard to private sector operations in developing countries and in conflict areas. HMG should prioritise regulation of UK and EU companies operating in developing countries as called for by CORE Coalition. Specifically new laws in three key areas: mandatory sustainability reporting, directors' duties, and access to justice.

7. Supporting alternative models of economic growth and poverty reduction. HMG and DFID should promote shifts in the global economic system, enabling collective and effective decision-making in the long-term interest and support well informed participatory democracy, accountability and transparency to truly deliver sustainable development, including by revitalising local economies and small enterprise. Where it is more difficult to reconcile economic, social and environmental priorities, decisions should be made through fully informed open and transparent decision-making processes through multi-stakeholder and cross-sector debate and sound analysis.

8. Engage Treasury and other departments to shape public procurement strategies that support the emergence of more sustainable and socially responsible businesses in emerging countries such as China. Pursue a policy of procurement that demands preferential access for ‘green’ goods and services (for example, low energy technology) sourced from developing countries. Develop a cross-developmental strategy to ensure it consistently uses its influence to

promote sustainable trade and investment policies in emerging economies, especially with regard to China’s future investment in sub-Saharan Africa.

9. Expand work on transparency to include disclosure of investment contracts and ensure that any development funding delivered through MDBs and/or financial intermediaries should be subject to the same level of scrutiny and rigour with respect to assessment of social and environmental impacts as any other investment of aid funding. This can be achieved using guidelines recently developed as best practice by WWF and Banktrack.169

10. Lead the UK government in becoming more engaged with the CSR debate, in an active and sophisticated manner. The planned DTI international framework for CSR with NGOs will strengthen cross-departmental alignment on this issue and DFID should actively engage with this instrument. DFID should engage fully with processes designed to promote CSR to ensure they are meaningful and effective. It should explore initiatives to develop a systematic means of company reporting on environmental impacts and also develop or engage with initiatives, such as those originally contained in the Operating and Financial Review, to ensure company directors are accountable to a broader range of stakeholders than a company's shareholders. 

11. Set and maintain clear guidelines on lobbying by companies which promote activities that lead to forms of unsustainable development and increase transparency and place responsibility on companies to disclose funds spent on lobbying activity and for DfID to disclose representations made by private sector interests.

12. Ensure that trade rules adopted by the WTO are fully compatible with the requirements of international Multilateral Environmental Agreements (MEAs) and do not undermine regional or national environmental legislation. For ‘mutual supportiveness’, the environment must not be subordinated to trade. Trade rules and trade concerns must not be used by governments to have a ‘chilling effect’ on the interpretation and implementation of existing Multilateral Environmental Agreements (MEAs) or on the development of new MEAs.

5. GOOD GOVERNANCE, POWER AND NATURAL RESOURCES

“Poor governance and inadequate accountability can trigger state failure that then causes human insecurity, refugee migration, organised crime and potentially terrorism…one of the reasons this happens is that rich countries and we, their consumers, are willing to pay a great deal of money for valuable commodities, like oil and gas to keep us warm and coltan to make our mobile phones work…”

Speech by Hilary Benn ‘Development beyond Aid’, Chatham House, London UK 23/2/2006

Background and Context: Good Governance and Development

DFID defines governance as “how the institutions, rules and systems of the state – the executive, legislature, judiciary and military – operate at central and local level and how the state relates to individual citizens, civil society and the private sector”.170 The quality of governance systems has an enormous impact on the lives of poor people. This fact was highlighted by the 2000 World Bank study ‘Voices of the poor: Crying out for change’171 which reflected the views of many thousands of poor people from 23 countries. This study indicated that “from the perspective of poor people worldwide, there is a deep and widespread crisis in governance…poor people are excluded from participation in government…poor people see little recourse to injustice, criminality, abuse and corruption in their interaction with institutions.”

Much the same can be said for poor countries in relation to global institutions. Rich countries and the undemocratic global institutions they dominate (for example, World Bank, IMF and WTO); largely create the arena of macroeconomic conditions within which low-income countries attempt to develop. Through distorted policies and markets, and unfair trading arrangements, this system can fuel poverty, inequality and unsustainable environmental practices, thus failing the world’s poor and exacerbating environmental degradation. To deliver sustainable development, equity and justice for all, there is an urgent need to re-balance power and ensure better participation, accountability and transparency in decision-making for all development processes.

The Secretary of State’s speech ‘Development beyond Aid’ highlighted “the global causes of bad governance” as a key challenge to eradicating poverty and acknowledged that “the policies we pursue matter just as much, if not more for development, than the money we give”. He highlighted that the global causes of bad governance can “create insecurity and conflict and lead to large scale theft and the squandering of the wealth and resources of poor countries”.

The role of developed nations accountability and good governance was touched upon in so much as “one of the reasons (for corruption around natural resources” was highlighted as “rich countries and consumers, who are willing to pay a great deal of money for valuable commodities”. However, HMG and DFID need to go much further to ensure good governance starts at home, including issues around export guarantee scheme and transparency in government loans and donations. At present DFID has readily condemned bad governance in the Congo, Nigeria and other African states, but has been less (publicly) critical of decisions and activities of other parts of the UK Government and UK private sector companies.

HMG needs to be showing leadership at home and internationally, particularly with regards to accountability and transparency about how policy decisions are reached across departments when linked to private sector interests. A key question is how the UK government ensures its policy decisions do not undermine DFID’s ability to champion the needs of the poor, and more widely to support good global governance and tackle poverty and the causes and consequences of climate change and environmental degradation.

Hilary Benn’s third White Paper speech rightly acknowledged that “the dream [eliminating world poverty] that unites us won’t be fulfilled without good political governance”, that “state building can’t be imposed” and that “It’s a process. It takes time.” From an environmental perspective, this can throw up a difficult miss-match, whereby the time it takes to create effective governance systems to manage natural resources, could be too late as natural assets have been misappropriated and squandered in the mean time – often further exacerbating poverty and ecosystem degradation. Old growth forest loss is a particular case, where destruction can happen quickly, impacting local people, particularly indigenous populations, as well as destroying biodiversity and future resources.

Good Governance for Poverty Elimination and Environmental Sustainability

Good governance at local-national and international level, including good environmental governance is fundamental for sustainable development and without it development efforts will be undermined. In the majority of developing countries in which DFID works, natural resources are a major source of wealth and power. They directly support the livelihoods of over 70% of the world’s poor.172 In Africa and many other developing countries, natural resources underpin, and will continue to drive, national and local economies for decades to come.

If managed effectively and equitably, natural resources have the potential to support poverty reduction and promote long term sustainable growth. However, poor environmental governance (including decisions taken without transparency, participation and full accountability to and of stakeholders) leads to environmental degradation and exacerbates poverty. Poor governance can too often lead to opportunities for elite capture of benefits by the more powerful. Studies indicate that poor people’s access to and control over the natural resources on which their livelihoods directly depend is generally declining, and resources are concentrating in the hands of the wealthy few.173

Responding to governance failings is critically important for development, and particularly pertinent for sustainable natural resources management. For instance, forests and fisheries have the capacity to provide far greater benefits over a long time period if managed sustainably, but a simplistic economic analysis, using standard ‘discounting’ will result in an unsustainable level of exploitation, that takes into account neither the future values of those resources nor the wider value in terms of water management, ecosystem health and intrinsic values.174 Strong and appropriate ‘good governance’ of natural resources is required to ensure the full value of resources is captured for national economies now and to ensure they are well utilised and managed for the future.

Reasons for the failure of governance include: Environment is an externality – is often outside the ‘system’ (not well owned, priced,

regulated etc.) and constantly falls of the agenda Poverty and environment initiatives and institutions are largely separate Inappropriate or unclear ownership and rights over resources Lack of structures and mechanisms to hold people and institutions accountable

The environment is often neglected in country-led process. This is often due to poor information, weak environmental ministries and little engagement with local institutions where environmental issues resonate better.175 Where it is recognised, there is a tendency to focus on issues requiring technical solutions, excluding the highly politicised aspects of environmental control and rights to resources176

The term ‘Governance’ covers a wide range of relationships and issues at a number of levels. Put most simply, these levels are:

International Regional National Local/sub national

There are numerous linkages between each level, but poor management of environmental assets can, and does, occur as a result of ineffective or inappropriate governance at each of these levels and with respect to the inter-linkages between them. If natural resources are to be well managed then capacity must be built within and between all relevant levels of government, different governments and civil society (including NGOs and donors). Threats and lost opportunities, at different levels, arise from poor governance and can undermine achievement of the MDGs.

Governance also requires balancing private interests with those of society and the planet as a whole. Governments should act responsibly in the long-term public interest. To this end, HMG and DFID need consider how to avoid a development path whereby rational individual/business decisions, that are not individually damaging, nonetheless cumulatively result in serious damage that inhibits sustainable development. The cumulative effects of individual actions, such as logging and land conversion, which are rational at the individual/local level or to business, but which collectively result in huge environmental problems (for example, the mass conversion of rainforest to palm oil in Indonesia177 or the loss of downstream water because of actions taken upstream) must be addressed. There is currently a huge governance failing around planning as well as a funding gap to offer long term sustainable alternatives (or compensation) to off-set short term profitable conversion (often asset stripping) and help conserve and sustainably manage important ecosystems. Strategic Environment Assessment (SEA) could help address this but there is a huge capacity gap as well as a lack of political will to find alternative options to the most profitable in the short-term if they are unsustainable in the longer term.

Klaus Toepfer, until this month UNEP Executive Director, commented in the ‘Foreword’ to the GEO2000 Report:178 "There is a need for more comprehensive, integrated policy making”. In itself this call is not new. But it gains urgency in view of the increasingly cross cutting nature of environment and development issues. Thus, rather than trying to tackle issues such as deforestation and land degradation on a piecemeal basis, “these must be integrated and in turn be connected with the needs and aspirations of the people”. This requires development and environment agendas to be coherently linked both institutionally and in practice – and at all levels.

Governance at the International LevelMuch has been written about International environmental governance. For a very useful analysis see World Resources 2002-2004: Decisions for the Earth: Balance, voice and power. UNDP, UNEP, World Bank and WRI.179 As recognised in this report: “The global biosphere behaves as a single system, where the environmental impacts of each nation ultimately affect the whole. That makes a coordinated response from the community of nations a necessity for reversing today’s global environmental decline. But the challenges of international governance are substantial. Finding consensus among nations about what sustainable development means, how to finance it, and what international laws and institutions are required to facilitate it is an urgent, but unfinished task.”

It is widely acknowledged that the international environmental governance regime has fallen short in many respects. Challenges include:

There is no central institution with authority sufficient to craft strong environmental protections at the international level and to insist on compliance;

the current system reflects the strengths and dysfunctions of global politics, and shows the difficulty of inspiring effective cooperation among the fractious community of nations;

The system is fragmented, with a host of policy-making organizations, treaties, financing mechanisms, and implementation projects whose efforts are often poorly coordinated and sometimes overlapping.

In many instances, international negotiations produce agreements with ambitious goals, but without realistic means of implementing or financing them.

Lack of financial resources for international environmental cooperation. International governance institutions are weakened by divisions among countries and

regions, often manifesting themselves as North-South divides in terms of environmental priorities and perceived responsibilities.

Weak support for existing institutions and oversight mechanisms. (e.g. UNEP is financed mostly by voluntary contributions from UN member states, who have increasingly earmarked ‘their’ money for special projects, so reducing the agency's budgetary discretion and ability to plan and carry out core activities.

Decisions that govern production, trade, and investment often pay inadequate attention to protecting the environment and human needs.

Failed or ineffective environmental mainstreaming - including within agencies committed to sustainable development, such as UNDP and the World Bank. 180

(Many of these problems in the international system reflect a similar lack of integration of environment into broader economic decision-making at national levels).

The UN World Summit 2005 and resultant UN reform process offers an opportunity address some of these challenges and ensure effective international environmental governance, which is crucial to sustainable development. Gordon Brown’s engagement should support this, including a strong and coherent development and environment agenda, recognising that Summit outcomes reaffirmed sustainable development as a key element of the overarching framework of United Nations activities

The Summit outcome document provides a framework that world leaders will use for the next decade, and significantly offers a crucial hook for the integration of environmental issues in development policy, and gives the environment and development communities a real opportunity to work together to achieve sustainable development. Issues relating to climate change, forests, toxics, marine, biodiversity, freshwater and transportation of hazardous wastes have been placed as priorities on the international agenda and there is a significant reference to having ‘respect for nature as a common fundamental value that is essential for international relations’.

Paragraph 11 of the outcomes document acknowledgment that good governance and the rule of law at the national and international levels are essential for, among other things, sustainable development and paragraph 169 (Part 4) recognises “the need for more efficient environmental activities in the UN system” and provides an agreement to “explore the possibility of a more coherent institutional framework to address this need”.181

Multilateral Environmental Agreements (MEAs), provide the legal framework for international environmental governance. They are the official expression of the collective will of national governments to protect the environment and steward the Earth – many signed by most of the world’s countries. Over 500 separate MEAs currently exist, with some 60 percent of these treaties signed since 1972, the year of the Stockholm Conference on the Human Environment, suggesting growing environmental awareness and recognition of issues requiring intergovernmental

cooperation.182 The objectives and priorities of MEAs vary significantly from one agreement to another. However, common aspects include the sustainable development focus of the three Rio Conventions (CBD, UNCCD and UNFCCC), the sustainable use of natural resources and the environment, or the protection of the environment in such a way as to ensure its sustainable use. None of the core environmental agreements are exclusively oriented to protection and conservation.

Much has been written about the strengths and weaknesses of MEAs, as well as their relationship with other institutions such as the WTO183. One significant area for improvement is the need to better link the local level to national and international levels, both in terms of information on impacts and upon compliance. This is particularly significant with increasing devolution of power to smaller units in many places of the world, without the creation of proper systems to facilitate communication and resource flow between different levels of government and international bodies. Weak focal points in national government for the various conventions has contributed considerably to the lack of Agreement implementation.

Much has still to been done to better harmonize national reporting between environmental agreements. If you add this burden to the diversity of reporting required in order to receive ODA from bilateral and multi-lateral donors, it demonstrates the considerable reporting overload for recipient governments. UNEP have launched a streamlining process for national reporting for the various biodiversity related conventions, which is now managed by the UN Environmental Management Group.184 This is a good start and should be supported by UK government. Harmonization of reporting has the potential to build common interests and is a first stage in building a common platform of shared priorities and objectives.

Governance at the Regional levelOver 300 MEAs concern regional issues such as regulation of local fisheries. Regional agreements offer good opportunities for cooperation amongst neighbours where resources are shared – there are also a growing number of examples of trans-boundary natural resource management initiatives (see Boxes 1 and 2).

Box 1: Transboundary Natural Resources Management in Southern Africa: The Great Limpopo Transfrontier Park (GLTP)

The Great Limpopo Transfrontier Park (GLTP) was proclaimed with the signing of an international treaty by the heads of state of Mozambique, South Africa and Zimbabwe in December 2000. This ‘mega park’ constitutes Kruger National Park in South Africa, Gonarezhou in Zimbabwe and Limpopo Park in Mozambique. It is the largest Transboundary Conservation Area (TBCA) in Africa and probably the whole world measuring 99 800km². It was established after the realisation that national boundaries in Africa cut across tribal and clan groupings as well as wildlife migration routes, fragmenting ecosystems and threatening biodiversity. The GLTP was established to address these problems and to contribute to the management of natural resources that straddle national borders such as forests, wildlife and water. The Park’s extensive wildlife also provides a foundation for economic development linked to ecotourism. The overall objective of the GLTP is sustainable natural resource management and biodiversity conservation as well as promoting tourism, local economic opportunities, regional collaboration and reunification of divided communities.

Source: Peace Parks Foundation Website. (Available at: http://www.peaceparks.org).

Key natural resources and exploitation do not recognise national political boundaries. In order to protect natural resources and ensure sustainable utilisation it is critical that good governance is built at the appropriate level, often regional. This can be a difficult process, overcoming unequal

power relationships and developing cooperation where there may have been little or none previously. Conversely developing regional agreement can lead to opportunities to strengthen good governance, peace and security (see Peace and Security chapter for further examples).

Box 2. Transboundary Water Resources management: The Mekong Delta

The Mekong Basin traverses several bioregions and is shared by Cambodia, China, Lao PDR, Myanmar, Thailand, Vietnam. Water underpins the dynamic and diverse ecology and society of the Mekong Basin. It forms the basis of the livelihoods of over 60 million people, and drives the economic activity of the larger economy of the riparian countries of Laos, Burma, Thailand, Cambodia, Viet Nam and Yunnan province in China.

On 5 April 1995, aware of the importance of regional cooperation for water resources development at basin scale, Cambodia, Lao PDR, Thailand and Viet Nam signed the Agreement on the Cooperation for Sustainable Development of the Mekong River Basin. With this agreement the Mekong River Commission (MRC) was created in order to promote and co-ordinate sustainable management and development of water and related resources in the Mekong Basin. In addition, a dialogue mechanism has been set up with the two upstream countries China and Myanmar. This is a framework of cooperation under which concrete joint activities are undertaken. On 1 April 2002, the MRC and China signed an “Agreement on the Provision of Hydrological Information on the Lancang/Mekong River in Flood Season”. Through this agreement, China contributes effectively to MRC’s flood forecasting activities.

Concrete participation of the upstream countries in MRC’s Mekong Cooperation Programme, in a joint effort to alleviate poverty and increase economical welfare, is a factor of regional integration and is of mutual benefit for all countries sharing the Basin. Cooperation is possible in a pragmatic way through joint identification and implementation of concrete projects in various areas of mutual benefit such as navigation safety and trade facilitation, flood management, environment management and biodiversity conservation, development of modeling and decision support tools, etc.

The orientation of the Mekong Programme, such as endorsed at the MRC’s 11th Ministerial Council meeting of 8-9 December 2004 in Vientiane, Lao PDR, is to implement Integrated Water Resources Management (IWRM) at basin scale as a means to alleviate poverty and to enhance economic growth in the scope of the millennium goals. On this basis, the MRC is currently preparing its Strategic Plan 2006 – 2010, addressing in a holistic way the development needs in the areas of navigation, flood management, fisheries, irrigation, hydropower, environment management, watershed management, tourism, and capacity development.

Miller, F. 2004. South East Asia Geography Conference Panel: Water Governance in Context: Case Study of Mekong Basin. Stockholm Environment Institute,185 and Oliver Cogels, O. 2005. Regional Cooperation Programme for Sustainable Development of Water and Related Resources in the Mekong Basin: Applying IWRM at basin scale, Mekong River Commission. 186

At an influential EU members state, the UK has a key role to play in delivering the EU Sustainable Development Strategy and UK consistency with the European Policy. DFID particularly needs to ensure consistency with the “European Consensus”(November 2005) and the EU Treaty objective of promoting sustainable development. There is need to adhere to the European Community principles of coherence for development and cooperation policy (Article 178) as well as environmental integration across all policies (Article 6). Including effective environmental mainstreaming and timely use of environment screening tools and procedures.187

In support of this, DFID and HMG should support the EU ‘Thematic Programme for Environment and Sustainable Use of Natural Resources including Energy’ as a key instrument for delivering on the environmental dimensions of development and other external policies. A group of environment NGOs have estimate that this requires multi-annual financial earmarking of at least 450mEUR per

annum, necessary to address global environmental challenges posed by economic, political and social pressures upon natural resources.188

Governance at the National levelGood governance of natural resources is equally vital at national level. In many ways, international problems mirror patterns at the national level. Sectoral approaches dominate, and mechanisms for cooperation and coordination among different government agencies are often ineffective, and environmental ministries often have smaller budgets and weaker political voices than, for example, those that directly manage productive natural resources such as agriculture, or determine economic policy in developing and developed countries alike.

Since it is predominately environment ministers who sit on UNEP's Governing Council, rather than agriculture or forest ministers, who have the greatest influence on FAO, and economic or finance ministers who talk to the World Bank, it is not surprising that policy gaps at the national level are repeated or reflected in the international system. Poor decision-making processes and power imbalances that fail to include the voices of all stakeholders, can have a direct impact on the poorest and most vulnerable. This is illustrated through the Usangu catchment in Tanzania where decision-making processes were affected more by politics and power than by evidence. This resulted in the poorest stakeholders (herders and down stream farmers) losing out to the interests of richer farmers involved in irrigated agriculture. The situation was, at least partially, improved by the development of a multi stakeholder group to address resource management in Usangu as a whole, integrating both national and local interests.189

Bad governance of natural resources means developing countries are losing out on the benefits that effective and equitable management of natural resources can bring, including local livelihoods improvements and significant government revenue that could and should be otherwise invested in poverty eradication. For example:

More than $1 billion of Angola’s state oil revenue goes missing each year, at least a portion of which is siphoned into private bank accounts offshore.190

In Cambodia, in 1997, payments to Government officials in the form of bribes were estimated at $200 million alone. This is more than 13 times the $15 million in revenue the Cambodian Government took in from legal forest operations in the same year.191

The recent report of the OECD ‘High Seas Task Force’ indicates that Illegal, unreported and unregulated (IUU) fishing estimates a loss of USD $1 billion for sub Saharan Africa from IUU activity.192

As DFID places its resources and efforts to develop stronger states, it must work to ensure that the government departments that are responsible for ensuring appropriate governance of natural resources are suitably empowered and included in ‘state building’ processes. Forestry, fishery and wildlife departments are often weak in central government and even more so at the local level. The lack of capacity in these institutions means that their agenda often goes unheard in strategic planning processes. A lack of financial resources means departments are often understaffed and have less capacity compared to other sectors such as health, education and agriculture. As a result, natural resource management receives lower investment, leading to lower capacity and a potentially destructive cycle, for which the poor and marginalised pay the greatest price.

To promote more effective planning on resource management, funding needs to be made available for well coordinated and facilitated national multi-stakeholder forums, which are linked into and have a mandate to inform key national strategic planning processes and subsequent budgeting and implementation. This is an approach that could be usefully supported to help meet MDG7 target 9 (integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources) and to effectively mainstream environment into other

strategic plans and processes (e.g. national five year plans for social and economic growth). There are a few good examples of this process including in Uganda and in Tanzania193. In Uganda, a cross-sectoral natural resources working group was set up to support the implementation of the country’s Poverty Eradication Action Plan (PEAP). This group, with both Government and civil society members, worked to integrate environmental issues across the sector plans of the PEAP.

Potential options for national multi-stakeholder forums to support such processes include organisations such as National Council’s for Sustainable Development or those being set up for MDG review – the two could either be the same body or work in close cooperation offering:

Outreach, for consultation and feedback, to their constituencies’ in-country Development of guidance on implementation strategies within a country Development of national targets for policy, strategies and future implementation, with

common reporting frameworks

National multi-stakeholder forums have developed differently in different countries and for forums to be seen as independent from government will be a crucial indicator of whether their input will be taken seriously by others in country stakeholders. Civil society groups (including development and environment groups) have strong experience in this respect and DFID should seek to work in close partnership with them, as well as experts and with Government to open up the space for dialogue between government and civil society over national policy development and implementation.

Governance at the Local LevelAccess to natural resources plays a key role in the livelihood strategies of many of the world’s poorest people (see chapter on people and planet). Water, fisheries, timber, non timber forest products and wildlife all play key roles both in day to day subsistence and income generation. These resources can also act as a critical ‘safety net’ in times of stress.194

Decentralised and devolved governance of natural resources is increasingly promoted as a development strategy in some developing countries. However, access to natural resources is often controlled by local government departments that may lack resources, capacity and the will to govern effectively. Legislation and government policy often contradict devolution efforts and leave contested areas of policy and legislative space, causing conflict and uncertainty over access, ownership and use of natural resources. As a result, local communities are often denied legal access to resources that they rely upon, provoking unsustainable practices and open access regimes leading to weak systems of local governance and unsustainable utilisation practices.

However, decentralisation can also bring advantages; working best when central government cedes responsibility for environmental management to locally built and managed community institutions that must answer to local people.195 Local institutions need to be built in a planned and appropriate way. Government bodies need to be adequately financed and strengthened and structures in place to ensure that local voices are heard and involved in decision making, promoting transparency and accountability. Devolution must thus go together with appropriate legislative reform, policy adaptation and institutional capacity building to raise awareness and build rights to strengthen civil society.

Development assistance to date has failed to provide support to the local organisations that benefit poor groups (including these groups’ own organisations). Indeed, most of the local organisations that benefit and represent poorer groups are invisible to development assistance. In most places, these organisations are much better able to meet local needs than activities funded by development assistance.196 This failure to support pro-poor local organisations is why decades of development and environmentalism have failed to halt the destruction or damage of the natural systems on

which virtually all food, fresh water supplies and a stable climate depend. Development assistance has also failed to address those local and extra-local interests that cause such destruction. Local organisations also usually have the central role in ensuring that the sustainable development and good environmental management are compatible – meeting needs without depleting natural resources and compromising ecosystem functioning. Partnerships, innovative governance and finance mechanism can also provide alternatives to resource exploitation, in favour of sustainable use and longer-term conservation that can benefit local communities, help support indigenous people and protect endangered wildlife (see box 3.).

Box. 3 ‘Harapan Rainforest’ - a restoration reserve in Sumatra, Indonesia

An RSPB/BirdLife coalition has been campaigning for three years to save lowland tropical forests in Sumatra (Indonesia). Lowland tropical forests here have decreased from 16 million ha in 1900 to 500-600000 ha today - many converted to oil palm and paper pulp plantations, with much of the remaining earmarked for conversion. The BirdLife coalition has successfully encouraged the Indonesian Ministry of Forestry to declare that production forests may be managed for conservation and restoration (June 2004). This has enabled an area of 100,000 ha, identified by BirdLife Indonesia, to be set aside by the government as the country's first restoration forest. The BirdLife coalition has submitted a bid for the management rights that draws upon its extensive study of the area and its consultations with local communities including the indigenous people living in the forest, and is waiting to hear if this has been successful. BirdLife is looking to set up a Trust fund to support ongoing revenue costs for ecosystem restoration and management as well as to support sustainable development in the concession.

Source: RSPB & BirdLife International http://www.rspb.org.uk/international/conservation/sumatra/index.asp

The MDGs are meant to provide new energy and resources to meet the needs of poor people, and a substantial increase in aid budget (to meet at least the 0.7% ODA target agreed in 1968). For this aid to be effective, there is a real need to tackle the failings and ‘ineffectiveness’ of much development assistance. Key to this is getting a better match between generating the needed pro-poor changes in each locality, and the highly centralised management of development assistance. Strengthening local level governance and effectiveness through local organisations and civil society is crucial to this. DFID is urged to remain in touch with the poor that its purports to represent.

The Way Forward for Supporting Good Governance and Poverty Elimination

Achieving the MDGs requires an integrated approach to planning and investment. Progress towards all the MDGs will be faster and more effective if the twin major endeavours of poverty reduction and ensuring environmental sustainability, including through natural resource management, are better integrated at all levels. These are often very separate in institutional and financial terms.

At the international level, UN Reform and follow-up to the 2005 UN World Summit provides a good context for this co-ordination, as does the Paris Declaration on Aid Effectiveness. The EU Development Consensus and EU Sustainable Development Strategy should be important drivers for all EU member states. Nationally, the UK Sustainable Development Strategy must bring together the UK’s domestic, EU and international commitments on social, economic and environmental issues. In all instances, the emphasis should be on moving towards a more coherent and effective system for making political decisions across diverse policy areas, based on equity, accountability and sustainability.

Other opportunities include learning from other countries. In December 2003 the Swedish Parliament adopted ‘Shared responsibility - Sweden's policy for global development’. Stating that:

“Global development policy is a task for the whole government and not merely a development assistance issue. All policy areas have a common overall objective for global development policy: to contribute to equitable and sustainable global development. … Equitable and sustainable global development can only be achieved by many forces pulling in the same direction. Coherence must characterise national and EU policies alike. Links must be made between security, trade, agriculture, public health and migration policies and global development. What Sweden says and does in one context must agree with how Sweden acts in another. Sweden is the first country in the world to establish a policy integrating all policy areas in the work to achieve the common goal of sustainable global development.”197

The UK Government also needs to address fundamental incoherence in current policies linked to climate change and trade. For example, planning for major increases in air traffic from the UK while acknowledging the harmful impacts this has on the global climate and identifying market liberalisation as a major means to reduce poverty in poor countries while pursuing more narrowly-defined national self-interest in multilateral and bilateral trade and investment negotiations. These kinds of discrepancy not only weaken the UK’s efforts to achieve the MDGs, but also impose double standards on weaker countries. It is not sufficient, as the White Paper consultation document suggests, merely to seek consistency between development and other policies. The UK Government should follow the example set 3 years ago by Sweden, and undertake to ensure that all areas of government policy are designed to contribute to achieving global sustainable development objectives.

All donor agencies, including DFID, should ensure that improving governance of natural resources utilisation is a key element in their support to partner governments to help establish systems and processes that promote good political governance. This must happen in conjunction with actions to strengthen ministries involved in natural resource planning, monitoring and management and the consistent use of environmental regulation and instruments such as environmental impact assessments. DFID and HMG should fully support the Paris Declaration198 commitments, noting the specific environmental agreements.

We welcome the fact that DFID recognises that ‘bad governance can create insecurity and conflict, and lead to large scale theft and the squandering of the wealth and resources of poor countries’199 and has taken action to address this through initiatives such as the Extractives Transparency Initiative (EITI) and the Forest Law Enforcement and Governance Programme (FLEG). These are strong initiatives but they are not enough given that it is the poorer communities who are particularly vulnerable to failed governance of natural resources. More needs to be done to ensure that their access to, and control over natural resources is strengthened; including support for effective implementation of the recommendations that were agreed at the World Commission on Dams200.

HMG also need to be coherent in respect to how it governs its own relationships with developing countries. A good example of this is the development of bilateral investment treaties, which should include social and environmental protection clauses and enable countries to protect their own citizen’s human rights, interests as well as their natural environment. Current Treaties should be reviewed to ensure they are supporting pro-poor sustainable development.201

THIS REPORT OFFERS THE FOLLOWING RECOMMENDATIONS TO SUPPORT GOOD GOVERNANCE, HIGHLIGHTING GOOD ENVIRONMENTAL GOVERNANCE IS A KEY PART

Recommendations

1. UK involvement in UN Reform (led by Gordon Brown) should be used effectively to ensure effective international environmental governance, which is crucial to sustainable development. HMG engagement should aim at creating a strong and coherent multilateral system necessary to address today’s global challenges, recognising that Summit outcomes reaffirmed sustainable development as a key element of the overarching framework of United Nations activities.

2. DEFRA should have sufficient resources to effectively support UNEP in the recently launched streamlining process for national reporting for the various biodiversity related conventions, which is now managed by the UN Environmental Management Group. Harmonization of reporting has the potential to build common interests and is a first stage in building a common platform of shared priorities and objectives.

3. HMG should continue and strengthen support to EITI, particularly in the development of criteria and means of validating EITI implementation and in developing the capacity of public servants and civil society to implement these agreements. HMG should also progress the EITI beyond just disclosing how much money Government receives from the sale of oil to how this money is used by Government.

4. HMG should extend lessons from the EITI to other sectors, especially to forestry (where they can build on the achievements to date of FLEGT) and fisheries, where they can consider support to the proposals of the High Seas Task Force to prevent illegal, unreported and unregulated fishing. DFID need to build strong partnerships with the private sector and with CSO’s at global, national and local levels to achieve this.

5. HMG should continue and strengthen its work with the EU to strengthen FLEGT and close the loopholes that still allow illegal timber to be imported into the UK and Europe.

6. DFID should support properly resourced government decentralization processes and help ensure sufficient resources to maximize opportunities for re-shaping citizen-state relationships and strengthen civil society participation in strategic planning and decision making at all levels. There is particular need to support additional in-country capacity, at national and sub-national level, within state institutions dealing with the environment and natural resources (for example forests, fisheries, water, biodiversity).

7. Provide supplementary support for local, national and regional bodies and processes dealing with allocation and management of natural resources and in particular, forests, freshwater (particularly dealing with catchments) and fisheries. Accounting for the likely consequences of climate change and ongoing depletion of the natural resource base, these bodies will become critical to reduce conflicts and maximize potential benefits. DFID should promote Principle 10ii of the Rio Declaration (1992)202 for access to information, justice and participation in decision-making.

8. DFID should promote the importance of pro-actively engaging marginalised groups and communities (including women, elderly, children and indigenous people) in consultations, planning, projects, programmes and decision-making processes as crucial to effective decision-making. Civil society organisations and NGOs (including development and

ii Principle 10 of The Rio Declaration (1992) states that” Environmental issues are best handled with the participation of all concerned citizens at the relevant level. At the national level each individual shall have appropriate access to information concerning the environment…. States shall facilitate and encourage public awareness and participation…. Effective access to judicial and administrative… shall be provided.”

environment NGOs) should be actively engaged and gender issues must be mainstreamed to ensure policies and practice are line with internationally agreed instruments such as the Convention on the Elimination of Discrimination against Women (CEDAW), the subsequent Beijing Platform for Action, and Security Resolution 1325.203

9. DFID should address good environmental governance (including of natural resources) as part of its overall strategy of promoting good political governance with it’s partner governments. This requires extending its support to improving accountability between government and it’s citizens to include all sectors but especially natural resources. In support of is urged to DFID:(i) amend civil society funding to enable capacity building on governance and sustainable

development and increase support to develop civil society capacity in developing countries to hold their governments accountable for the wise use and sustainable management of natural resources.

(ii) support the EU ‘Thematic Programme for Environment and Sustainable Use of Natural Resources including Energy’ as a key instrument for delivering on the environmental dimensions of development and other external policies. A group of environment NGOs have estimate that this requires multi-annual financial earmarking of at least 450mEUR per annum, necessary to address global environmental challenges posed by economic, political and social pressures upon natural resources.204

6. CHANGING AID ARCHITECTURE: DELIVERING AID EFFICIENTLY AND COHERENTLY

“…the international system needs to better recognise and deal with the fact that there are many policies and actions which affect development, not just about aid –but also climate change, global corruption, managing shocks, peace and security and human rights – and we need a more effective system to deal with every single one of them”

Hilary Benn, ‘An international development system fit for the 21st Century’ White Paper Speech, ODI, London 14/03/2006

Background and Context

Effective long-term development can only be delivered through effective international development systems. However, existing international development systems often fail to produce better sustainable development outcomes. ‘International aid architecture’ refers to the way the international aid system works.205 The efficiency of aid institutions, structures and processes has come under increasing review. Over the past decade, there has been growing recognition that the modalities of Official Development Assistance (ODA) have often failed to generate intended development results.206 There is a growing perception among donors and recipient governments, as well as many NGOs, that a multiplicity of agencies, compounded by a multiplicity of agendas and purposes leads to a diversity of inefficiencies. Joint or overall utility maximisationiii will not happen, unless the actions of multiple independent actors (for example donors, international agencies and governments) are efficiently coordinated.

A number of other issues constrain and compound the efficient functioning of aid architecture including: forced liberalisation characterised by Structural Adjustment Programmes (SAPs) of the 1980s and still prominent in Poverty Reduction Strategy Papers (PRSPs), economic policy conditionality in return for aid, lack of international donor harmonisation, lack of coherence on international development policy and a global economic system championed by rich countries and the undemocratic global institutions they dominate (for example World Bank, IMF and WTO). Currently the international development system is not delivering sustainable development, justice and equity. There is an urgent need to reconsider the efficacy of the international aid system to produce improved sustainable development outcomes.

Overview: The Debate on the International Aid System - Which Way Forward?

Over the past decade, there has been growing recognition that the aid modalities of ODA in general and SAPs have failed to deliver on their promises.207 The 1990s saw the emergence of new ‘policy management’ approaches, especially direct budget support (DBS), sector budget support (SBS) and pooling fund arrangements under Sector-Wide Approaches (SWAPs) - along with the introduction of PRSPs and related institutional frameworks (such as the Performance Assessment Framework (PAF) and the Medium-Term Expenditure Framework (MTEF).208 More recently, there have been several efforts by major donors and multilateral institutions to understand why aid has failed to produce better development outcomes and to build from those lessons to improve aid effectiveness. The Rome Declaration on Harmonisation (2003)209 and the Paris Declaration on Aid Effectiveness (2005)210 are the culmination of these initiatives aimed at improving aid effectiveness.

Donor agencies and multilateral institutions are increasingly focusing on policy and budget processes at national, and global levels, but this approach does not get to grips with the means to achieve change at local level. This presents a significant barrier to reaching the MDGs, and achieving broader social and economic empowerment. Direct Budgetary Support (DBS) has iii Utility maximisation refers to the attainment of the greatest possible utility (utility means the benefit or satisfaction that a person gets from the consumption of a good or services).

become the principal means by which many donors deliver increased aid flows. It entails giving money to Ministries of Finance and Planning, for distribution to other government departments. It makes central governments more concerned about satisfying their donors, and less accountable to their electorates. It favours the status quo and ignores the diverse complexity of many local contexts.

The 2005 Paris Declaration on donor harmonisation reinforces the DBS model, putting in place central systems of scrutiny and getting donors to focus on big central government activities and on joint projects but taking their eyes off local government and community level contexts. There are certainly positive sides to this delivery of aid, by providing long term, predictable supplies of flexible aid to allow governments to respond to the needs of their communities. But there are also many risks that suggest it is vital to find complementary means to support a range of activities at local government and community levels.iv

iv Numerous examples of local funding mechanisms exist, from grants to upgrade slum housing in Mumbai, India to the new community land fund being established in Mozambique (see ‘How to Make Poverty History: The central role of local organizations’, IIED (2005) http://www.iied.org/Gov/mdgs/documents/mdg3/ch1_26pp.pdf

4 DFID, EC, UNDP, and The World Bank (2002): Linking Poverty Reduction and Environmental Management: Policy Challenges

5 Chen, S. and Ravallion, M. (2004) “How have the world’s poorest faired since the early 1980’s?” Policy Research

6 World Resources Institute (2005). World Resources 2005: the wealth of the poor – managing ecosystems to fight poverty UNEP/UNDP/WRI/World Bank Chapters 1 & 2 http://population.wri.org/worldresources2005-pub-4073.html.

16 In December 2003 the Swedish Parliament adopted ‘Shared responsibility - Sweden's policy for global development.’ … ‘Global development policy is a task for the whole government and not merely a development assistance issue. All policy areas have a common overall objective for global development policy: to contribute to equitable and sustainable global development. …Equitable and sustainable global development can only be achieved by many forces pulling in the same direction. Coherence must characterise national and EU policies alike. Links must be made between security, trade,

20 The Commission for Africa Report, HMG (2005) “from 2008 donors should make climate variability and climate change

25 Poverty and Environment Partnership (2005) “Sustaining the Environment to Fight Poverty and Achieve the MDGs. Environment for the MDGs – a message to the 2005 World Summit” prepared by UNDP, UNEP, IIED, IUCN & WRI

The shift towards DBS as a preferred aid modality has had additional impacts on the aid system, through further empowering macroeconomists. The first World Bank-driven PRSPs were focused on economic and fiscal reform and with economists firmly in the driving seat. In DFID this has been accelerated by DFID restructuring and the dominance of macroeconomists on the Management Board. Environment advisors and others have played second fiddle to economic advisors, and their voice and position has often been weakened.

DFID’s Approach to the Environment Paper (2006)211 provides a solid base for rectifying this imbalance and putting sustainable development back at the heart of the UK government’s approach to international development. However, successful delivery will require further 26 DFID (2006) Environment Approach Paper.27 Menocal, A.R. and A. Rogerson (2006). Which Way the Future of Aid? Southern Civil Society Perspectives on Current Debates on Reform to the International Aid Systems. Working Paper 259.ODI, London.28 Principle 10 of The Rio Declaration (1992) “Environmental issues are best handled with the participation of all concerned citizens at the relevant level. At the national level each individual shall have appropriate access to information concerning the environment…. States shall facilitate and encourage public awareness and participation…. Effective access to judicial and administrative… shall be provided.” Paragraph 128 of the WSSD, 2002, further support this as does a number of Multilateral agreements (e.g. Aarhus Convention, 1998 and the Malmo Declaration 2000).29 The Corporate Responsibility (CORE) Coalition set up in 2001, represents over 130 charities and campaigning organisations, faith-based groups, community organisations, unions such as AMICUS, GMB, UNISON and TGWU, businesses and elected representatives. http://www.corporate-responsibility.org/

30DFID, EC, UNDP, and the World Bank (2002). Linking Poverty Reduction and Environmental Management: Policy Challenges and Opportunities. Paper prepared for the World Summit on Sustainable Development, Johannesburg. http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2002/09/27/000094946_02091704130739/Rendered/PDF/multi0page.pdf 31 Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC 32 Report of the UN Secretary General (2005). In Larger Freedom: towards development, security and human rights for all. http://www.un.org/largerfreedom/contents.htm 33 UN (2005). UN Millennium Development Goals. http://www.un.org/millenniumgoals/index.html 34 Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DCPoverty-Environment Partnership (2005). Investing in Environmental Wealth for Poverty Reduction. UNDP / UNEP / IIED / IUCN / WRI. http://www.undp.org/pei/pdfs/InvestingEnvironmentalWealthPovertyReduction.pdf World Resources Institute (2005). World Resources 2005: the wealth of the poor – managing ecosystems to fight poverty UNEP/UNDP/WRI/World Bank, Chapters 1 & 2. http://population.wri.org/worldresources2005-pub-4073.html.35 DFID, EC, UNDP, and World Bank (2002): Linking Poverty Reduction and Environmental Management: Policy Challenges and Opportunities, paper for the World Summit on Sustainable Development, Johannesburg. http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2002/09/27/000094946_02091704130739/Rendered/PDF/multi0page.pdf 36 DFID (2006). DFID’s Approach to the Environment. DFID, London.37 Chen, S. and Ravallion, M. (2004). How have the worlds poorest faired since the early 1980’s? Policy Research Working Paper 3341, Washington CD, World Bank.38 World Resources Institute (2005). World Resources 2005: the wealth of the poor – managing ecosystems to fight poverty UNEP/UNDP/WRI/World Bank Chapters 1 & 2. http://population.wri.org/worldresources2005-pub-4073.html.Economics for the Environment Consultancy (EFTEC) (2005). The economic, social and ecological value of ecosystem services: a literature review: final report for the Department for the Environment, Food and Rural Affairs. EFTEC. London.39 Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC 40 DFID (2006). DFID’s Approach to the Environment. DFID, London.UN Task Force on Environmental Sustainability (2005). Environment and human well-being: a practical strategy. http://www.unmillenniumproject.org/reports/tf_environment.htm 41 Tear fund (2005) Dried up, drowned out. http://www.tearfund.org/webdocs/website/campaigning/policy%20and20research/driedupdrownedout.pdf 42 Simms, A., J. Magrath and H. Reid. (2004) Up in Smoke? Threats from, and responses to, the impact of global warming on human development. IIED, London. http://www.iied.org/pubs/pdf/full/9512IIED.pdf 43 World Bank (2000) Voices of the Poor. http://www1.worldbank.org/prem/poverty/voices/reports.htm44 Satterthwaite, D. (2003) The Millennium Development Goals and Local Processes: Hitting the Target or Missing the Point? http://www.iied.org/Gov/mdgs/documents/9291IIED.pdf45 Poverty-Environment Partnership (2005). Investing in Environmental Wealth for Poverty Reduction. UNDP / UNEP / IIED / IUCN / WRI. http://www.undp.org/pei/pdfs/InvestingEnvironmentalWealthPovertyReduction.pdf

commitment, resources and expertise – including through better in-house training and use of performance targets and ensuring in-country capacity to support often-weak environment departments or ministries. We are now at a critical juncture as environment issues such as climate change are becoming increasingly important and are rising up the political agenda. DFID must seize this opportunity to regain its leadership and deliver long term aid effectiveness.

Funding should be tailored to meet the needs of each specific country - one size does not fit all. A basket of mechanisms is needed, for example to support:

Poor countries with good governance (including environmental governance): Budget support and sector programmes assistance

Poor countries with challenging policy environments: Targeted interventions supported by technical assistance – including addressing environmental issues

Countries in conflict, where the policy environment may be difficult or non-functional: Assistance to help them move out of conflict and relieve some of the most pressing needs, as well as to protect their natural resource base from exploitation

In particular, non-Direct Budget Support funds linked to development are needed to: Strengthen civil society engagement in decision-making Support civil society advocacy Build local capacity Invest in the institutions and initiatives of poor people Increase investment in critical environmental assets in ways that provide the best returns

for the poor Support vital ecosystem services and biodiversity of national or global significance, in

ways that are pro-poor

Why We Need to Change the International Aid Architecture

There are six key reasons that illustrate the need for reform of international aid system:

(i) The volume of aid is projected to increase by 60% by 2010(ii) There have been progressive changes in the way aid is directed, with donors increasingly

willing to fund recurrent expenditures

46 UN (2005). UN Millennium Development Goals. http://www.un.org/millenniumgoals/ 47 Poverty-Environment Partnership (2005). Investing in Environmental Wealth for Poverty Reduction. UNDP / UNEP / IIED / IUCN / WRI. http://www.undp.org/pei/pdfs/InvestingEnvironmentalWealthPovertyReduction.pdf 48DFID (2001). Poverty and the Environment: What the Poor Say Environment Department Issues Paper No. 1, DFID, London. 49 DFID (2001). Poverty and the Environment: What the Poor Say Environment Department Issues Paper No. 1, DFID, London.50 DFID (2001). Poverty and the Environment: What the Poor Say Environment Department Issues Paper No. 1, DFID, London.51 Poverty-Environment Partnership (2005). Sustaining the Environment to Fight Poverty and Achieve the MDGs: The Economic Case and Priorities for Action. http://www.undp.org/pei/pdfs/SustainingEnvironmentFightPoverty.pdf 52 Hamilton, K. (2005). Where is the Wealth of Nations? Measuring Capital for the 21st Century. World Bank, Washington D.C.53 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board, www.millenniumassessment.org/proxy/document.429.aspx 54 DFID (2001). Poverty and the Environment: What the Poor Say Environment Department Issues Paper No. 1, DFID, London.55 United Nations Convention to Combat Desertification, http://www.unccd.int/56 WBGU (2005). Development Needs and Environmental Protection. Recommendations for the Millennium +5 summit Policy Paper. German Advisory Council of Global Change.

(iii) In response to the MDGs, donors are increasingly moving to a results-focus and away from an inputs-focus

(iv) There is an increasingly large mismatch between the requirement of multiple donors for dialogue and the capacity of recipients to engage in such dialogue

(v) The distribution of current aid is not systematic or organised in a rational way, leading to vast differences in the volumes of aid flowing to objectively similar countries212

(vi) Mounting evidence demonstrates that the international development system is failing the environment, with severe consequences for the poorest.213 MDG7 (ensuring environmental sustainability) is way off track and threatens the achievement of other MDGs.214 The world is facing dire environmental consequences - climate change, biodiversity loss, declining ecosystem services, increasing vulnerability and tension and conflict.

Current Efforts to Improve the Aid Architecture

The Millennium Development Goals (MDGs) are part of a significant change in the way in which international development is delivered. An increase in international development assistance was highlighted as key to ensuring that the MDGs are realised. Since then, there have been numerous calls to increase both the quantity and quality of aid.215 Rich countries began to meet old pledges to increase development assistance to 0.7% of national income with increases in aid and new targets for reaching 0.7%.216 DFID has recognised this as both an opportunity and a key challenge – how should it move forward with big cash, less staff and multiple pressures? DFID is set to become a serious cash player (from ~£5bn to £15bn over 7-10 years) as it reaches it’s 0.7% ODA commitment by 2013. This will put it on a par with the World Bank today, but with one sixth of its staffing.

Among donors and a number of recipient country governments, a growing consensus has emerged on what needs to be done to make development assistance work. At a High Level Forum on Aid Effectiveness held in Paris in 2005,217 both donors and recipient countries renewed pledges made in the Rome Declaration on Harmonisation in 2003,218 to improve the levels of coordination and minimise the negative effects of fragmented and unpredictable flows. The major donors and partner countries agreed to emphasise ownership, alignment, harmonisation, managing results and mutual accountability.

The Paris Declaration also underlined the importance of strengthening the application of Environmental Impact Assessments and deepening common procedures for projects, including consultations with stakeholders and applying common approaches for strategic environmental assessment at sector and national levels (“including addressing implications of global environmental issues such as climate change, desertification and loss of biodiversity”).219

In terms of donor harmonisation and the Paris declaration, there is an urgent need for wider debate on decisions vis a vis comparative advantage. There is a need to ensure truly cross cuttings issues such as the environment and gender are understood and incorporated into the thinking of all donors. Within joint support, there should be clear lead donors, with agreed accountability, that are responsible for ensuring cross-cutting issues are addressed.

The European Consensus on Development Policy agreed by all Member States, the European Commission and the European Parliament in November 2005220 re-iterated the need for improving aid effectiveness through donor harmonisation and tackling policy coherence for development, as well as continued implementation of the Paris Declaration. It remains to be seen whether political commitment is sufficient to operationalise the Paris recommendations.

There is some welcome progress, in that a recent joint OECD DAC and EPOC has adopted a “Framework for Common Action Around Shared Goals” (4th March 2006) to improve the coordination and coherence of efforts by Development Cooperation and Environment agencies in OECD countries, in support of poverty reduction and the MDGs.221 Development and Environment ministers at the meeting also agreed a “Declaration on integrating climate change adaptation into development cooperation” (4th April 2006).222 This in response to the UN 2005 World Summit and directly supports the Paris Declaration. Resources and commitment to operationalise this are now crucial.

The lack of structure and the multiplicity of agencies and agendas originate from and relate to factors outside the current aid system, indicating that the search for solutions must go beyond the current aid system. This requires engagement with the powerful political forces shaping institutional and behavioural parameters in which aid occurs. The international aid system must radically change if aid is to become real and effective.223 It must be driven by efforts to protect the rights of the poor rather than by geopolitical and commercial objectives. In recognition of this DEG endorses a call by Action Aid and others for a new International Aid Agreement that holds donors and recipients mutually accountable for securing the basic rights of the poor.224

THIS REPORT MAKES THE FOLLOWING RECOMMENDATIONS TO THE CURRENT AID ARCHITECTURE TO BETTER DELIVER AID EFFICIENTLY AND COHERENTLY

Recommendations

1. Recognise the benefits and limitations of Direct Budgetary Support (DBS). Poor countries lacking strong policy and institutional environments need targeted interventions supported by technical assistance and thus more flexible and adaptable forms of financial aid assistance. Funding should be tailored to meet the needs of each specific country- one size does not fit all. A basket of mechanisms is needed, for example to support:(i) Poor countries with good governance (including environmental governance) budget

support and sector programmes assistance(ii) Poor countries, which lack the required policy environment: Targeted interventions

supported by technical assistance including addressing environmental issues(iii) Countries in conflict, where the policy environment may be difficult or non-functional:

Need assistance to help them move out of conflict and relieve some of the most pressing needs, as well as to protect their natural resource base from exploitation

For fragile states and where there are questions over good governance, the role of civil society as channels for both innovative projects to deliver on the ground and in terms of strengthening their advocacy capacity to enable fuller engagement in decision making and access to information, are vitally important. In particular, non-Direct Budget Support funds linked to development are needed to: (i) Strengthen civil society engagement in decision-making (ii) Support civil society advocacy(iii) Build local capacity(iv) Invest in the institutions and initiatives of poor people(v) Increase investment in critical environmental assets in ways that provide the best

returns for the poor(vi) Support vital ecosystem services and biodiversity of national or global significance, in

ways that are pro-poor

2. Ensure aid quantity and quality is increased – meeting 0.7% ODA as quickly as possible. Longer term and more predictable finance is required with better donor, harmonisation to reduce duplication, and with clearer allocation of functions between donors. In accordance with the EU Consensus and Paris declaration,225 DFID should:(i) Support increased international donor harmonisation and coherence to ensure aid

effectiveness(ii) Continue to lead in ensuring the Paris Declaration226 is operationalised, especially its

environmental commitments and ensuring gender commitments are meaningfully integrated. Support the call for clear lead donor roles and accountability to address cross-cutting issues, such as the environment, including through the development of joint analysis, assessments and common frameworks for support

(iii) Champion the environmental cause – both internally and by encouraging others to ensure environmental issues are properly assessed, and by supporting environmental players from in-country to be involved in strategic planning and decision making

3. Deliver clear environment roles for aid that are defined, benchmarked and supported, particularly in light of the off-track nature of MDG7. This needs to go further than just supporting policy alone. In Tanzania DFID has done an excellent job in providing assistance to ensure environment is mainstreamed in their PRSP, but has now withdrawn support at a critical time when capacity is urgently needed to deliver.

4. Increased coherence on international development policy, through:(i) Ensuring consistency with the “European Consensus” (November 2005) and the EU

Treaty objective of promoting sustainable development(ii) Ensuring adherence to the European Community principles of coherence for

development and cooperation policy (Article 178) as well as environmental integration across all policies (Article 6)

(iii) Effective environmental mainstreaming and timely use of environment screening tools and procedures227

(iv) Within HMG, developing new legislation (for example along the lines of Swedish international development legislation)v for coherence on international sustainable development policy (at support for example energy, trade, agriculture, fisheries and foreign policy)

(v) Leading the EU towards fostering a global trade and financial system that is open, rules based, predictable and non discriminatory - it is schizophrenic for the UK government to channel resources into the accomplishment of the MDGs on one hand whilst simultaneously promoting an economic system and strategy for development that is not based on the interests of the poor

5. Increase the power and participation of the poor and marginalised in making decisions aimed at transforming their lives. Support civil society organisations as they often best understand the needs of the poor and marginalised. For example, promoting participation of environmental civil society could see the environment, a vital asset to the livelihoods of the

v In December 2003 the Swedish Parliament adopted ‘Shared responsibility - Sweden's policy for global development.’ … ‘Global development policy is a task for the whole government and not merely a development assistance issue. All policy areas have a common overall objective for global development policy: to contribute to equitable and sustainable global development. …Equitable and sustainable global development can only be achieved by many forces pulling in the same direction. Coherence must characterise national and EU policies alike. Links must be made between security, trade, agriculture, public health and migration policies and global development.’ From ‘Global development and development cooperation’, online at http://www.sweden.gov.se/sb/d/3102.

vast majority of poor people, being given the status it deserves in national development strategies such as PRSPs.

6. Prioritise changing accountability relations between aid recipient governments and donors, currently heavily tilted towards donors. Mutual accountability, contractual obligations and enforcement mechanisms should apply not only to aid recipients but to donors as well. This should entail full implementation, monitoring and feedback of the UK government’s new conditionality position. Support ‘no economic conditionality’ in donor circles and multilateral process.

7. Prioritise improved monitoring and evaluation of aid to determine aid effectiveness. Monitoring and evaluation should be done in a transparent manner involving all stakeholders including civil society organisations, aid recipient governments and the poor people who are the intended beneficiaries of aid. The information gathered from monitoring and evaluation should be used to improve DFID’s aid practices.

8. Championing fundamental international architectural shifts to ensure long-term environmental sustainability and poverty eradication. HMG should support multilateral system reform (including UN, World Bank, IMF and WTO) to ensure genuinely democratic processes and institutions that give an equal voice to developing countries and ensure social and environmental objectives are properly safeguarded. HMG and DFID should also be pro-active in reforming IFI positions to support pro-poor sustainable development and ensure that the UK's own position in multilateral negotiations promotes pro-poor sustainable development.

9. Support global good governance through adherence to globally agreed frameworks and effective international organizations. Reinforce international law and intensify multilateral cooperation through the UN. Support reform of international financial institutions such as the World Bank and IMF, and the World Trade Organization and the coherent integration of their policies and actions fully into global governance architecture. Promote accountability of key financial institutions such as the IMF and the World Bank to ensure that they implement and safeguard policies which are designed to ensure that they live up to their duties to the people.

10. Honour commitments made through the Paris Declaration,228 UK’s Sustainable Development Strategy,229 and DFID’s Approach to the Environment230 paper and their Environmental Guide.231 Commitments include environmental impact assessments and strategic environmental assessments for all significant programmes, policies and projects as well as addressing implications of global environmental issues such as climate change, desertification and loss of biodiversity.232 Also, include supporting development of specialised technical and policy capacity necessary for environmental analysis and support for the implementation and enforcement of environmental legislation in aid recipient countries.

11. DFID and HMG should work effectively as part of the OECD (DAC and EPOC) to support and deliver the agreed “Framework for common action and shared goals”, and the “Declaration on integrating climate change adaptation into development cooperation”, both adopted by Development and Environment Ministries of OECD Members Countries (4 th

April 2006).233

7. POVERTY, PEACE, CONFLICT AND THE ENVIRONMENT

“First and foremost, all of us need to do more - governments and multilateral organisations – to prevent conflict; giving more attention and resources to the causes as well as the symptoms of conflict… We can also help reduce fighting over the use of natural resources through better regulation… without peace and security, development simply won’t happen”

Speech by Hilary Benn, ‘Humanitarian and conflict reform – an emergency service for the world’, United Nations, New York, 23/01/2006

“Peace on Earth depends on our ability to secure our living environment” Ole Danbolt Mjoes, in announcing Wangari Maathai - Kenyan environmental activist and Environment

Minister, as winner of the 2004 Nobel Peace Prize

Background and Context

Environmental problems are rated alongside the threats of terrorism and insecurity as major global challenges.vi Environmental factors are also increasingly implicated in analyses of development, peace and conflict situations.234 There is mounting concern over the extent to which environmental stress is threatening livelihoods, health and the fulfilment of basic needs, and harming the sustainability and resilience of fragile ecosystems.235 Environmental degradation intensifies conflict and competition over natural resources, aggravating social tensions, and in certain volatile situations can provoke or escalate violence and conflict. The challenges at the nexus of environment, conflict and peace exist on multiple levels and concern overlapping constituencies (including governance, rural livelihoods, private-sector development, and equality especially gender). They also require multiple dynamic and holistic solutions that are informed by research and practice.

vi For example, Hans Blix talking to David Frost on BBC television (March 2004) commented that: “To me the question of the environment is more ominous than that of peace and war…. I’m more worried about global warning than I am of any major military conflict.” Similarly Sir David King, Chief Scientific Advisor to Tony Blair cited climate change as “the most severe problem we are facing today – more serious even than the treat of terrorism .” (Science, January 9, 2004).57UNEP and CBD, Global Biodiversity Outlook 2 (2006) - main messages at http://www.biodiv.org/gbo2/main-messages.shtml58 WBGU (2005). Development Needs and Environmental Protection. Recommendations for the Millennium +5 summit Policy Paper. German Advisory Council of Global Change.59 United Nations. 2002. Natural Disasters and Sustainable Development: Understanding The Links Between Development, Environment and Natural Disasters. Department Of Economic and Social Affairs Department Of Economic and Social Affairs. Background Paper No. 5 Submitted by The United Nations International Strategy For Disaster Reduction. Commission On Sustainable Development.http://www.johannesburgsummit.org/html/documents/backgrounddocs/unisdr%20report.pdf60 International Red Cross (2004). Annual World Disasters Report. International Red Cross. Geneva, Switzerland.61 International Red Cross (2004). Annual World Disasters Report. International Red Cross. Geneva, Switzerland.62 IRIN (2005). Disaster Reduction and The Human Cost of Disaster. IRIN Web Special http://www.irinnews.org/webspecials/DR/DR-webspecial.pdf63 World Bank (2004). Natural Disasters: Counting the Costs. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20169861~menuPK:34457~pagePK:34370~piPK:34424~theSitePK:4607,00.html64 International Strategy for Disaster Reduction (2005), Hyogo Framework for Action 2005-2015: Building the Resilience of Nations and Communities to Disasters. www.unisdr.org/wcdr 65 UN-Habitat (2003). Slums of the World: the face of urban poverty in the new millennium?. UN-Habitat, Nairobi.66 Toulmin, C. 2006. Securing land rights for the poor in Africa — Key to growth, peace and sustainable development. A paper  prepared for the High Level Commission on the Legal Empowerment of the Poor  (HLC). January 2006. http://legalempowerment.undp.org/documentWord/Africa_Land_Rights.pdf

The interface between environment, conflict and peace is dynamic, and as the impacts of climate change increase, they are likely to further amplify existing threats to global security. Experts predict that climate change will trigger enormous physical and social changes such as water shortages, natural disasters, decreased agricultural productivity, increased rates and scope of infectious diseases, and shifts in human migration.vii Such changes are likely to increase competition for natural resources, destabilize weak states, escalate humanitarian crises and thus significantly impact international security.

Environmental issues, including land degradation, climate change, water quality and quantity, and the management and distribution of natural-resource assets (such as oil, forests, and minerals) can all affect peace and security at the individual, national and global levels. These factors can vii For example British Defence Secretary John Reid warns that global climate change and dwindling natural resources are combining to increase the likelihood of violent conflict over land, water and energy. Climate change, he indicated, “will make scarce resources, clean water, viable agricultural land even scarcer”—and this will “make the emergence of violent conflict more rather than less likely.” Cited in The Energy Bulletin (07/03/2006) http://www.energybulletin.net/13605.html. 67 DFID (2003). Agriculture and poverty reduction: unlocking the potential, a DFID policy paper, December 2003.68 UNESCAP (2005). Theme Paper – Achieving Environmentally Sustainable Economic Growth in Asia and the Pacific, E/ESCAP/SO/MCED(05) http://www.sustdev.org/index.php?option=com_docman&task=doc_download&gid=54 69 Poverty-Environment Partnership (2005). Sustaining the Environment to Fight Poverty and Achieve the MDGs: The Economic Case and Priorities for Action. http://www.undp.org/pei/pdfs/SustainingEnvironmentFightPoverty.pdf 70 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board, www.millenniumassessment.org/proxy/document.429.aspx World Resources Institute (2005). World Resources 2005: the wealth of the poor – managing ecosystems to fight poverty UNEP/UNDP/WRI/World Bank Chapters 1 & 2. http://population.wri.org/worldresources2005-pub-4073.html.71 Poverty-Environment Partnership (2005). Sustaining the Environment to Fight Poverty and Achieve the MDGs: The Economic Case and Priorities for Action. http://www.undp.org/pei/pdfs/SustainingEnvironmentFightPoverty.pdf 72 Martin-Hurtado, R (2002) Costing the 7th Millennium Development Goal: Ensure Environmental Sustainability. World Bank Environment Department, World Bank, Washington D.C.73 International Energy Agency (2004). World Energy Outlook 200. http://www.worldenergyoutlook.org/ 74 International Energy Agency (2004). World Energy Outlook 2004 http://www.worldenergyoutlook.org/ 75 World Bank (2003). Household Energy Use in Developing Countries: A Multi-country Study. Energy Sector Management Assistance Programme, World Bank, Washington D.C. 76 Larson, B and S. Rosen (2000) Household Benefits of Indoor Air Pollution Control in Developing Countries. Paper presented to USAID/WHO Global Technical Consultation on the Health Impacts of Indoor Air Pollution and Household Energy in Developing Countries, Washington D.C.77 Winters, P et al. (1998). “Economic and welfare impacts of climate change on developing countries”, Environmental and Resource Economics,12:1, pages 1-24.78 Abramovitz,J. (2001). Unnatural Disasters. Worldwatch Paper 158, Worldwatch Institute, Washington D.C.79 Anderson, D. (1987). The Economics of Afforestation: A Case Study in Africa. Johns Hopkins University Press, Baltimore. 80 Pearce, D. W. (2005). Investing in Environmental Wealth for Poverty Reduction. UNDP, http://www.iucn.org/themes/economics/Files/Economics%20Paper-Final.pdf 81 Balmford et al., (2002) Economic Reasons for Conserving Wild Nature, Science, Vol. 297 82 HM Government (2005). UK Government Sustainable Development Strategy: Securing the future. at: http://www.sustainable-development.gov.uk/publications/pdf/strategy/SecFut_complete.pdf 83 UNDESA, 2005 http://www.un.org/esa/desa/ 84UNEP (2006). GEO Year Book 2006: An overview of our changing environment. http://www.unep.org/geo/yearbook/yb2006/PDF/Complete_pdf_GYB_2006.pdf85 Intergovernmental Panel on Climate Change http://www.ipcc.ch/ 86 Intergovernmental Panel on Climate Change http://www.ipcc.ch/ 87 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board. www.millenniumassessment.org/proxy/document.429.aspx 88 World Economic Forum http://www.weforum.org/ 89 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board.

contribute directly to conflict, or may exacerbate the underlying causes of conflict including poverty, migration, small arms, and infectious diseases.

Acts of terror and the dangerous reactions they provoke have also been linked to underlying sources of global insecurity, including the perilous interplay between poverty, infectious disease, environmental degradation, and rising competition over oil and other resources.236 This has been acknowledged at the highest level, for example, in a key document for the 2005 World Summit (Millennium + 5) presented by The High Level Panel on Threats, Challenges and Change, whose panel members are former heads of governments, foreign ministers, and national security, military and development experts. The document set out ‘a new vision of security’ seeing transnational

www.millenniumassessment.org/proxy/document.429.aspx 90 HM Government (2005). UK Government Sustainable Development Strategy: Securing the future. http://www.sustainable-development.gov.uk/publications/pdf/strategy/SecFut_complete.pdf 91 DFID (2006). DFID’s Approach to the Environment. DFID, London.92 DFID (2006). DFID’s Approach to the Environment. DFID, London.93 Poverty and Environment Partnership (2005) “Sustaining the Environment to Fight Poverty and Achieve the MDGs. Environment for the MDGs – a message to the 2005 World Summit” prepared by UNDP, UNEP, IIED, IUCN & WRI94 DFID (2006). DFID’s Approach to the Environment. DFID, London.95 DFID (2003). Agriculture and poverty reduction: unlocking the potential. DFID policy paper, London.96 UN-Habitat (2003). Slums of the World: the face of urban poverty in the new millennium?. UN-Habitat, Nairobi.97 International Strategy for Disaster Reduction (2005). Hyogo Framework for Action 2005-2015: Building the Resilience of Nations and Communities to Disasters. www.unisdr.org/wcdr 98The Independent Online Edition (2006). Blow for Britain's fight against climate change as emissions target is missed. 29 March 2006 http://news.independent.co.uk/environment/article354231.ece 99 The Independent Online Edition (2006). Global warming: Your chance to change the climate. 28/03/2006 http://news.independent.co.uk/environment/article354055.ece 100 DFID (2005). Internal submission to Stern Review. DFID, London.101 Simms, A. (ed.) (2005) Up in smoke? Threats from, and responses to, the impact of global warming on human development. UK Working Group, New Economics Foundation (NEF) London, UK102 National Statistics, Statistical Release, Provisional 2005 UK Climate change sustainable development indicator and 2004 air pollutant emissions final figures, 30 March 2006 (ref: 133/06), DEFRA, UK.103 Hilary Benn, Secretary of State for International Development, February 23rd 2006. ‘Development beyond Aid. Speech at Chatham House, London, UK104 http://news.bbc.co.uk/1/hi/business/4672716.stm 105 See reference 4 above106 Parry, M., Presentation: Avoiding Dangerous Climate Change: Overview of Impacts, IPCC WGII, WMO & UNEP.107 DFID (2005). Internal submission to Stern Review. DFID, London.108 Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC109 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board. www.millenniumassessment.org/proxy/document.429.aspx 110 DFID (2005). Internal submission to Stern Review. DFID, London.111 WWF (2006). Counting consumption: CO2 emissions, material flows and Ecological Footprint of the UK by region and devolved country. http://www.wwf.org.uk/filelibrary/pdf/countingconsumption.pdf 112 DEFRA (2005). Avoiding Dangerous Climate Change. DEFRA, London.113 IPCC (2001). 3rd assessment report. http://www.ipcc.ch/pub/un/syreng/spm.pdf 114 WWF (2006). Climate witnesses. http://powerswitch.panda.org/the_problem/climate_witnesses.cfm 115 World Health Report (2002). Reducing risks, promoting healthy life. WHO, Geneva, 2002.116 Nyong, A. (2005). The Economic, Developmental and Livelihood Implications of Climate Induced Depletion of Ecosystems and Biodiversity in Africa. http://www.wwf.org.uk/filelibrary/pdf/ipcc_paper.pdf117 United Nations Framework Convention on Climate Change (UNFCCC) Article 4.8 http://unfccc.int/2860.php118 DFID (2006). DFID’s Approach to the Environment. DFID, London.119 According to scientists at the Africa Earth Observatory Network120 WWF (2005) Overview of Glaciers- Glacier Retreat, and Subsequent Impacts in Nepal, India and China, WWF Nepal Programme, http://assets.panda.org/downloads/himalayaglaciersreport2005.pdf121 Nyong, A. (2005). The Economic, Developmental and Livelihood Implications of Climate Induced Depletion of Ecosystems and Biodiversity in Africa. http://www.wwf.org.uk/filelibrary/pdf/ipcc_paper.pdf122 Vellinga, P. and W. J. van Verseveld (2000). Climate Change and Extreme Weather Events, WWF, Gland, Switzerland http://assets.panda.org/downloads/xweather.pdf

threats such as environmental degradation, poverty, terrorism and weapons of mass destruction as equally significant and interlinked.237

Whilst environmental degradation and scarcity of resources fuels conflict, increased knowledge and practice of sustainable development and wise environmental management offers opportunities for understanding how environmental issues are integral to conflict prevention and peace building. Managing environmental issues and natural resources can build confidence and contribute to peace through cooperation. WorldWatch’s State of the World Report (2005)238 emphasizes that: “Environmental Peacemaking strategies offer the chance to craft a positive, practical policy framework for cooperation that can engage a broad community of stakeholders by combining environment, development, and peace-related concerns.”

123 Simms, A. (ed.) (2005) Up in smoke? Threats from, and responses to, the impact of global warming on human development. UK Working Group, New Economics Foundation (NEF) London, UK124 Parry, M.L., Arnell, N.W., McMichael, T., Nicholls, R., Martens, P., Kovats, S., Livermore, M., Rosenzweig, C., Iglesias, A. and Fischer, G. (2001). “Millions at risk: defining critical climate change threats and targets”. Global Environmental Change, 11, (3), 181-183. 125 http://www.stopclimatechaos.org.uk/index.asp 126 HMG (2005). The Commission for Africa Report. London, UK.127 WWF (2005). Submission to the Stern Review. http://www.wwf.org.uk/filelibrary/pdf/cc_sternreview.pdf 128 Declaration on integrating climate change adaptation into development cooperation, 4th April 2006 at http://www.oecd.org/dataoecd/44/29/36426943.pdf; ‘Shared goals By Lena Sommestad, Minister of the Environment, Sweden, and Richard Manning, Chair of the OECD Development Assistance Committee (DAC), OECD Observer, March 2006 at http://www.oecdobserver.org/news/fullstory.php/aid/1819/Shared_goals.html129 Framework of Common Action Around Shared Goals adopted by OECD Development and Environment Ministers, 4 April 2006. Available at: http://www.oecd.org/dataoecd/44/27/36427017.pdf

130 World Resources (2005). The Wealth of the Poor: Managing ecosystems to fight poverty. UNDP, UNEP, The World Bank, WRI. http://pdf.wri.org/wrr05_full_hires.pdf 131 Woodward, D. and A. Simms (2006). Growth Isn’t Working: the Unequal Distribution of benefits and Costs from Economic Growth. Rethinking Poverty, No. 1, nef (the New Economics Foundation), London.132 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board, www.millenniumassessment.org/proxy/document.429.aspx 133 Secretariat of the Convention on Biological Diversity (2006) Global Biodiversity Outlook 2. Montreal. http://www.biodiv.org/doc/gbo2/cbd-gbo2.pdf 134 Woodward, D. and A. Simms (2006). Growth Isn’t Working: the Unequal Distribution of benefits and Costs from Economic Growth. Rethinking Poverty, No. 1, nef (the New Economics Foundation), London.135 Shaohua, C. and M. Ravallion (2004). “How have the World’s Poorest Fared since the Early 1980s?” World Bank Research Observer 19(2):141-169.136 Shaohua, C. and M. Ravallion (2004). “How have the World’s Poorest Fared since the Early 1980s?” World Bank Research Observer 19(2):141-169.137 World Bank (2006). World Development Indicators Online. http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20398986~menuPK:64133163~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html 138 Woodward, D. and A. Simms (2006). Growth Isn’t Working: the Unequal Distribution of benefits and Costs from Economic Growth. Rethinking Poverty, No. 1, nef (the New Economics Foundation), London.139 World Bank (2006). World Development Indicators Online. http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20398986~menuPK:64133163~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html Marland, G. and T. Boden (2005). Global CO2 Emissions from Fossil-Fuel Burning, Cement Manufacture, and Gas Flaring: 1751-2002. Carbon Dioxide Information Analysis Center (CDIAC), Oak Ridge, Tennessee. http://cdiac.esd.ornl.gov/ftp/ndp030/global.1751_2002.ems 140 World Bank (2006). World Development Indicators Online. http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20398986~menuPK:64133163~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html Marland, G. and T. Boden (2005). Global CO2 Emissions from Fossil-Fuel Burning, Cement Manufacture, and Gas Flaring: 1751-2002. Carbon Dioxide Information Analysis Center (CDIAC), Oak Ridge, Tennessee. http://cdiac.esd.ornl.gov/ftp/ndp030/global.1751_2002.ems

‘Environmental peacemaking’ involves using cooperative efforts to manage resources as a way to transform insecurities and create more peaceful relations between parties. This may provide a way to transform both how people approach conflict and how they view the environment. Initiatives such as peace parks, shared river basin management plans, regional seas agreements and joint environmental monitoring programs that combine politics and ecology are making headway in both the environmental movement and the peacemaking process.239 For example, State of the World (2005)240 highlights that “after decades of simmering conflict and heated border disputes, Peru and Ecuador ceased hostilities under a 1998 peace agreement facilitated by Brazil, Argentina, Chile, and the United States. The disputing governments agreed to establish conservation zones along the border that would be managed by their national agencies but headed by a bi-national steering committee. The new Cordillera del Condor conservation zone - or

141 Woodward, D. and A. Simms (2006). Growth Isn’t Working: the Unequal Distribution of benefits and Costs from Economic Growth. Rethinking Poverty, No. 1, nef (the New Economics Foundation), London. Wagstaff, A. (2003). “Child Health on a Dollar a Day: Some Tentative Cross-Country Comparisons”. Social Science and Medicine 57:1529-1538.142 Edward, P. (2006). “The Ethical Poverty Line: a Moral Quantification of Absolute Poverty”. Third World Quarterly 27(2):377-393.143 Jawara, F. and A. Kwa (2004). Behind the Scenes at the WTO: the Real World of International Trade Negotiations – Lessons from Cancun. Zed Books, London.144 Klugman, J. (ed.) (2002). A Sourcebook for Poverty Reduction Strategies. World Bank, Washington D.C.145 see http://www.iisd.org/trade/rba/ 146 Woodward, D. (2001). The Next Crisis? Direct and Equity Investment in Developing Countries. Zed Books, London.147 Cobham, A. (2005). “Tax Evasion, Tax Avoidance and Development Finance”. Working Paper 129, Finance and Trade Policy Research Centre, Queen Elizabeth House, University of Oxford, Oxford.148 Action Aid International (2005). Real Aid: An agenda for Making Aid Work. Action Aid International, London.149 DFID (2000). Eliminating World Poverty: Making Globalisation Work for the Poor. White Paper on International Development, DFID, London.150 BirdLife International, New Economics Foundation, Oxfam (2002). Measuring Real Progress - headline indicators for a sustainable world. RSPB, UK; Pagiola, S. von Ritter, K. and Bishop, J. (2004) Assessing the Economic Value of Ecosystem Conservation, Environment Department Paper No. 101, World Bank, Washington D.C.151 Worldwatch Institute (2004). State of the world 2004. Special focus: the consumer society. Worldwatch Institute, Washington D.C.152 World Trade Organization (2005). International Trade Statistics 2005. http://www.wto.org/english/res_e/statis_e/its2005_e/its05_toc_e.htm 153 Worldwatch Institute (2006). State of the World 2006. Special focus: India and China. Worldwatch Institute, Washington D.C.154 Worldwatch Institute (2006). State of the World 2006. Special focus: India and China. Worldwatch Institute, Washington D.C.155 ICFTU (2005). Whose miracle? How China’s workers are paying the price for its economic boom. International Confederation of Free Trade Unions, December 2005. http://www.workersvoiceatwto.org/www/pdf/ WhoseMiracleChinaReport.pdf 156 Anderson, S. Cavanagh, J. (2000). The Top 200: The Rise of Global Corporate Power. Institute for Policy Studies. http://www.ips-dc.org/downloads/Top_200.pdf 157 DFID (2005). DFID and the Private Sector: Working with the private sector to eliminate poverty. DFID, London. http://www.dfid.gov.uk/pubs/files/dfid-private-sector.pdf 158 SustainAbility and WWF (2005). Influencing Power: Reviewing the conduct and content of corporate lobbying http://www.wwf.org.uk/filelibrary/pdf/influencingpower_exsum.pdf 159 PLATFORM Research (2004). Pumping Poverty: Britain’s Department for International Development and the oil industry http://www.foe.co.uk/resource/reports/pumping_poverty.pdf 160 DFID (2004). UK Government response to the Extractive Industries Review, 17/08/2004. http://www.dfid.gov.uk/news/files/update-extractiveindustriesreview-full.asp161 HM Government (2005). UK Government Sustainable Development Strategy: Securing the future http://www.sustainable-development.gov.uk/publications/pdf/strategy/SecFut_complete.pdf 162 WWF, Stockholm Environment Institute, Cure, Biffaward (2006) Counting Consumption- Ecological Budget UK, WWF, UK http://www.wwf.org.uk/filelibrary/pdf/countingconsumption.pdf 163 Curmally, A. ,J. Sohn and C. Wright (2005). Multilateral Development Bank Lending Through Financial Intermediaries: Environmental and Social Challenges. WRI Issue Brief, World Resources Institute, http://pdf.wri.org/iffe_mdb_lending.pdf

“peace park” - uses the interdependence of the two countries’ ecosystems to remove a thorny obstacle to peace.”

The environment offers useful and unique qualities that lend themselves to building peace and transforming conflict. For example, environmental challenges ignore political boundaries, require a long-term perspective, encourage local and non-governmental participation, and extend community building beyond polarizing economic linkages. Meeting environmental challenges can also bridge religious and ideological divides. Cross-border environmental cooperation can be difficult to achieve, whether the borders involved are boundaries between states or social, cultural, economic and political boundaries. However, where cooperation does happen, it can enhance trust, establish cooperation, create shared regional identities around shared resources, and establish

164 DFID (2006). DFID’s Approach to the Environment. DFID, London.165 European Tender Information System (ETIS) http://www.etisys.com/50.0.html 166 Kaplinsky, R. (ed.) (2006). “Asian Drivers: Opportunities and threats”, IDS Bulletin, Vol. 37:1167 HM Government (2005). UK Government Sustainable Development Strategy: Securing the future. http://www.sustainable-development.gov.uk/publications/pdf/strategy/SecFut_complete.pdf168 Menocal, A.R. and A. Rogerson (2006). Which Way the Future of Aid? Southern Civil Society Perspectives on Current Debates on Reform to the International Aid Systems. Working Paper 259.ODI, London.169 WWF and Banktrack (2006). Shaping the future of sustainable investment. http://www.wwf.org.uk/filelibrary/pdf/sustainablefinancereport.pdf 170 DFID (2001). Making government work for poor people: building state capability. DFID strategy Paper, DFID, London.171 Narayan, D. Chambers, R. Shah, M. K. and P. Petesch, (2000). Voices of the poor: Crying out for change. World Bank, Washington D.C. http://www-wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000094946_01032805491162 172 Roe, D. (2003). “The Millennium Development Goals and Natural Resources Management: Reconciling Sustainable and Resource Conservation Livelihoods or Fuelling a Divide”. In Satterthwaite, D (ed). The Millennium Development Goals and Local Processes: Hitting the Target or Missing the Point. IIED, London. http://www.iied.org/Gov/mdgs/documents/9291IIED.pdf 173 IDS (2006) Livelihoods Connect Website http://www.livelihoods.org/info/docs/UPPAP.doc [Accessed 6 April 2006]; World Resources Institute, UNDP, UNEP, World Bank (2005) World Resources 2005: The Wealth of the Poor – Managing Ecosystems to Fight Poverty. WRI, Washington D.C. US. 174 Balmford, A. et al. (2002) Economic Reasons for Conserving Wild Nature, Science, Vol. 297, pp 950-953; RSPB & BirdLife International (2002) Unravelling the Web: The global value of wild nature, RSPB, UK http://www.rspb.org.uk/policy/Economicdevelopment/global_value.asp175 Bass, S. from presentation “Linking Poverty and Environment in Country-driven processes”, March 2006176 Waldman, L. (2005). Environment, Politics and Poverty: Lessons from a Review of PRSP Stakeholder Perspectives. http://www.acdi-cida.gc.ca/INET/IMAGES.NSF/vLUImages/Environment,%20Politics,%20and%20Poverty/$file/Synthesis%20Review%20EN%20-%20low%20res.pdf177 Donald, P.F. (2004). “Biodiversity impacts of some agricultural commodity production systems”. Conservation Biology, 18:17-38.178 UNEP (2000). Global Environment Outlook. http://www.unep.org/Geo2000/ov-e/index.htm 179 World Resources Institute (2003). World Resources 2002-2004: Decisions for the Earth: Balance, voice, and power. United Nations Development Programme, United Nations Environment Programme, World Bank, World Resources Institute, Washington D.C. http://pubs.wri.org/pubs180 World Resources Institute (2003). World Resources 2002-2004: Decisions for the Earth: Balance, voice, and power. United Nations Development Programme, United Nations Environment Programme, World Bank, World Resources Institute, Washington D.C. http://pubs.wri.org/pubs181 Resolution adopted by the UN General Assembly, 24 October 2005, 60/1. 2005 World Summit Outcomes. http://www.un.org/summit2005/documents.html182 UNEP (2001) International Environmental Governance: Multilateral Environmental Agreements (MEAs), UNEP/IGM/1/INF/3, 6 April 2001183 UNEP (2001) International Environmental Governance: Multilateral Environmental Agreements (MEAs), UNEP/IGM/1/INF/3, 6 April 2001; Brack, D. and Grey, K.(2003) Multilateral Environmental Agreements and the WTO, RIIA, UK, http://www.riia.org/pdf/research/sdp/MEAs%20and%20WTO.pdf; Multilateral CIEL, Environmental Agreements (MEAs) at http://www.ciel.org/Tae/Trade_MAEs.htm; FIELD, Trade, Investment and Sustainable Development Programme at http://www.field.org.uk/tradesust_current.php184 http://www.unemg.org/document/harmonization.php 185 Available at: (http://www.mekong.es.usyd.edu.au/events/past/GeogConference2004/mekong_casestudy.pdf

mutually recognised rights and expectations, all of which support good governance and democracy.241

Overview: Poverty Peace and the Environment

Natural resources are distributed unequally throughout the world. In some cases, scarcity (for example of water, fish, forests, or arable land) or abundance (of oil, diamonds, or other valuable resources) has contributed to violence within and between states. Environmental change, for instance climate change, may have a similar impact by reducing the availability of some natural resources and increasing the severity of floods and droughts, which may lead to mass migration, weaken state capacities, and worsen widespread poverty. Therefore, environmental stresses and

186 Available at (http://www.mrcmekong.org/mekong_program_ceo.htm187 DFID (2003) Environment Guide.188 The Review of the EC’s Development Policy Statement: Ensuring Environmental Sustainability, June 2005, NGO coalition: FERN, WWF, BirdLife International, Conservation International, IFAW and Climate Action Network Europe189 Thomas, King, Kayetta (2005) People Perspectives and Reality. 190 Global Witness (1999). A crude awakening: The role of the oil and banking industries in Angola’s conflict http://www.globalwitness.org/reports/show.php/en.00016.html 191 WRI (2003). EarthTrends: Undue influence: corruption and natural resources. http://earthtrends.wri.org/pdf_library/features/gov_fea_corruption.pdf 192 Marine Resources Assessment Group Ltd (2005). IUU Fishing on the High Seas: Impacts on Ecosystems and Future Science Needs. High Seas Task Force, Final report http://www.high-seas.org/ 193 WWF (2006). How to Put The Environment at the Heart of Poverty Reduction Strategies (PRS). Users Guides 1 (Influencing the PRS Process) and 2 (Strengthening the case for Water). WWF. London. 194 Brocklesby, M. and E. Hinshelwood (2001). Poverty and the environment: what the poor say. Centre for Development Studies, University of Wales, Swansea. http://www.dfid.gov.uk/Pubs/files/whatthepoorsay.pdf 195 WRI (2003). Decision for the Earth, Balance Voice and Power. World Resources Institute, Washington D.C. Available online at http://pubs.wri.org/pubs_pdf.cfm?PubID=3764 196 Bigg, T and Satterthwaite, D. (eds.) (2005). How to Make Poverty History – The Central Role of Local Organizations in Meeting the MDGs. http://www.iied.org/Gov/mdgs/documents/mdg3/11000IIED.pdfnSatterthwaite, D. (2003). Satterthwaite, D (ed) . The Millennium Development Goals and Local Processes: Hitting the Target or Missing the Point. IIED, London. http://www.iied.org/Gov/mdgs/documents/9291IIED.pdf 197 Government of Sweden (2003). Global development and development cooperation. http://www.sweden.gov.se/sb/d/3102 198 Paris High Level Forum (2005)., High-Level Forum: Harmonisation, Alignment and Results. Paris, February 28 – March 2, 2005. http://www.adb.org/documents/events/2005/2nd-High-Level-Forum/media-backgrounder.pdf 199 Hilary Benn, Secretary of State for International Development, February 23rd 2006. ‘Development beyond Aid. Speech at Chatham House, London, UK.200 World Commission on Dams (2000). Dams and Development. http://www.dams.org/report/contents.htm 201 Wray. N (2006) Trade and development 202 The Rio Declaration (1992) Principle 10. http://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm203 UN General Assembly (1979).The Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). http://www.un.org/womenwatch/daw/cedaw/text/econvention.htmUN (1995). The United Nations Fourth World Conference on Women, Beijing, China, September 1995. http://www.un.org/womenwatch/daw/beijing/platform/plat1.htm#statementUN (2000). United Nations Security Council Resolution 1325 On Women, Peace and Security http://www.peacewomen.org/un/sc/1325.html204 The Review of the EC’s Development Policy Statement: Ensuring Environmental Sustainability, June 2005, NGO coalition: FERN, WWF, BirdLife International, Conservation International, IFAW and Climate Action Network Europe205 Menocal, A.R. and A. Rogerson (2006). Which Way the Future of Aid? Southern Civil Society Perspectives on Current Debates on Reform to the International Aid Systems. Working Paper 259 ODI, London. 206 Menocal, A.R. and A. Rogerson (2006). Which Way the Future of Aid? Southern Civil Society Perspectives on Current Debates on Reform to the International Aid Systems. Working Paper 259 ODI, London.207 World Bank (2005). Budget Support: Concept and Issues. Paper presented at the Practitioners’ Forum on Budget Support. May 50-6, 2005, Cape Town, South Africa. http://siteresources.worldbank.org/PROJECTS/Resources/budgetsupportconceptsissues.pdf208 GRIPS Development Forum (2004). Good Donorship and the Choice of Aid Modalities- Matching Aid with country needs and Ownership. http://www.grips.ac.jp/forume/pdf_e01/ModalityEng.pdf 209 The Rome Declaration (2003). Aid Harmonization.

their consequences have direct and indirect impacts on global challenges such as poverty, terrorism, globalization, poor governance, and inequality.242

Environmental degradation and the exploitation of natural resources, whether “high value” (such as minerals and timber) or “non-extractive” (such as water or land), are among the most significant factors driving state fragility, instability and violent conflict. These factors are also likely to be amongst the reasons why original structural “root causes” of conflict are themselves significantly reshaped by conflict to give instability a dynamic of its own. Environmental damage and degradation are also major factors increasing the risk of natural disasters – which in turn can further vulnerability to conflict.

http://www1.worldbank.org/harmonization/romehlf/Documents/RomeDeclaration.pdf 210 Paris High Level Forum (2005). Aid harmonisation and Alignment. http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf211 DFID (2006). DFID’s Approach to the Environment. DFID, London.212 Menocal, A.R. and A. Rogerson (2006). Which Way the Future of Aid? Southern Civil Society Perspectives on Current Debates on Reform to the International Aid Systems. Working Paper 259 ODI, London.213 Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC 214 DFID (2006). DFID’s Approach to the Environment. DFID, London.UN Millennium Project Task Force on Environmental Sustainability (2005). Task Force on Environmental Sustainability Environment and human well-being: a practical strategy. http://www.unmillenniumproject.org/reports/tf_environment.htm 215 Action Aid (2005). Real Aid: An Agenda for making aid work. http://www.actionaid.org.uk/doc_lib/69_1_real_aid.pdf 216 ODI (2005). Scaling Up Versus Absorptive Capacity: Challenges and Opportunities for Reaching the MDGs in Africa. ODI Briefing Paper. May 2005. London. 217 Paris High Level Forum (2005). Aid harmonisation and Alignment. http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf 218 Ibid, 2005219 Ibid, 2005220 European Commissioner for Development and Humanitarian aid (2005). The development policy of the European Union: A common vision to eradicate poverty. Palace of Westminster London, 28 November 2005. http://europa.eu.int/rapid/pressReleasesAction.do?reference=SPEECH/05/737&format=HTML&aged=0&language=EN&guiLanguage=en 221 Framework of Common Action Around Shared Goals adopted by OECD Development and Environment Ministers, 4 April 2006. Available at: http://www.oecd.org/dataoecd/44/27/36427017.pdf222 Declaration on integrating climate change adaptation into development cooperation, 4th April 2006 at http://www.oecd.org/dataoecd/44/29/36426943.pdf; ‘Shared goals By Lena Sommestad, Minister of the Environment, Sweden, and Richard Manning, Chair of the OECD Development Assistance Committee (DAC), OECD Observer, March 2006 at http://www.oecdobserver.org/news/fullstory.php/aid/1819/Shared_goals.html223 Action Aid (2005). Real Aid: An Agenda for making aid work. http://www.actionaid.org.uk/doc_lib/69_1_real_aid.pdf 224 Inbdi, 2005 225 Paris High Level Forum (2005). Aid harmonisation and Alignment. http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf 226 Ibid, 2005227 DFID (2003). DFID’s Environmental Guide. DFID, London.228 Paris High Level Forum (2005). Aid harmonisation and Alignment.http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf 229 DFID (2005). DFID’s Sustainable Development Action Plan. DFID, London. 230 DFID (2006). DFID’s Approach to the Environment. DFID, London.231 DFID (2003). DFID’s Environmental Guide. DFID, London.232 Paris High Level Forum (2005). Aid harmonisation and Alignment. http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf 233 see reference 16 and 17 above234 UNHCR (1996). UNHCR environmental guidelines. Switzerland,Office of the United Nations High Commissioner for Refugees, Geneva. www.unhcr.ch) [6 May 2003].Global Witness (2003). A conflict of interests, the uncertain future of Burma’s Forests. Global Witness, London.Goodhand, J. (2003). Enduring disorder and persistent poverty a review of the linkages between war and chronic poverty. World Development, 31(3): 629–646.

Tensions over non-extractive natural resources (for example the use and availability of water and land) can drive conflict, usually on a local level. Often shaped and compounded by their interaction with other socio-economic, political and ecological factors, such tensions may spill over into wider conflict, particularly where grievances are manipulated for political ends at the macro level. In the case of Darfur in Sudan , for example, among the underlying causes of violent conflict is increasing competition between herders and farmers over land and water. This is compounded by real and/or perceived historical ethnic divisions, rivalries between pro- and anti-government groups, and the breakdown of state capacity.

Closely linked to poverty and involuntary migration, access to resources can be determined by (i) physical presence (or lack) of a natural resource, (ii) problems arising more from institutional and infrastructure deficiencies, and/or (iii) insecure or inequitable rights to control or access resources. In many settings, women may be particularly excluded from access, decision-making and the benefits from land use, productive technologies and credit, thus preventing their full participation in the economic, social and political processes that foster peace and development. In the coming decades, demographic pressure and urbanisation, inequitable access to and shortage of land, and resource depletion or degradation are widely predicted to get worse, with profound effects on stability in both rural and urban settings.

In many conflict-prone and -affected contexts, competition to control the extraction and/or trade in high-value “extractive” natural resources can cause or prolong instability, violence or wider conflict. Examples of countries where resources have contributed to conflict include Angola, the Democratic Republic of Congo (DRC), Liberia, and Sierra Leone. Wealth derived from natural resource extraction is often used to finance patronage networks, militias or arms purchases. Money from resource exploitation can become a major source of revenue for rebel forces or locally rooted armed groups, such as the Mayi Mayi in eastern DRC.

Where a state lacks accountability and responsiveness to its citizens, figures connected to government (including the security services) can become involved in misusing the influence that they exercise over natural resource exploitation. Financial flows from resource wealth may be used to reinforce military capacity, enrich those connected to the ruling clique, and pay off the opposition, key collaborators, and friendly leaders. Even where this is not the case, weak regulatory environments for investments, and a lack of capacity to assess the impacts of investments on economies and the rights of their populations, can prevent any verification of the integrity of the activities of foreign investors in the host state. The ability of militias and other “spoilers” to translate their ill-gotten assets into such wealth critically depends on their access to global financial, commodity, and arms markets.

Investor projects such as mining or other extraction activities can lead to environmental damage and degradation, causing or aggravating tensions. They can also increase disaster risks - in turn furthering vulnerability to conflict. Direct impacts include water contamination, malaria associated

Hart, T. and R. Mwinyihali (2001). Armed conflict and biodiversity in sub-Saharan Africa: the case of the Democratic Republic of Congo (DRC). Biodiversity Support Program, Washington, DC.McNeely, J. (2003). “Biodiversity, war and tropical forests.” Journal of Sustainable Forestry, 16(3–4): 1–20.235 Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Island Press, Washington, D.C.236 State of the World (2005). Redefining Global Security. World Watch, Washington D.C.237 WBGU (2005). Development Needs and Environmental Protection: Recommendations for the Millennium +5 summit Policy Paper. German Advisory Council of Global Change.238 State of the World (2005). Redefining Global Security. World Watch, Washington D.C.239 Conca, K. (2005). Building Peace Through Environmental Cooperation (Live Online Discussions) at http://www.worldwatch.org/live/discussion/111/ 240 State of the World (2005). Redefining Global Security. World Watch, Washington D.C.

with standing water, and degradation or loss of farming land (for example resulting from waste storage). Indirect impacts include loss of watershed protection when land is cleared, thus increasing flood risk and soil damage. Social impacts include child labour and HIV-AIDs transmission in mining towns.

Whilst conflicts and tensions can be fuelled by environmental problems and visa versa, the environment can also play a vital role in promoting peace. Many of the problems are shared between communities and neighbouring countries. Joint projects to clean up sites, agreements and treaties to better share resources such as rivers and forests, and strengthening cooperation between the different countries ministries and institutions holds the key to building trust, understanding and more stable relationships. Wise management of natural resources and the environment together with good governance promotes peace and security and supports sustainable utilisation and development.243

There is real need to accelerate efforts to address underlying threats to international peace and security, such as poverty, disease, and environmental degradation. Shifting just 5% of donor governments’ military spending to development assistance would free up the funds necessary to nearly double aid spending in 2006 from 2003 levels, which the U.N. Millennium Project concludes is necessary to put the world on the path towards achieving the MDGs.244 HMG and DFID could lead this call for a more secure, sustainable and equitable world.

THIS REPORT MAKES THE FOLLOWING RECOMMENDATIONS TO ADDRESS POVERTY, PEACE, CONFLICT AND THE ENVIRONMENT

Recommendations

1. Environmental degradation, along side poverty and disease, needs to be recognised as a significant underlying threat to international peace and security. National and international efforts need to explicitly recognise this and urgently put it at the heart of all DFID and UK government policy.

2. Specifically focussed environmental programmes, such as conservation and sustainable-management for environmental degradation, can serve as peace-building mechanisms, with multiple direct and indirect benefits for development. Such programmes should be supported and integrate peace building initiatives to explore opportunities for dialogue and co-operation. Such programmes must be adapted to local contexts because, without sufficient local knowledge and consultation, they too can risk driving conflict.

3. Harnessing the environment to support peacemaking should become a priority for development and security policy. Opportunities for environmental cooperation should be encouraged, with strong roles for civil society - much of the peacemaking potential around environmental problems lies in better dialogue directly among civil society groups and resource users across borders. This requires more effective mechanisms for stakeholder participation at all levels. Such mechanisms should also limit governments or other powerful actors from abusing natural resources, for example, using international river-basin agreements to pave the way for international funding to dam, drain, and divert freshwater ecosystems. Support is needed for cooperative efforts to manage environmental resources as a way to transform insecurities and create more peaceful relations.

4. Establish and strengthen state and non-state institutions, capacity and mechanisms to regulate and administer natural resources for “extractive” and “non-extractive” industries. Provide support for promoting transparency and accountability, ensuring compliance, and guide international and local business activity. Support for tackling corruption to facilitate private-sector development and honest foreign investments.

5. Promote the proactive contribution of Corporate Social Responsibility and ethical businesses for peace building (for example, engaging in innovative social investment, stakeholder consultation, policy dialogue, advocacy and civic institution building). Support for other good governance initiatives that sustain societal stability and economic growth over the long term.

6. Encourage the international community to tackle the consequences of globalised financial and business practices that are linked to valuable natural resources and that are detrimental to governance standards and stability in fragile societies. In addition to institution and legislation-strengthening measures, support for the design and implementation of anti-corruption strategies is particularly important. They require whole-of-government commitment, international co-operation and strong engagement with the private sector. Steps to increase transparency and business integrity in the private and public sectors could include deepening and widening the Extractive Industries Transparency Initiative.

7. Put in place mechanisms to ensure extractive industry companies are accountable for their actions in conflict-affected areas. Given the scale of their operations and their potential impacts, these companies have a critical role to play in ensuring that harmful impacts are minimised. However, the need to minimise negative effects and foster more positive ones applies to all companies operating in conflict-prone and conflict-affected contexts. Greater use can be made of tools which have been developed to help make business practices more sensitive to the conflict-prone and affected contexts in which companies are operating and investing.

8. The UK government should support environmental initiatives in post-conflict settings, including through strengthening staffing and funding initiatives to restore clean water supplies, air quality, and green spaces – these can be a valuable stabilizing force and useful confidence-building tools in war-torn societies. Greater support for local institution building as well as monitoring and assessment should also be provided.

9. Enhance the conflict-resolution components of development assistance - this is critical to promoting social as well as ecological sustainability, particularly linked to access and rights to livelihood resources and critical ecosystems. Indigenous groups and minority communities need to be included and their rights and voice recognised.

10. All governments should be encouraged to ratify and strengthen existing multilateral environmental agreements and donor countries should be supporting developing countries with financial and technical resources, including through secondments, to implement them.

11. Further resources and research needs to be focused on expanding the growing number of initiatives around the world that are blending ecology and politics in the service of

241 Conca, K., A. Carius, and G. D. Dabelko (2005). Global Security Briefs, No. 6: Promoting Environmental Cooperation as a Peace-Building Tool. Global Security: Worldwatch Global Security Briefs. http://www.worldwatch.org/features/security/briefs/6/ 242 UNEP (2004). Understanding Environment, Conflict and Cooperation. UNEP http://www.unep.org/pdf/ECC.pdf

peace – for example peace parks, shared river basin management plans, regional seas agreements, and joint environmental monitoring programs.

8. HORIZON SCANNING

“The symptoms of today’s problems will become the catalysts and the causes of tomorrow’s crises...it is already clear that we will have to deal with a number of global trends over the next ten to twenty years-some positive and some negative-that represent an even greater acceleration of the pace of change”.

Speech by Hilary Benn, ‘Development beyond Aid’ Chatham House, London, UK 23/2/06

Background and Context

Hilary Benn and DFID’s Consultation Document acknowledges that we are facing many global challenges and forthcoming trends and issues. In line with this acknowledgement DFID supports horizon scanning as an essential component of good development practice. The ability to undertake and respond to horizon scanning reduces vulnerability and strengthens resilience. Therefore activities such as horizon scanning in developing countries should be supported by HMG. Additionally, horizon scanning within DFID and HMG is highly appropriate, and could possibly be run and supported by the UK government’s Sustainable Development Strategy (SDS).245

Overview: Horizon Scanning for International Development

Horizon scanning to address upcoming environmental issues has recently become strong at international level, but – with the exception of the Intergovernmental Panel on Climate Change (IPCC)246 – is poorly linked to international development practice. Developing countries often lack capacity to conduct regular horizon scanning and if it does happen, it is largely unsystematic and often in isolation of larger regional or international trends. Two recent international level initiatives were: The Millennium Ecosystem Assessment (MA),247 which offered excellent information, but was one-off and has not yet been responded to by most multilateral or bilateral development agencies. Whilst UNEP’s Global Environmental Outlook (GEO)248 is very poorly resourced, but offers much that can be used.

BOND-DEG welcomes several approaches used by DFID to ensure that its approach, policies and delivery mechanisms are robust to plausible futures. These include:

The preparation of a multi-sector, scenarios paper to ‘wind tunnel’ the various options for White Paper 3, which was well informed by the MA’s and GEO’s scenarios – albeit as a one-off exercise

Support to several NGOs and research groups (including NEF, IIED, ODI, IDS) which keep a keen eye on trends and emerging issues – although these insights are not shared or pooled, and there is less freedom to address ‘futures’ than hitherto

The [annual] assessment of risk conducted by DFID’s Management Board – although it deals more with proximate risk than ‘outlying’ uncertainty

The intention to compile a schedule of DFID’s environmental risks and liabilities – although this is focused on current legal regimes

245 HM Government (2005). UK Government Sustainable Development Strategy: Securing the future http://www.sustainable-development.gov.uk/publications/pdf/strategy/SecFut_complete.pdf 246 Intergovernmental Panel on Climate Change http://www.ipcc.ch/ 247 Millennium Ecosystem Assessment Board (2005). Living Beyond Our Means: Natural Assets and Human Well-Being. Statement of the Millennium Ecosystem Assessment Board. www.millenniumassessment.org/proxy/document.429.aspx 248 UNEP (2000). Global Environment Outlook. http://www.unep.org/Geo2000/ov-e/index.htm

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The Chief Scientific Adviser’s intention to begin horizon scanning in science and technology – although the scope of this is as yet unclear

Such approaches in part explain DFID’s reputation as a forward-looking donor. However, given that the magnitude of uncertainty in economic, social and environmental systems is increasing, a few unconnected approaches will not be adequate. A systematic approach to horizon scanning on international development is needed within HMG. Several factors currently constrain DFID’s ability to develop an effective system on its own:

The Public Service Agreement and Spending Rounds force attention on shorter-term certainties. Very few resources are applied to, or are flexible enough to respond to, longer-run possibilities

The premium placed on ‘results-based management’ skews the activities of DFID directors and country heads; the recent diminution in technical advisory base exacerbates this by reducing perspectives available

Prevailing development paradigms tend to restrict the scope of issues tracked by DFID; the fact that paradigms tend to be treated as policy instructions (rather than hypotheses) exacerbates this restricted view

DFID obtains high kudos from responding to major events after they happen (such as natural disasters) rather than from anticipating them

Weak engagement with DEFRA and other relevant UK government departments except reactively

THIS REPORT MAKES THE FOLLOWING HORIZON SCANNING RECOMMENDATIONS TO SUPPORT POVERTY ELIMINATION AND SUSTAINABLE DEVELOPMENT

Recommendations

1. Recognise environmental trends and uncertainties as key opportunities as well as threats for future development paths for example, as highlighted in the agenda of the recent ‘Asia 2015’ conference.249 HMG should use and support models and tools such as impact assessments, scenario building and ‘horizon scanning’ to help themselves and others, including in developing countries, better understand the implications of present and future issues and choices linked to sustainable development and achieving poverty eradication in a rapidly changing world. Environmental challenges will need increasing political commitment and civil society engagement at all levels to maximise the potential for increased cooperation and coordination, and to avoid possible conflict (for example, linked to water resources).

2. Support key international, multi-disciplinary environmental horizon scanning initiatives, notably the IPCC, GEO and MA, follow-up, assess resulting information seriously, and respond accordingly.

3. Support, in a similar way, initiatives which track and assess emerging consumption and production patterns, such as the International Assessment of Agricultural Science and Technology for Development (IAASTD),250 and respond accordingly.

249 Asia 2015 Conference http://www.asia2015conference.org/

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4. Promote and support more systematic horizon scanning by scientists and stakeholders in developing countries; and ensure that such systems are linked to development planning and review and where all such horizon scanning highlights significant information gaps regarding the links between environment and poverty reduction, support research into those areas.

5. Where horizon scanning highlights significant opportunities or threats, support long-range visioning exercises, particularly in developing countries. This is particularly important in countries that are likely to become key sources of raw materials and environmental services (including waste treatment).

6. Develop a regular horizon scanning system within HMG on international development issues, with clear DFID and UK SDS responsibilities. DFID’s science and technology horizon scanning should be central to the system.

7. Factor environmental uncertainties into DFID’s public discussion and promotion of poverty reduction. Future public support for poverty reduction will be more secure if it links strongly to other issues about which the public is concerned are treated seriously, notably the environment.

243 Doods, F. and T. Pippard (2005). Human and Environmental Security - an agenda for change. Earthscan, London. 244 French, H. (2005). WorldWatch Global Security Brief #7: Upcoming World Summit Offers Rare Opportunity to Redesign the U.N. for the Future. WorldWatch Institute, Washington D.C. http://www.worldwatch.org/features/security/briefs/7/

250 International Assessment of Agricultural Science and Technology for Development (IAASTD) http://www.agassessment.org/

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