Reproduced, with permission, from:
U.S. Office of Technology Assessment. 1992. Trade and the environment: Conflicts and opportunities. Report no. OTA-BP-ITE-94. Washington, D.C.: Government Printing Office.
No one really knows how much it will cost to address the environmental needs of the developing world. The Secretariat for the UN Conference on Environment and Development (UNCED), in estimating total costs for implementing the Conference's multifaceted agenda, estimated that about $15 billion (possibly more if conventions on climate change or biodiversity are adopted) would be needed for global environmental issues (defined to include only ozone depletion, climate change, biodiversity and oceans). Another $750 million per year could be needed to strengthen the capacities of international institutions. These figures pale against the Secretariat's overall estimate of the resources needed to implement UNCED's agenda: between $500 billion and $625 billion a year through the end of the century. Most of this appears to be for accelerated and sustainable development in developing countries.
The aggregate estimate is rough, and may be much overstated. The UNCED Secretariat, in releasing the estimate, cautioned that there could be substantial overlap among categories. For example, a major effort to achieve UNCED's agenda item for sustainable livelihoods might require infrastructure investments also counted in other agenda items (such as for human settlements, health, energy, reforestation, water systems and sanitation and education). Some part of these investments (reforestation, for example) might be considered environmental.
The lion's share of the total costs would be borne by the private sector or developing country governments as part of their development plans. However, the Secretariat estimated that $125 billion per year in donor country aid and concessional financing could be needed to catalyze developing country activities. This would be a substantial increase over current levels of development assistance.
Official development assistance (ODA) for all purposes by countries that are members of the Organisation for Economic Co-operation and Development averages around $50 billion per year. This amounts to about 0.35 percent of those nations' combined gross national product (GNP). An increase to 1 percent of GNP would produce $150 billion per year, according to the UNCED Secretariat, which notes that industrialized nation defense expenditures (in some countries amounting to 5 or 6 percent of GNP) are decreasing.[1] An increase to 1 percent would fall most heavily on the United States, which spends roughly 0.20 percent of GNP on ODA. (Among OECD countries, the United States ranks 13th in per capita aid; in absolute terms, Japan and the United States are the largest donors.)
The amount of current assistance provided to developing countries for environmental projects is only a small part of total development assistance. However, bilateral and multilateral development assistance programs increasingly have environmental criteria and requirements---mostly to reduce the environmental impacts of development within the country receiving the aid.[2]
Developed countries now provide some assistance to help developing countries deal with global environmental problems through the Global Environment Facility (GEF).[3] Set up in 1990, GEF is a 3-year pilot program administered by the World Bank, the United Nations Environment Program (UNEP) and the United Nations Development Program (UNDP). Through two closely coordinated funds---the Montreal Protocol Interim Multilateral Fund and the Global Environmental Trust Fund (GETF)--a total of $1.3 billion in technical assistance, transfer of technologies and financial support will be provided to developing countries for qualified projects.
The Montreal Protocol fund is intended to help developing countries with low per capita emissions of ozone-depleting substances phase out or avoid use of these materials. It now has $200 million for grants to such countries, with projects implemented by UNEP, the World Bank, and UNDP.
GETF is the larger activity, with $1.1 billion committed to help developing countries participate in solutions to global environmental problems. Projects will fall in four areas: global warming, protecting international waters, preserving biological diversity, and ozone depletion. GETF can be used to help Eastern European and other needy countries that do not meet the per capita emissions requirement of the Montreal Protocol Interim Fund to phase out their use of ozone-depleting substances. By the end of 1991, 24 countries had contributed $800 million to a core fund. (This included contributions from several developing countries totaling $100 million.) In addition, five countries had agreed to cofinance about $250 million of support for related projects.
The Bush Administration, during climate change negotiations in February 1992, announced that it would commit $75 million in new funds for developing world environmental assistance. A total of $50 million of this would be for GEF; the remainder would be for bilateral aid for greenhouse gas inventories in the developing countries.
The decision to make a direct contribution to GEF was a change in policy by the Administration, which previously had only committed to what it called "parallel financing." This entailed counting of relevant environmental projects funded by U.S. Agency for International Development (AID) as the U.S. contribution. It plans $150 million of AID projects for such parallel financing during the 3-year GEF pilot project. Although they do not administer the U.S. projects, GEF administrators have agreed to include U.S. "parallel financing" in its estimate of country contributions to the funds.
In addition to AID, several Federal agencies that are primarily domestic in focus, such as the Environmental Protection Agency (EPA), the U.S. Forest Service, and the U.S. Fish and Wildlife Service, provide technical assistance to developing countries for environmental purposes, generally on a reimbursable basis.
The Administration has identified some special initiatives with environmental components. As has been mentioned, President Bush's Enterprise for the America's Initiative, which aims to promote Latin American economic growth through trade liberalization, investment, and debt reduction, has an environmental component. Other activities include environmental assistance to Eastern Europe and the U.S.-Asia Environmental Partnership, launched in early 1992. Several agencies are also cooperating in an a public/private Environmental Training Institute, to provide training to developing country officials and executives about environmental issues and technologies.
The Administration's proposed fiscal year 1993 budget also calls for a near doubling of funds for the U.S.-Mexican border environmental plan (from $103 to $203 million). These funds are not development assistance, as they will address environmental problems that affect both Mexico and the United States; Mexico plans to commit $460 million to border area environmental problems over a 3-year period. (U.S.-Mexico environmental issues are discussed in ch. 2.)