ENB:09:65
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FINANCIAL RESOURCES AND MECHANISM (AGENDA ITEM 6)
Delegates were invited to address all matters related to financial resources and the financial mechanism in the Committee of the Whole on 5 and 6 November. Peter Schei (Norway), Chair of SBSTTA-2, presented recommendations formulated at SBSTTA-2 related to activities the Global Environment Facility (GEF) should support, including the CHM and capacity building in taxonomy and biosafety (UNEP/CBD/COP/3/3). Executive Secretary Juma presented the other documents that addressed this agenda item (UNEP/CBD/COP/3/5-10 and 37), including the report of the GEF, review of the effectiveness of the financial mechanism, and designation of the institutional structure to operate the financial mechanism.
In addition to addressing the issues on which decisions were taken (see below), delegates considered whether to designate a permanent financial mechanism. The G-77/CHINA, supported by several delegates, said that it is premature to designate the final institutional structure. Others, including the EU, CANADA, AUSTRALIA, TUNISIA, SYRIA and SLOVAKIA, on behalf of Central and Eastern European Countries (CEE), supported designation of the mechanism at COP-3. A decision was not taken up on this issue. The Memorandum of Understanding between the COP and the GEF that was adopted (see below) notes that the GEF will continue to operate the financial mechanism on an interim basis.
ADDITIONAL FINANCIAL RESOURCES: The decision on additional financial resources considers how to strengthen existing financial institutions to provide financial resources for the conservation and sustainable use of biological diversity. During discussion in the COW, the EU stated that the documentation for this issue, regarding suggestions for funding institutions and the availability of additional financial resources (UNEP/CBD/COP/3/7 and 37), did not provide a sufficient basis for discussion and, together with AUSTRALIA and the US, noted inaccuracies in the latter. The G- 77/CHINA said developed countries are not fulfilling their commitments under Article 20.2 (new and additional financial resources). MALAYSIA called for new and additional resources, including from the private sector. INDONESIA and AUSTRALIA proposed efforts related to identifying the role that the private sector can play in CBD funding.
During the Working Group’s consideration of the G-77/CHINA’s draft proposal, several delegates recalled their statements to the COW regarding the accuracy of the documents related to the issue and did not support the proposal to take note of the information and recommendations contained in UNEP/CBD/COP/3/7 and 37. The final decision (UNEP/CBD/COP/3/L.20): takes note of elements in those documents; urges all funding institutions to make their activities more supportive of the Convention; requests the Executive Secretary to explore collaboration with funding institutions and the involvement of the private sector; urges developed country Parties to cooperate in the development of standardized information on their financial support; and invites other funding institutions to provide information on their financial support for the Convention.
MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN THE COP AND THE COUNCIL OF THE GEF: The Memorandum of Understanding between the COP and the Council of the GEF had been discussed at COP-1 and COP-2 but no agreement had been reached. The revised version presented to COP-3 (UNEP/CBD/COP/3/10) was based on those deliberations as well as intersessional consultations.
Several countries, including MAURITIUS, POLAND and INDONESIA, stated during the COW that they wanted COP-3 to take a decision on the MOU. MEXICO, NORWAY, CHINA and SLOVAKIA, on behalf of the CEE countries, stated that the MOU was acceptable. Some delegates, including the PHILIPPINES, CANADA and MALAWI, supporting using CBD language to improve the draft. MALAYSIA and COLOMBIA said the MOU should contain explicit reference to the interim nature of the financial mechanism.
The G-77/CHINA distributed amendments to the Working Group on financial issues and OECD countries offered oral amendments. Delegates deleted text noting that: the GEF would operate the financial mechanism until 1999, at which time it would be reviewed; if the COP considers that a specific project decision does not comply with its guidance it may “ask for a reconsideration of that decision;” the GEF would indicate the amount of new and additional funding to be contributed to the GEF Trust Fund in the next replenishment cycle and (a G-77/CHINA proposal) the GEF would clearly indicate the reasons for which this funding is considered new and additional; and the COP will review the amount of funding “available” for CBD on the occasion of each replenishment.
Text was added noting that: the financial mechanism shall function under the authority and guidance of and be accountable to the COP; the GEF will operate the financial mechanism on an interim basis; and the withdrawal of the MOU by either Party shall not affect any projects considered and/or approved prior to the withdrawal.
Additional text in the decision adopted by COP-3 (UNEP/CBD/COP/3/L.21) notes that: the COP will determine the policy, priorities and criteria for access to financial resources; the GEF Council will submit to each COP a report on GEF activities in the biodiversity focal area; the COP may raise any matter arising from the reports; the COP should analyze the observations presented by any Party that considers that a decision of the Council regarding a specific project was not made in compliance with COP guidance; prior to the replenishment, the COP will assess the amount of funds necessary to assist developing countries; and either participant may withdraw the MOU at any time.
ADDITIONAL GUIDANCE TO THE FINANCIAL MECHANISM: The decision on additional guidance to the financial mechanism combines the instructions to the GEF from other COP-3 decisions into a single text. During the COW discussion, the EU noted that guidance to the GEF from COP-2 was not clear, making it difficult to develop an operational programme for the GEF Council. The UK added that to ensure that matters such as biosafety and agro-biodiversity are appropriately addressed by the GEF, COP-3 should prepare additional guidance to the GEF, which should be encompassed in a single decision. MALAYSIA identified a need to develop the COP’s own implementing strategy and to make it clear to the GEF. The PHILIPPINES, among others, noted the need for focused guidance, especially in relation to the implementation of all three of the CBD’s objectives, not only conservation.
The G-77/CHINA and the OECD countries distributed drafts on this issue to the Working Group on financial issues. During the initial review of the G-77/CHINA draft, several developed countries indicated they would consider additional guidance based on SBSTTA-2 recommendations and matters on COP-3’s agenda, but did not want to reconsider the GEF guidelines before the 1997 review. The Working Group combined elements from the preambles of both drafts. The operative section consists of edited and/or redrafted versions of operative paragraphs contained in other COP-3 decisions that are directed at the GEF. One issue that involved significant discussion was inclusion of COP-3’s endorsement of SBSTTA recommendation II/2 regarding capacity building for taxonomy, as contained in the decision on Article 7 (UNEP/CBD/COP/3/L.6). Delegates added a note following its guidance regarding capacity building related to Article 7 stating that the COP endorsed the recommendation.
COP-3 decision UNEP/CBD/COP/3/L.22 amalgamates guidance to the GEF that is contained in other COP-3 decisions on the following issues: capacity building related to biosafety, the CHM and access to genetic resources; conservation and sustainable use related to agriculture; the examination of support for capacity building related to the preservation of indigenous knowledge and practices; targeted research that contributes to conservation and sustainable use; promotion of the understanding of conservation and sustainable use; and preparation by the Secretariat and the GEF of a proposal on the means to address the fair and equitable sharing of the benefits arising out of the utilization of genetic resources.
GUIDELINES FOR THE REVIEW OF THE EFFECTIVENESS OF THE FINANCIAL MECHANISM: The decision on the guidelines for the review of the GEF outlines the objectives, methodology, criteria and procedures for the first review of the effectiveness of the financial mechanism, which is to be conducted at COP-4. NEW ZEALAND suggested during the COW that guidelines for the review of the GEF be transparent and that the COP should re-determine the GEF’s status every 2-3 years. CANADA cautioned against reviewing the effectiveness of the financial mechanism in areas in which it has not yet received guidance.
The G-77/CHINA distributed a draft text on the review to the Working Group. A small consultative group drafted the text on the objectives, methodology and criteria of the review. Text was later added regarding the application of the criteria of agreed full incremental costs, keeping in mind the provision of new and additional resources by developed country Parties. The remaining focus of the Working Group was on the procedure through which the review would take place. Initial proposals focused on whether an independent consultant should conduct the review or whether information should be gathered and reviewed by delegates at COP-4. Delegates forwarded a text to the COW noting that the Secretariat is to prepare background documentation and shall, if necessary, appoint a consultant. Two options regarding who would provide monitoring and guidance of the review were bracketed: [the Bureau plus regional representatives] and [a steering panel composed of two representatives from each regional group]. During discussion of the bracketed text in the COW, the G-77/CHINA, SWITZERLAND and AUSTRALIA supported the option for a steering panel. The EU, supported by RUSSIA, proposed deleting both options. The bracketed text was referred back to the Working Group.
The agreed procedure to review the effectiveness of the financial mechanism, as contained in UNEP/CBD/COP/3/L.25, calls on the Secretariat to: gather information; prepare a synthesis; send it for appraisal to five regional representatives; take account of the comments; distribute copies to all Parties and relevant bodies for comments; based on these, prepare a draft report to be presented to the regional representatives and made available to the GEF and implementing agencies; and submit the synthesis with supporting documents to Parties not later than three months prior to COP-4. Supporting documents will include comments and other information identified by source.