Daily report for 11 April 1995

OPENING PLENARY

Outgoing Chair Klaus T”pfer opened the third session of the CSD andhighlighted some of the ongoing CSD-related sectoral initiatives. He called for moredialogue to ensure that all countries benefit from trade liberalization and that debtrelief measures are developed to support sustainable development. He added that thefinancial resources needed to implement the Rio commitments are still far fromadequate, calling on developed countries to honor ODA commitments. One of thecrucial topics before the CSD is CO2 taxation. He urged developed countries to takethe lead with energy efficiency measures. The CSD must ensure that the goals ofsustainable development are integrated into all sectoral areas and the UN mustdemonstrate its capacity to secure ecological and social stability through partnershipand shared responsibility.

Henrique Cavalcanti (Brazil) was then elected Chair of the CSD. Cavalcantiproposed three operational aspects for the new intersessional period: assessment ofAgenda 21 implementation and commencement of work on sectoral and sustainabilityindicators; enhancement of the engagement of the UN system in CSD activities; andestablishment of a dialogue with the private sector to better define its role andcommitment to sustainable development.

Under-Secretary-General for Policy Coordination and Sustainable DevelopmentNitin Desai said that the success of the CSD depends on the political weightgiven to it by governments. Desai said that the CSD must build on the important workof Cairo and Copenhagen. On consumption, financial and technology transfer, and theintegration of environmental considerations into economic decision-making, the ball isnow in the CSD's court.

The Co-Chair of the High-Level Advisory Board on Sustainable Development,Birgitta Dahl, outlined the recommendations from the Board's third meetingon: sustainable food security; the links between trade and environment policies; value-based education for sustainability; and new partnerships. The Board acknowledgeddeveloping countries' concerns about new forms of conditionality and 'greenprotectionism.' It broadly endorsed the seven principles proposed by the InternationalInstitute for Sustainable Development. The Board also recommended the establishmentby the WTO, UNEP and UNCTAD of a Panel of Environment, Development andTrade Experts to make recommendations on the link between trade and environmentalprotection. Dahl outlined seven key areas for action: conflict prevention; change inconsumption patterns and production; the development of new energy and transportstructures and technologies; balanced and integrated management of the globalcommons; development of a win-win conceptual marriage of trade, development andenvironment; the mobilization and transfer of resources for sustainable socialdevelopment to developing and East European countries; and the participation ofwomen.

The Commission then elected the Bureau: Jordan Uzunov (Bulgaria); Takao Shibata(Japan); Magns Jhannesson (Iceland); and Henry Aryamanya-Mugisha (Uganda).Cavalcanti introduced Agenda Item 2 (adoption of agenda and other organizationalmatters), noting that working groups will be established on: (a) finance; poverty;consumption; trade, environment and sustainable development; and demographicdynamics; (b) technology transfer; science; decision making structures; and majorgroups; and (c) sectoral issues and biotechnology.

FINANCIAL RESOURCES AND MECHANISMS

Dr. Lin See-Yan presented the second report of the intersessional adhoc working group on finance, E/CN.17/1995/11. He asked for delegates tocomment on the following areas: new approaches in the context of Agenda 21 torevitalize ODA; the need to energize IFIs and development agencies' efforts insupport of sustainable development; the promotion of equitable economic instruments;the promotion of innovative mechanisms to address environmental degradation; andthe matrix approach.

PANEL DISCUSSION ON FINANCIAL RESOURCES

Prof. Grzedorz Kolodko, the Polish Minister of Finance, noted thatPoland's focus has been on economic liberalization, institutional changes andmicroeconomic restructuring. Over 60% of GDP is from the private sector. This is thethird year of economic growth, positive industrial output and improved environmentalstandards. Poland's environmental policy is supported by a national fund forenvironmental protection supported by pollution tariffs.

Andrew Steer of the World Bank addressed three areas: raising additionalfinance for sustainable development; changing all finance; and reducing financialneeds. The CSD has not addressed financial problems nor the popular perceptions thatODA has failed. The World Bank has lent US$10 billion in 60 countries to strengthenenvironmental policies, with government input of US$25 billion. He called for moreeffective use of ODA as leverage funding and adjustment in the risk content ofenvironmental investment. On lowering the cost of sustainable development herecommended: setting priorities; cost effective analyses; sharing best practices andtechnologies; and using economic instruments. To advance sustainable developmentbeyond the micro implementation level, the World Bank is: using 'global overlay' todiscern how a country's various sectors would differ if global policies were taken intoaccount; examining the leverage capacity of private sector resources; and recognizingthe role of NGOs as primary agents of implementation.

Vito Tanzi, on behalf of the IMF, commented that environmental concernsshould be promoted by: raising awareness on environmental problems; raisingresources; and ensuring better allocation of resources. IMF activities to improve themicroeconomic environment include improving tax systems and raising revenue. Sometax incentives promote the wrong goal. For example, in many countries diesel, whichis a dirtier fuel than gasoline, is not taxed where gasoline is. The CSD should addressthese distortions. The administration of an international transportation tax is morecomplicated than it may appear.

Hilary Thompson of the National Westminister Bank said environmentaland business sense are closely linked. However, sustainable development requireslong-term thinking, planning and time scales, while the opposite holds true forfinancial markets. She spoke of the need to educate the investment community, whichwill demand a correction of the current skewed information base upon which thefinance sector operates. There is also a need for a change in the tax system to penalizethe bads and encourage the goods. The Advisory Committee on Business andEnvironment, established by the UK Government, has been looking at internalizationof environmental costs and market education.

Maximo Kalaw, on behalf of Green Forum (the Philippines), said thatinstead of focusing on new and additional sources of funds, existing flows should beshifted so that they are more sustainable. Declining ODA flows encourage developingcountries to look at national income-generating instruments. He called on the WorldBank and the IMF to reorient their mandates towards sustainable development. Hesupported an institutional elevation of sustainable development such as theCommission on Global Governance's recommendation for an economic securitycouncil.

Nitin Desai summarized the panel discussion. (1) Policy reform: the need formacroeconomic stabilization as a necessary condition for sustainable development; theneed to address the changes to the underlying logic of the fiscal system; the need forgovernments to address externalities as a possible central goal of fiscal policy; and theonus on both developed and developing countries to introduce policies. (2) Generationof new and additional resources: the need to create a supportive climate for ODAinvestment; and the need to improve the predictability and effectiveness of mobilizedresources through better targeting and leveraging. Desai also referred to institutionalinnovation, a more proactive role for the CSD vis-…-vis the IFIs, and the matrixapproach.

In the discussion that followed, India called for new approaches to ODA andsupported Andrew Steer's suggestion about educating developed countries that theiroverseas investment is not wasted. He expressed surprise that the documents have notmade any reference to the restructured GEF. Colombia expressed concernabout ODA and said the question of external debt should be seen as a method to freeresources for sustainable development. Norway noted that high ODA flowsdo not materialize without serious political work. Although private investment flowsare at a high level, they are unequal in a regional sense.

Ecuador expressed concern about the failure of the panel to address thedetrimental impact of financing on the environment, and the panel's failure to addressthe social and environmental dimensions of sustainability alongside the economicones. Martin Khor (Third World Network) said the poor image of ODAresults from the perceived negative environmental and social impacts of a large portionof development assistance. He said external aid is still the major problem facingdeveloping countries and implementing sustainable development. He called on theCSD to assess the social and economic risks involved in financial support forbiotechnology.

The Czech Republic asked the CSD to address the issue of public awarenessand education. Sweden called for careful reflection on how scarce ODAflows are being distributed. He asked how one can improve information about the needfor long-term thinking about sustainable development and the problematic short-termcharacter of financial markets. Algeria asked the World Bank and the IMFabout the measures they have taken to provide financial assistance to nationalenvironmental funds and to innovative measures adopted by developing countries.Pakistan expressed concern that the focus remains on short-term solutionsand asked if mechanisms and international institutions have been working on theevolution of a long-term macroeconomic environment to propel societies towardssustainability.

The Chair then gave the floor to the panelists to respond to the questions andcomments. Prof. Kolodko noted that investing in the environment can alsobe a vehicle that contributes to enhancement of economic growth. He added thatcountries should rely more on their own resources than on ODA. Vito Tanzisaid that twice a year Ministers meet to discuss the Fund's mandate. He addedthat one issue that has not been addressed is the 'scandalous way' that manycountries have wasted ODA. Maximo Kalaw said that the Philippines' threenational environmental funds are effective because they are limited and specific inscope. Private philanthropy is increasing but needs a sustainable developmentframework.

Andrew Steer said that citizens of the rich countries should not be blamedfor their negative perception of ODA. He said the World Bank believes in targetingnon-subsidized funds for the environment. Hilary Thompson said thatdeveloped countries must start taking action at home and that both economic and othervoluntary instruments will be necessary. In London, fund managers dealing withmultinationals have said that the concept of sustainable development is too vague andcould be ignored. Nitin Desai noted that the discussion proved that the CSDdoes have an impact on the direction of international finance.

IN THE CORRIDORS

Many delegates have welcomed the new panel discussion format. It is felt that thepanel approach, with the participation of technical experts and NGOs, will stimulate amore informed debate on the substantive issues. Whether the new approach willfacilitate negotiations on the draft decisions that are to be produced during this sessionremains to be seen.

THINGS TO LOOK FOR TODAY

PLENARY: This morning, the CSD will focus on Agenda Item 6, 'Reviewof the sectoral issues.' Sir Martin Holdgate will present the report of the AdHoc Working Group on Sectoral Issues and the Chairs of the Biological DiversityConvention and the Convention to Combat Desertification will present progressreports. This will be followed by a panel discussion on sectoral issues.

In the afternoon, the CSD will focus on Agenda Item 3, a general discussion onprogress in the implementation of Agenda 21, focusing on cross-sectoral issues and thecritical elements of sustainability. Topics include: trade, environment and sustainabledevelopment; consumption patterns; combating poverty; and demographic dynamics.An evening session has been scheduled to accommodate the anticipated number ofspeakers .

OECD BRIEFING: The OECD Director for Environment and other OECDstaff will give a briefing on current OECD work related to this year's CSD Agenda at1:15 in Room 9.

THIRD WORLD NETWORK FORUM ON BIOTECHNOLOGY: Therewill be a forum today on 'Biotechnology: Panacea or Peril?' at 1:00 pm inConference Room 1.