GEF: A tale of beggars and frauds

  • 14/03/1993

THE WEB is getting tighter. The South is finding out that the funds it was hoping to get to pay for global environmental problems are entangled in countless issues. The Global Environment Facility (GEF), set up to administer funds to be paid to the South to deal with global problems like climate change, is governed by intricate mathematical formulae that define how much and for what it should pay. The problem GEF administrators concede, is complex.

International negotiators in the climate and biodiversity convention agree that funds should be given for agreed incremental costs for global benefits that are cost effective. The problem now is to define what is incremental, what is global and what is cheapest.

The formula most popular with donors is to insist that the national benefits resulting from a project must be subtracted from the total benefits of that project to determine the net global benefit for which payment is to be made. This is the definition of incremental costs. The North has made it clear that it will not use these funds to pay for local and national benefits. So, the haggling has started over the formula to use to calculate the "net incremental cost of each unit of global environment protected." Only when this is determined will the payment be "just", say the donor-nations, implying that the South is immoral in asking that the North must pay for national programmes of the South to benefit its own economy and poor.

Furthermore, the donors insist, the funds should not only pay for global environmental issues but also be most cost- effective. This is the cheapest of the whole range of technological options and must be agreed upon between GEF and the individual country before any funds are taken out of the kitty. This combination of demands constitutes a sure-fire recipe for intense wrangling and frustration.

But the South has only itself to blame for this turn of affairs. The minute the South extended its begging bowl asking for alms to pay for it to protect the global environment, it stepped into the spider's web. The framework of environmental governance, as set up by the environmentally destructive, financially stingy and double-talking North, is: First, the North will neither discuss nor negotiate the damages it caused in the past; second, if at all it does pay anything, it's only because it is more capable -- a word accepted by South delegations and used in the climate convention; third, what it will pay as aid to the South will be specifically to deal with global problems.

What all this really means is that the North cannot be assessed for its environmental liability, but the South must beg for its generosity in the future. The Southern governments did not have the spine to challenge the North then and this is happening again in the GEF negotiations.

The GEF framework apes the Montreal convention set up to protect the ozone layer. And, it compounds its faults. The framework fails to acknowledge that because all countries share the atmosphere as a common resource, a system of disciplined use must be evolved. Nor does it acknowledge that clear responsibilities must be established for misuse of the atmosphere and errant nations must be bound to make recompense for past and current overuse of common resources.

The immorality is blatant. The global environmental problems which has reduced the South to begging for crumbs, are the liability of the North. So, the South's demand is not for aid or charity, but reparation for damages that the North has caused to the global environment and because of which developing countries will suffer.

Consider global warming. Pollution by the industrialised countries, whether USA or Germany, has endangered the earth's climate. The climatic changes would affect countries worldwide and scientists say the rising temperatures could lead to a rise in sea levels that would flood many low-lying areas in countries like Bangladesh. The North has to pay the bill for these damages.

The North, in addition, continues to use -- indeed exploit in colonial fashion -- the atmospheric space of the South. US scientists have calculated the "natural debt" the North has accumulated by overusing the South's share of the atmosphere. For instance, the total carbon dioxide present in the atmosphere is about 260 tonnes per each resident of USA, compared to about six tonnes for each resident of India.

The "just" way to make environmental reparations would be to make transfer of funds automatic and mandatory. And, the most feasible way to do this would be to assess each nation's entitlement to the atmosphere. These entitlements are available for trading and those countries not using their share of the atmosphere could sell their entitlement to those exceeding their pollution quota. Such a global emissions market would introduce the right financial disincentives for excessive pollution and the right financial incentives to keep developing countries from moving toward environment-damaging activities.

The atmosphere would have a clear price set on it. The compensation would be substantial. The World Bank, of which GEF is a part, has itself calculated that if carbon emission rights were sold at $25 per tonne of carbon, the industrial world would have to pay developing countries about $70 billion to afford one year's emissions at 1988 levels. This is more than the total of the entire official development aid today. And, what does the GEF offer? A measly US $3 billion over three years.

The governments of the South must stop mortgaging the interests of their future generations for a handful of dollars. They must insist that the Global Environment Fund is in fact a Global Liability Fund, set up to compensate the South its rightful share of the globe's resources and for the North to pay for the damage it has caused. The payment to the South is neither aid nor charity and the funding must be real and mandatory.

The North must learn to respect the market -- a lesson it never tires of preaching to the South. Anything less should be unacceptable to the South. After all, we, too, have to take care of our future generations.