Daily report for 22 April 1996

Delegates to the fourth session of the Commission on Sustainable Development (CSD-4)heard a report from the Ad Hoc Working Group on Finance and Production andConsumption Patterns during the morning meeting. A discussion and panel on the sameissues followed during the morning and afternoon. A contact group, chaired by SvanteBodin, met during the afternoon to consider text in the Chair’s Report from the AdHoc Working Group on Sectoral Issues.

FINANCE AND CONSUMPTION AND PRODUCTION PATTERNS

Lin See-Yan, Chair of the Working Group, presented the Report (E/CN.17/1996/7) of theAd Hoc Intersessional Working Group on Finance and Changing Consumption andProduction Patterns. Regarding changing consumption and production patterns, hehighlighted: trends; the impact on developing countries; evaluating policy measures;progress on implementation; and further work on revised guidelines for consumerprotection. Regarding financial resources and mechanisms, he highlighted mobilizinginternational and national resources and the feasibility of innovative mechanisms.

The EU emphasized interlinkages between finance and changing consumption andproduction patterns. He stated that ODA is insufficient to implement Agenda 21. Heemphasized enabling policies to promote non-ODA resources, including private capitaland domestic resources, and innovative mechanisms. ODA, he added, should be usedeffectively, and he affirmed a commitment to provide 0.7% of GNP as ODA.

The G-77/CHINA focused on changing energy production and consumption, underscoringthe qualitative and quantitative differences between changing these patterns in developedcountries versus developing countries. He noted that the problem in developing countries isparticularly acute, and asked for consideration of the effectiveness of policies intended tochange consumption and production patterns, and of UNEP’s guidelines for consumerprotection.

INDIA emphasized links between macroeconomic policies, external debt burdens ofdeveloping countries, trade issues and the importance of technology transfer to developingcountries. NORWAY called for political action to mobilize ODA and to use the PolluterPays Principle. He stated that the suggestion in the Ad Hoc Working Group’s reportto study the international transportation of oil was not discussed by the meeting.PAKISTAN expressed disappointment about insufficient progress in achieving the ODAtarget. Environmental issues should be treated in the context of macroeconomic policies.Eco-efficiency initiatives should not be a substitute for changes in unsustainable lifestyles.The US reiterated that his was not among the countries committed to a 0.7% ODA target. AUS priority is increasing the efficient use of current resources and innovative mechanisms.He called for governmental reports on sustainable procurement policies in 1997, and forthe CSD to focus on ISDs, eco-efficiency, and sustainable production and consumption.CHINA echoed disappointment regarding the international community’s financialcommitment. Historically, environmental pollution has been related to the expansion ofprivate capital. Private capital is not a panacea. JAPAN reported progress in honoringfinancial commitments made at UNCED. The ODA decline will not be reversed by mererhetoric but by enlightened political leadership, supported by public opinion. Bilateral andmultilateral ODA must be understood as a win-win strategy for peace and world security.

BRAZIL noted the importance of environmentally sound technologies (ESTs) that are alsosocially acceptable and economically feasible, and available on a concessional basis. Hestated that the concept of eco-efficiency cannot be a substitute for lifestyle changes. CUBAcalled for a dialogue and exchange of information and experiences with innovativemechanisms.

The REPUBLIC OF KOREA called for further analysis of the impacts on developingcountries of changes in consumption in developed countries. She suggested that a voluntarycarbon tax could be adopted at the domestic level. The OECD has done considerable workon financial flows and economic instruments, including subsidies. In May 1995, the OECDDevelopment Assistance Committee (DAC) agreed on new “Development Partnerships inthe New Global Context.” A workshop co-sponsored by OECD on consumption andproduction patterns found that eco-efficiency is a promising strategy and called forexamination of the interlinkages between consumption and production patterns in OECDand non-OECD countries.

SWITZERLAND and OECD will organize a meeting in February 1997 on the impact ofpublic purchasing policies. The NETHERLANDS COMMITTEE FOR IUCN, on behalf ofseveral NGOs, stated that the new regimes for investment and trade undermine theobjectives of Rio. She called for local community input on major infrastructureprogrammes. KENGO, on behalf of several NGOs, called for: the WTO to take intoaccount the impacts of trade on sustainable development; a ban on patents for livingmaterial; and the removal of subsidies that encourage unsustainable activities.

AUSTRALIA supported the continued development of the matrix and welcomed emphasison the need to remove environmentally damaging subsidies. POLAND emphasized thatODA should remain the primary instrument for financing sustainable development.Sustainable consumption requires administrative and economic instruments, publicparticipation and environmental education. The PHILIPPINES expressed concern on eco-labeling, which could be a new form of non-tariff barrier. She called for a comprehensivestrategy for the problem of debt management and noted that innovative partnerships must bemutually beneficially.

BULGARIA noted it is developing instruments to encourage a shift towards sustainableconsumption and production, with foreign investment assistance. GUYANA stated thatpolitical will is the single most important factor for implementation of Agenda 21.BANGLADESH said it has taken measures to attract private investment, however priorinjection of ODA assistance will be necessary for infrastructural improvement. MEXICOexpressed concern at the CSD’s new emphasis on national implementation and said eventhe ODA target of 0.7% is insufficient. MALAYSIA stressed the role of ODA in sectorsthat do not fully benefit from private investment. The findings of the working group onfinance should be taken up by ECOSOC for implementation.

The UK stressed identifying win-win situations in addressing energy efficiency indeveloping countries. He noted that ODA should not focus on transferring specifictechnology but on building a policy framework to stimulate technology transfer.INDONESIA encouraged countries to establish a timetable for progressive ODA increasesand stressed technology transfer on concessional terms. She said the absence of adequatefinancial flows could jeopardize the existing accomplishments resulting from UNCED.

PANEL ON FINANCE

Roberto De Ocampo, Finance Minister (Philippines), recounted national progress madetoward sustainable development as a result of policy changes that promote economicliberalization and empowerment, ensure sound infrastructure, and streamline bureaucracy.Recent economic targets were exceeded. James Michel, OECD Development AssistanceCommittee, stated that the volume of ODA has remained constant over the last decade, butit is not keeping pace with the growth in the OECD countries, which suggests a lowerpriority. He noted that political support for ODA is linked to development education and aconvincing vision of the importance of sustainable development is needed. ODA shouldbuild the capacity of developing countries to receive private sector flows.

Andrew Steer, Director of the World Bank Environment Department, stressed the need forlong-term consistent policies and risk management, and for reshaping private financepolicy in recipient countries. He also noted that careful analysis of cost assessments cansubstantially lower the cost of environmental measures. Responding to questions, heacknowledged that government decisions to implement sustainability often require politicalcourage and forward planning, harnessing new constituencies with the assistance of NGOs.Regarding debt relief, he said there is a framework established for identifying countriesthat are “debt stressed,” i.e. with no prospective work out period over 5 to 10 years.

Fridrik Sophusson, Finance Minister (Iceland), noted that, while market economies arewell suited to the provision of goods and services, government action is often needed toredirect patterns of consumption and production to further sustainable development. InIceland, the shift from oil to geothermal energy was initiated by the government. Oneconomic instruments, he said Nordic taxation policies have been sensitive to impactswhere levels are already high. At a time when ODA flow is diminishing a newinternational tax warrants consideration. Luise Diogo, Deputy Finance Minister(Mozambique), described the need to link financial help for sustainability and debt relief inpoorer countries. She said it will be difficult to reverse low ODA and there should be afocus on increased efficiency. Substantial progress has been made in the uses of aid.Developing countries should involve the private sector in deciding policies to take accountof social impacts.

Ved Gandhi, Assistant Director, Fiscal Affairs Department, International Monetary Fund,underscored: the reliance of foreign investment on sound national economic and socialpolicies; reducing environmentally-damaging subsidies; and encouraging the IMF andWorld Bank to study the technical issues of sustainable development. The IMF will:perform further technical work on taxes, subsidies and user prices; ensure that its advicedoes not curtail institutional capacity; help with countries’ macroeconomic stability; andinvolve finance ministers in decision-making on sustainable development.

IN THE CORRIDORS

Although many delegates approved of the overall treatment of issues contained within thereport of the Ad Hoc Working Group on finance, most expressed disappointment atthe level of technical detail, which was perceived as inadequate. Some delegates noted thateven so-called “expert group” meetings are hobbled by the limited participation ofgovernmental representatives only. Others praised informal expert meetings sponsored bygovernments as effective fora for the free exchange of technical information, although somepointed out that such meetings, often sponsored by Northern governments, may not bewholly impartial in their treatment of particular topics. The debate over the usefulness andcost-effectiveness of intersessional working group meetings continues.

THINGS TO LOOK FOR TODAY

PLENARY: The Plenary is expected to meet in Conference Room 1 during themorning and afternoon to hear a report from the Ad Hoc Group on Sectoral issues. APanel focusing on transport will follow.

WORKING GROUP I: The Working Group considering oceans and atmosphereissues (to be chaired by Enrique Provencio of Mexico) is expected to meet during themorning in Conference Room 2.

WORKING GROUP II: The Working Group considering finance and productionand consumption issues (to be chaired by Daudi Ngelautwa Mwakawago of Tanzania) isexpected to meet during the afternoon in Conference Room 2.

DRAFT DECISIONS: A number of draft decisions to be considered by WorkingGroup’s II and III (to be chaired by Paul de Jongh (Netherlands); decision-making andnational reporting) were distributed Monday afternoon.