The large disparities across people, groups and countries that add to the large and growing environmental threats pose massive policy challenges. But there is cause for optimism. In many respects the conditions today are more conducive to progress than ever— given innovative policies and initiatives in some parts of the world. Taking the debate further entails bold thinking, especially on the eve of the UN Conference on Sustainable Development (Rio+20) and the dawn of the post- 2015 era. The Report advances a new vision for promoting human development through the joint lens of sustainability and equity. At the local and national levels we stress the need to bring equity to the forefront of policy and programme design and to exploit the potential multiplier effects of greater empowerment in legal and political arenas. At the global level we highlight the need to devote more resources to pressing environmental threats and to boost the equity and representation of disadvantaged countries and groups in accessing finance.
Integrating equity concerns into green economy policies
A key theme of the Report is the need to fully integrate equity concerns into policies that affect the environment. Traditional methods of assessing environmental policies fall short. They might expose the impacts on the path of future emissions, for example, but they are often silent on distributive issues. Even when the effects on different groups are considered, attention is typically restricted to people’s incomes. The importance of equity and inclusion is already explicit in the objectives of green economy policies. We propose taking the agenda further.
Several key principles could bring broader equity concerns into policy-making through stakeholder involvement in analysis that considers:
Early analysis of the distributional and environmental consequences of policies is critical.
A clean and safe environment— a right, not a privilege
Embedding environmental rights in national constitutions and legislation can be effective, not least by empowering citizens to protect such rights. At least 120 countries have constitutions that address environmental norms. And many countries without explicit environmental rights interpret general constitutional provisions for individual rights to include a fundamental right to a healthy environment.
Constitutionally recognizing equal rights to a healthy environment promotes equity by no longer limiting access to those who can afford it. And embodying this right in the legal framework can affect government priorities and resource allocations.
Alongside legal recognition of equal rights to a healthy, well functioning environment is the need for enabling institutions, including a fair and independent judiciary, and the right to information from governments and corporations. The international community, too, increasingly recognizes a right to environmental information.
Participation and accountability
Process freedoms are central to human development and, as discussed in last year’s HDR, have both intrinsic and instrumental value. Major disparities in power translate into large disparities in environmental outcomes. But the converse is that greater empowerment can bring about positive environmental outcomes equitably. Democracy is important, but beyond that, national institutions need to be accountable and inclusive— especially with respect to affected groups, including women— to enable civil society and foster popular access to information.
A prerequisite for participation is open, transparent and inclusive deliberative processes— but in practice, barriers to effective participation persist. Despite positive change, further efforts are needed to strengthen the possibilities for some traditionally excluded groups, such as indigenous peoples, to play a more active role. And increasing evidence points to the importance of enabling women’s involvement, both in itself and because it has been linked to more sustainable outcomes.
Where governments are responsive to popular concerns, change is more likely. An environment in which civil society thrives also engenders accountability at the local, national and global levels, while freedom of press is vital in raising awareness and facilitating public participation.
Sustainability debates raise major questions of costs and financing, including who should finance what— and how. Equity principles argue for large transfers of resources to poor countries, both to achieve more equitable access to water and energy and to pay for adapting to climate change and mitigating its effects.
Four important messages emerge from our financing analysis:
Although the evidence on needs, commitments and disbursements is patchy and the magnitudes uncertain, the picture is clear. The gaps between official development assistance spending and the investments needed to address climate change, low-carbon energy, and water and sanitation are huge— even larger than the gap between commitments and investment needs (figure 8). Spending on lowcarbon energy sources is only 1.6 percent of the lower bound estimate of needs, while spending on climate change adaptation and mitigation is around 11 percent of the lower bound of estimated need. For water and sanitation the amounts are much smaller, and official development assistance commitments are closer to the estimated costs.
Closing the funding gap: currency transaction tax— from great idea to practical policy
The funding gap in resources available to address the deprivations and challenges documented in the Report could be substantially narrowed by taking advantage of new opportunities. The prime candidate is a currency transaction tax. Argued for by the 1994 HDR, the idea is increasingly being accepted as a practical policy option. The recent financial crisis has revived interest in the proposal, underscoring its relevance and timeliness.
Today’s foreign exchange settlement infrastructure is more organized, centralized and standardized, so the feasibility of implementing the tax is something new to highlight. It has high-level endorsement, including from the Leading Group on Innovative Financing, with some 63 countries, among them China, France, Germany, Japan and the United Kingdom. And the UN High-Level Advisory Group on Climate Change Financing recently proposed that 25–50 percent of the proceeds from such a tax be directed to climate change adaptation and mitigation in developing countries.
Our updated analysis shows that at a very minimal rate (0.005 percent) and without any additional administrative costs, the currency transaction tax could yield additional annual revenues of about $40 billion. Not many other options at the required scale could satisfy the new and additional funding needs that have been stressed in international debates.
A broader financial transaction tax also promises large revenue potential. Most G-20 countries have already implemented a financial transaction tax, and the International Monetary Fund (IMF) has confirmed the administrative feasibility of a broader tax. One version of the tax, a levy of 0.05 percent on domestic and international financial transactions, could raise an estimated $600–$700 billion.
Monetizing part of the IMF’s surplus Special Drawing Rights has also attracted interest. This could raise up to $75 billion at little or no budgetary cost to contributing governments. The SDRs have the added appeal of acting as a monetary rebalancing instrument; demand is expected to come from emerging market economies looking to diversify their reserves.
Reforms for greater equity and voice
Bridging the gap that separates policy-makers, negotiators and decision-makers from the citizens most vulnerable to environmental degradation requires closing the accountability gap in global environmental governance. Accountability alone cannot meet the challenge, but it is fundamental for building a socially and environmentally effective global governance system that delivers for people.
We call for measures to improve equity and voice in access to financial flows directed at supporting efforts to combat environmental degradation.
Private resources are critical, but because most of the financial flows into the energy sector, for example, come from private hands, the greater risks and lower returns of some regions in the eyes of private investors affect the patterns of flows. Without reform, access to financing will remain unevenly distributed across countries and, indeed, exacerbate existing inequalities. This underlines the importance of ensuring that flows of public investments are equitable and help create conditions to attract future private flows.
The implications are clear— principles of equity are needed to guide and encourage international financial flows. Support for institution building is needed so that developing countries can establish appropriate policies and incentives. The associated governance mechanisms for international public financing must allow for voice and social accountability.
Any truly transformational effort to scale up attempts to slow or halt climate change will require blending domestic and international, private and public, and grant and loan resources. To facilitate both equitable access and efficient use of international financial flows, the Report advocates empowering national stakeholders to blend climate finance at the country level. National climate funds can facilitate the operational blending and monitoring of domestic and international, private and public, and grant and loan resources. This is essential to ensure domestic accountability and positive distributional effects.
The Report proposes an emphasis on four country-level sets of tools to take this agenda forward:
Finally, we call for a high-profile, global Universal Energy Access Initiative with advocacy and awareness and dedicated support to developing clean energy at the country level. Such an initiative could kickstart efforts to shift from incremental to transformative change.
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The Report casts light on the links between sustainability and equity and shows how human development can become more sustainable and more equitable. It reveals how environmental degradation hurts poor and vulnerable groups more than others. We propose a policy agenda that will redress these imbalances, framing a strategy for tackling current environmental problems in a way that promotes equity and human development. And we show practical ways to promote jointly these complementary goals, expanding people’s choices while protecting our environment.
