Innovative financing: Filling in the gaps on the road to sustainable environmental funding

Review of European Community and International Environmental Law

Volumn 14, Issue 3, 2005, Pages 202-211

  Miles, Kate ^a  

^a UNIVERSITY OF SYDNEY   (Australia)

Author keywords

[No Author keywords available]

Indexed keywords

ENVIRONMENTAL ECONOMICS; NONGOVERNMENTAL ORGANIZATION; PRIVATE SECTOR; SUSTAINABILITY;

EID: 33747337522     PISSN: 09628797     EISSN: 14679388     Source Type: Journal    
DOI: 10.1111/j.1467-9388.2005.00442.x     Document Type: Article

References (104)

1. Protocol on Substances that Deplete the Ozone Layer (Montreal, 16 September 1987); Adjustments and Amendments to the 1987 Montreal Protocol (London, 29 June 1990), Article 10(1).
2. United Nations Framework Convention on Climate Change (New York, 9 May 1992) (UNFCCC); and Report of the Conference of the Parties on its Seventh Session, Decision 7/CP.7 (FCCC/CP/2001/13/Add.1-Add.4, 21 January 2002) (Marrakesh Accords).
3. Protocol to the United Nations Framework Convention on Climate Change (Kyoto, 11 December 1997); Marrakesh Accords, ibid.
4. Instrument for the Establishment of the Restructured Global Environmental Facility (Geneva, 16 March 1994).
5. The Global Environmental Facility (GEF) adopted a crossinstitutional framework governed and implemented by the World Bank, United Nations Environment Programme (UNEP) and United Nations Development Programme (UNDP). See L. Boisson de Chazournes, The Global Environmental Facility as a Pioneering Institution: Lessons Learned and Looking Ahead, Working Paper 19 (GEF, October 2003), at 10-11 and 23-24, available at .
6. See Instrument for the Establishment of the Restructured GEF, n. 4 above, at para. 2.
7. Convention on Biological Diversity (Rio de Janeiro, 5 June 1992).
8. Convention on Persistent Organic Pollutants (Stockholm, 22 May 2001).
9. See Instrument for the Establishment of the Restructured GEF, n. 4 above, at paras 2 and 3. See also the discussion on the GEF in P. Sands, Principles of International Environmental Law (Cambridge University Press, 2003), at 1032-1036; and D. Hunter et al., International Environmental Law and Policy (Foundation Press, 2002), at 1501-1505.
10. World Bank, Resolution No 91-5 (November 1991).
11. See D. Hunter et al., n. 9 above, at 1502; and L. Boisson de Chazournes, n. 5 above, at 7-8.
12. See D. Hunter, ibid., and L. Boisson de Chazournes, ibid.
13. See Instrument for the Establishment of the Restructured GEF, n. 4 above, at paras 7, 11 and 24; P. Sands, n. 9 above, at 1033; and D. Hunter et al., ibid., at 1502-1503.
14. See Instrument for the Establishment of the Restructured GEF, ibid., at Annex D; P. Sands, ibid., at 1033-1034; and D. Hunter et al., ibid., at 1503.
15. See P. Sands, ibid., at 1034; and L. Boisson de Chazournes, n. 5 above, at 9.
16. See D. Hunter et al., n. 9 above, at 1501; and L. Boisson de Chazournes, ibid.; Member States described the GEF as 'the leading multilateral funding mechanism for global environmental protection...'. See GEF, Summary of the Co-Chairs, Planning Meeting for the Third GEF Replenishment, GEF Secretariat (Washington DC, October 2000), at para. 3.1. Member States committed to a replenishment of GEF funds of US$2.97 billion for the 22003-2006 period. See GEF, Summary of Negotiations on the Third Replenishment of the GEF Trust Fund (GEF/A2/7, 2002), available at .
17. A. Miller, 'The Global Environmental Facility and the Search for Financial Strategies to Foster Sustainable Development', 24:4 Vermont Law Review (2000), 1229, at 1237; R. Clémençon, Financing Protection of the Global Commons: The Case for a Green Planet Contribution, GEF Working Paper 17 (July 2000), available at , at 1 and 7-9.
18. See A. Miller, ibid., at 1237; R. Lake, 'Finance for the Global Environment: The Effectiveness of the GEF as the Financial Mechanism to the Convention on Biological Diversity', 7:1 RECIEL (1998), 68, at 70 and 72.
19. See Instrument for the Establishment of the Restructured GEF, n. 4 above, at para. 2.
20. See R. Lake, n. 18 above, at 72; R. Clémençon, n. 17 above, at 2 and 11-12.
21. See R. Clémençon, ibid., at 7-12.
22. Ibid.
23. See Agenda 21 (UN Doc. A/CONF.151/26/Rev.1, 1992), at Chapter 33, paras 33.14-33.17.
24. See also the comments of L. Boisson de Chazournes, n. 5 above, at 24: 'It [the GEF] functions as a facility, that is to say a catalyst for triggering joint and parallel actions to be undertaken by all the concerned partners, states, international and non-governmental organizations as well as the private sector and local populations, in order to shape a durable and viable world'.
25. World Bank Development Committee, Global Monitoring Report 2005, Millennium Development Goals: From Consensus to Momentum (World Bank, April 2005), at 11, available at .
26. G8, The Gleneagles Communiqué: Africa (Gleneagles, July 2005), at paras 26-29 and Annex II, available at . See, for example, at Annex II, the EU pledged to reach 0.7% Official Development Assistance/gross national income by 2015, and Russia committed to cancel US$11.3 billion worth of debts owed by African States.
27. World Bank, Financing the Development Agenda (World Bank, April 2005), at 2, available at .
28. Ibid., at 1.
29. F. Pinto, UNDP/GEF Experience with Innovative Financing Mechanisms for Environmental Projects, Technical Workshop on Concessional Lending, UNEP Division of Technology, Industry and Economics (July 2002), at 1, available at .
30. See the UNEP Finance Initiative: Innovative Financing for Sustainability website available at , for details the programme.
31. See, for example, Financing Protected Areas Task Force of the World Commission on Protected Areas of the World Conservation Union (IUCN) in collaboration with the Economics Unit of the IUCN, Financing Protected Areas: Guidelines for Protected Area Managers (IUCN, 2000).
32. See the proposals in H. Reisen, Innovative Approaches to Funding the Millennium Development Goals (Organization for Economic Cooperation and Development, 2004), at 7-17, available at .
33. The World Wide Fund for Nature (WWF) developed the concept of the 'Debt-for-Nature Swap' mechanism in 1984, the first such programme being implemented through Conservation International in Bolivia in 1987; see D. Asiedu-Akrofi, 'Debt-for-Nature Swaps: Extending the Frontiers of Innovative Financing in Support of the Global Environment', 25:3 The International Lawyer (1991), 557, at 564-565.
34. A. Sherman (ed.), Conservation Finance E-Resources: A Compendium of Examples for Self-Sustaining Projects to Protect Wildlife and the Environment (WWF, June 2003), available at .
35. WWF, Center for Conservation Finance, Business Plan (WWF, 2002), at 1 and Annex D, at 27, available at .
36. See n. 16 above, concerning the replenishment funds for the 2003-2006 period.
37. See the WWF website for a full discussion and data on these projects, available at .
38. See A. Sherman, n. 34 above.
39. M. Grant, 'Financial Contributions A Global Perspective', 4 New Zealand Journal of Environmental Law (2000), 201.
40. Global taxation proposals to fund development aid, such as the Tobin Tax, a currency transaction tax model developed by James Tobin, or taxes on aviation fuel and airline tickets, have been explored over the last 30 years and have met with varying degrees of resistance. It appears, however, that momentum may be gathering in favour of forms of coordinated, multilateral taxation, as evidenced by the recent agreement in May 2005 of European finance ministers to fund development assistance through a tax on airline tickets, and Belgium's adoption of a currency transaction tax in July 2004. See Press Release, 'Public Development Aid, Management of Financial Crises and Financial Perspectives for 2007-2013 on the Agenda of the Second Day of the Informal "ECOFIN" Meeting' (Luxembourg Presidency of the Council of the European Union, 14 May 2005), available at . See Chamber of Representatives of Belgium, Seeking to Levy a Tax on Foreign Currency Exchange Operations, Banknotes and Coins (Doc. 51 0088/003, 1 July 2004), available at . This article, however, does not examine these financing mechanisms as its focus is more on initiatives at the local level than regimes requiring multilateral coordination.
41. See A. Sherman, n. 34 above, at 4-5. See also, generally, C.E. Di Leva, 'The Conservation of Nature and Natural Resources through Legal and Market-Based Instruments', 11:1 RECIEL (2002), 84; A. Drumm, Tourism-Based Revenue Generation Mechanisms, Fifth World Parks Congress, Sustainable Finance Stream, Durban, South Africa (IUCN, September 2003), available at .
42. The Bunaken National Park Management Advisory Board, comprised of representatives from local and national levels of government, academics, NGOs, tourist operators and villagers from the surrounding areas, administers the revenue generated from the park's entry fee, 80% of which is retained by the park for conservation, management and environmental protection costs, with the remaining 20% allocated to various government bodies. See also B. Spergel and M. Moye, Financing Marine Conservation: A Menu of Options (WWF, 2004), at 31-34, available at .
43. The system at Mabini employs a Bunaken-style management board, the Coastal Resource Management Board, again encompassing the commercial sector, government entities, local communities and NGOs. A conservation trust fund, into which 85% of this diving fee revenue is paid, is responsible for financing the protection and conservation of the marine environment at Mabini, and it is the local Coastal Resource Management Board that administers the allocations and activities of the trust fund. See WWF, Conservation Finance, Featured Projects: Scuba Diving in Mabini, Batangas, Philippines (WWF, undated), available at and B. Spergel and M. Moye, ibid., at 34.
44. At Bonaire and Saba, 100% of diving fee revenue goes into financing the conservation and environmental protection costs associated with the protected areas and this now covers a substantial component of those costs. See also B. Spergel and M. Moye, ibid., at 33.
45. The Republic of Palau has established a US$15 per person diving fee system, which now finances 100% of the costs of protecting the islands' marine environment. See A. Sherman, n. 34 above, at 23.
46. The Republic of Palau has established a US$15 per person diving fee system, which now finances 100% of the costs of protecting the islands' marine environment. See A. Sherman, n. 34 above, at 23. 46 Entry fees to Sagarmatha National Park and Annapurna Conservation Area in Nepal generate annual funds in excess of US$1 million, satisfies the conservation requirements and operating costs of the site, while additionally advancing specific global environmental objectives through its research and reforestation projects. See A. Sherman, ibid., at 20; and WWF, n. 35 above, at 12.
47. Utilizing several innovative financing mechanisms, the Galápagos Islands National Park is virtually self-financing. It does still require the assistance of traditional donor grants, but for the most part, it sources its funds from the US$100 entry fee to the park, licence fees levied from tour operators and visitation fees from private yachts. See B. Spergel and M. Moye, n. 42 above, at 31-32; and B. Spergel, Raising Revenue for Protected Areas: A Menu of Options (WWF, 2001), at 13-14, available at .
48. B. Spergel and M. Moye, ibid., at 31-34; and A. Sherman, n. 34 above, at 19-20.
49. P. Fearnhead, Commercial Tourism Concessions: A Means of Generating Income for South African National Parks, Fifth World Parks Congress, Sustainable Finance Stream, Durban, South Africa (IUCN, September 2003), available at ; and D.D.C. Mauambeta, Private Investments to Support Protected Areas: Experiences from Malawi, Fifth World Parks Congress, Sustainable Finance Stream, Durban, South Africa (IUCN, September 2003), available at >.
50. See P. Fearnhead, ibid., at 1-2.
51. Ibid., at 2-5.
52. See D.D.C. Mauambeta, n. 49 above, at 1 and 5.
53. Ibid., at 4.
54. Ibid., at 4 and 9.
55. Ibid., at 4.
56. Ibid.
57. Ibid., at 2-3.
58. Ibid., at 3-4.
59. Ibid., at 2 and 7-8.
60. Ibid., at 2-3 and 9-.10.
61. See D. Asiedu-Akrofi, n. 33 above; E. Webb, 'Debt for Nature Swaps: The Past, the Present and Some Possibilities for the Future', 11:3 Environmental and Planning Law Journal (1994), 222; J.P. Resor, 'Debt-For-Nature Swaps: A Decade of Experience and New Directions for the Future, 48:1 Unansylva, (1997), 1, available at .
62. See D. Asiedu-Akrofi, ibid., at 564; and J.P. Resor, ibid.
63. See A. Sherman, n. 34 above, at 15.
64. See D. Hunter et al., n. 9 above, at 1507-1508; and D. Asiedu-Akrofi, n. 33 above, at 564-565; A. Sherman, ibid., at 17; B. Spergel and M. Moye, n. 42 above, at 16.
65. See B. Spergel and M. Moye, ibid., at 16-17.
66. Ibid.
67. Ibid., at 17-18.
68. Ibid. See also, Organization for Economic Cooperation and Development, Swapping Debt for the Environment: The Polish EcoFund (OECD, March 1998), available at ; and the Polish EcoFund website available at .
69. See J.P. Resor, n. 61 above, at 2.
70. See WWF, n. 35 above, at 24.
71. See WWF, n. 35 above, at 24.
72. See J.P. Resor, n. 61 above, at 6.
73. D. Perrot-Maître and P. Davis, Case Studies of Markets and Innovative Financial Mechanisms for Water Services from Forests (Forest Trends, May 2001), available at andK. Georgieva, S. Pagiola and P. Deeks, Paying for the Environmental Services of Protected Areas: Involving the Private Sector, Fifth World Parks Congress, Sustainable Finance Stream, Durban, South Africa (IUCN, September 2003), available at .
74. D. Perrot-Maître and P. Davis, ibid.
75. FONAFIFO is responsible for implementation of the Costa Rican Government's Payments for Environmental Services Programme, which was established in 1996. See Ley Forestal No 7575 (16 April 1996).
76. See D. Perrot-Maître and P. Davis, n. 73 above, at 8-10.
77. S. Postel and B. Thompson, 'Watershed Protection: Capturing the Benefits of Nature's Water Supply Services', 29:2 Natural Resources Forum (2005), 98, at 103.
78. See D. Perrot-Maître and P. Davis, n. 73 above, at 8-10.
79. See Ley Forestal No 7575, n. 75 above; S. Postel and B. Thompson, n. 77 above, at 103; E. Malavasi and J. Kellenberg, Program Payments for Ecological Services in Costa Rica (IUCN, March2002), at 6, available at .
80. See D. Perrot-Maître and P. Davis, n. 73 above, at 4-6.
81. Ibid.
82. See the Coalition for Rainforest Nations' website vailable .
83. See, Forest Trends' website available at .
84. See, for example, Forest Trends' report for the International Tropical Timber Organization (ITTO); S. Scherr et al., For Services Rendered: The Current Status and Future Potential of Markets for the Ecosystem Services Provided by Tropical Forests (ITTO, July 2004), available at ; the Katoomba Group's 'Ecosystem Marketplace' website available at ; and Coalition for Rainforest Nations, Initiatives: Environmental Sustainability (Coalition for Rainforest Nations, undated), available at . 85 See Coalition for Rainforest Nations, ibid.; D. Perrot-Maître and P. Davis, n. 73 above, at 1-3.
85. See Coalition for Rainforest Nations, ibid.; D. Perrot-Maître and P. Davis, n. 73 above, at 1-3.
86. See Union of Concerned Scientists (UCS), Recognizing Forests' Role in Climate Change (UCS, October 2002), at 1-3, available at ; J. Stiglitz, Cleaning Up Economic Growth (Project Syndicate, June 2005), at 1-2, available at .
87. J. Stiglitz, ibid.
88. See B. Spergel, n. 47 above, at 16. An example of this form of revenue raising is the annual fee levied from telecommunications companies, which constructed and operate transmission towers on Mount Kitanglad in the Philippines.
89. Sistema Nacional de Unidades de Conservacao, Lei No 9985 (18 July 2000).
90. C. Foloni Ferraz, Institutional Solutions for the Financing of Protected Areas in Brazil, Fifth World Parks Congress, Sustainable Finance Stream, Durban, South Africa (IUCN, September 2003), at 2, available at .
91. See Lei No 9985, n. 89 above.
92. See C. Foloni Ferraz, n. 90 above.
93. Ibid., at 3.
94. See B. Spergel, n. 47 above, at 16
95. Ibid.
96. See M. Grant, n. 39 above, at 201.
97. Ibid.
98. Ibid., at 202.
99. Ibid., at 201 and 216.
100. P. Bisseck, FEDEC: An Environmental Compensatory Mechanism Set Up within the Framework of a Pipeline Construction Project, Cameroon, Fifth World Parks Congress, Sustainable Finance Stream, Durban, South Africa (IUCN, September 2003), at 1, available at
101. FEDEC, History and Goals (FEDEC, undated), available at . See also P. Bisseck, ibid.
102. P. Bisseck, ibid.
103. Ibid.
104. Ibid.