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Financing Sustainable Development : Country Undertakings and Rights for Environmental Sustainability (CURES)

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Author Info

  • R. Quentin Grafton

    ()
    (Australian National University, Asia Pacific School of Economics and Government)

  • Frank Jotzo

    ()
    (Australian National University, Centre for Resource and Environmental Studies)

  • Merrilyn Wasson

    ()
    (Australian National University, Research School of Pacific and Asian Studies)

Abstract

We propose a global mechanism to finance sustainable development (SD) that offers a number of advantages over the current Global Environmental Facility (GEF). The mechanism would be multinational, provide incentives for rich and poor countries to promote SD, incorporate the principle of common, but differentiated, responsibilities and link incentives and funding for SD to structural benchmarks and performance targets. It would operate as a large fund into which rich countries would pay based on their level of population, per capita income and change in a measure of environmental sustainability. Receipts from the funds, called Country Undertakings and Rights for Environmental Sustainability (CURES), would be made to poor countries based on their population, per capita income and absolute level of environmental sustainability. This approach differentiates payments and receipts on the basis of income, while rewarding improvements in environmental performance in rich countries, and making greater payments to countries with greater environmental problems. To promote flexibility, recipient countries would be able to trade, bank or borrow their assigned CURES, provided that the trade resulted in a verifiable improvement in environmental sustainability in the purchasing country. A reformed GEF that adopted the desirable features of CURES, if widely adopted and funded at a sufficiently high level, would offer a significant boost to global SD and would greatly assist poor countries to address the twin challenges of poverty and environmental degradation.

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File URL: http://een.anu.edu.au/download_files/een0403.pdf
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Bibliographic Info

Paper provided by Australian National University, Economics and Environment Network in its series Economics and Environment Network Working Papers with number 0403.

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Length: 38 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:anu:eenwps:0403

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Web page: http://een.anu.edu.au/

Related research

Keywords: sustainable development; intergovernmental financial transfers; adjusted net savings; GEF;

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  1. Varma, Anshuman, 2003. "The economics of slash and burn: a case study of the 1997-1998 Indonesian forest fires," Ecological Economics, Elsevier, vol. 46(1), pages 159-171, August.
  2. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
  3. Nijkamp, Peter & Vreeker, Ron, 2000. "Sustainability assessment of development scenarios: methodology and application to Thailand," Ecological Economics, Elsevier, vol. 33(1), pages 7-27, April.
  4. Neumayer, Eric, 2001. "The human development index and sustainability -- a constructive proposal," Ecological Economics, Elsevier, vol. 39(1), pages 101-114, October.
  5. Daan van Soest & Robert Lensink, 2000. "Foreign Transfers and Tropical Deforestation: What Terms of Conditionality?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 389-399.
  6. Pearce, David & Hamilton, Kirk & Atkinson, Giles, 1996. "Measuring sustainable development: progress on indicators," Environment and Development Economics, Cambridge University Press, vol. 1(01), pages 85-101, February.
  7. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
  8. Adam, Christopher S. & Gunning, Jan Willem, 2002. "Redesigning the Aid Contract: Donors' Use of Performance Indicators in Uganda," World Development, Elsevier, vol. 30(12), pages 2045-2056, December.
  9. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-56, May.
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Cited by:
  1. Luca Tacconi & Frank Jotzo & R. Grafton, 2008. "Local causes, regional co-operation and global financing for environmental problems: the case of Southeast Asian Haze pollution," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(1), pages 1-16, March.
  2. Kumar, Surender & Managi, Shunsuke, 2009. "Compensation for environmental services and intergovernmental fiscal transfers: The case of India," Ecological Economics, Elsevier, vol. 68(12), pages 3052-3059, October.

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