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Financing SD: Country Undertakings and Rights for Environmental Sustainability


  • 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)


The paper proposes a global mechanism to finance and promote sustainable development (SD) that is multinational, provides incentives for rich and poor countries to promote SD, incorporates the principle of common but differentiated responsibilities and links incentives and funding for SD to structural benchmarks and performance targets. The mechanism would operate as a large fund into which rich countries would pay based on their level of population, per capita income and change in an individual or composite measure of environmental sustainability. The approach offers a number of features that make it a superior mechanism to the Global Environmental Facility (GEF). 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. To illustrate the mechanism, Genuine Savings (GS) is used as a measure of environmental sustainability and country contributions and payments from a $10 billion annual fund are calculated and compared. The control of Indonesian forest fires is used as an example where CURES could be used to fund initiatives that could generate very large global benefits.

Suggested Citation

  • R. Quentin Grafton & Frank Jotzo & Merrilyn Wasson, 2003. "Financing SD: Country Undertakings and Rights for Environmental Sustainability," Economics and Environment Network Working Papers 0301, Australian National University, Economics and Environment Network.
  • Handle: RePEc:anu:eenwps:0301

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    References listed on IDEAS

    1. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-356, May.
    2. 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.
    3. Holden, Stein T. & Shiferaw, Bekele & Wik, Mette, 1998. "Poverty, market imperfections and time preferences: of relevance for environmental policy?," Environment and Development Economics, Cambridge University Press, vol. 3(01), pages 105-130, February.
    4. 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.
    5. Neumayer, Eric, 2001. "The human development index and sustainability -- a constructive proposal," Ecological Economics, Elsevier, vol. 39(1), pages 101-114, October.
    6. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
    7. Dasgupta, Partha, 1996. "The economics of the environment," Environment and Development Economics, Cambridge University Press, vol. 1(04), pages 387-428, October.
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    More about this item


    sustainable development; environmental performance; genuine savings;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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