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

Author

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  • 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.

Suggested Citation

  • R. Quentin Grafton & Frank Jotzo & Merrilyn Wasson, 2004. "Financing Sustainable Development : Country Undertakings and Rights for Environmental Sustainability (CURES)," Economics and Environment Network Working Papers 0403, Australian National University, Economics and Environment Network.
  • Handle: RePEc:anu:eenwps:0403
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    References listed on IDEAS

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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.

    More about this item

    Keywords

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

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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