IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Financial instruments for human development

Listed author(s):
  • Chichilnisky, Graciela

Economics often provides the wrong incentives to those who control the assets, such as people in developing countries where most forests are located and who could potentially benefit most from conservation . There is increasing unease about this situation, and an emerging view is that standard economic concepts and prescriptions fail to properly account for the value of environmental assets . Economic values seem to be out of step with social values ; it is clear that the economic science of the future should bridge this gap. This paper develops practical ways and new economic thinking to redress this discrepancy: it creates and develops structures and institutions through which the value embodied in environmental assets can be translated into economic return which encourages the conservation of the asset, and induce more equitable and effective use of resources . I will introduce a range of different financial instruments, some of which are connected to global environmental assets such as the planet's atmosphere, and others to local or regional assets, such as watersheds . The financial instruments proposed here all share an unusual feature : they provide economic incentives towards environmental conservation. They do so by altering the economic valuation of these assets in a way that is more aligned with their real values to human societies . By doing so, these mechanisms produce incentives towards more efficient use of resources globally, whether for local resources such as water or for global resources such as a stable atmosphere . The ultimate role of these instruments is to offer a way to fund sustainable human development at a global scale, systematically and reliably. The main message of this article is that we must rethink the foundations of international development to achieve equitable and sustainable economic progress . The Bretton Woods Institutions (World Bank, IMF, GATT) were based on a post World War II model . They encouraged one form of development : resource based industrialization . These organizations are built upon a model funded by voluntary national donations based on taxes, a model that no longer works well . At the same time the globalization of the world economy brings new demands on the international system, requiring more infrastructure for trading and communication, and the need to develop new standards of human development and environmental protection . The current criticism of the Bretton Woods institutions, and of the United Nations within the US and other industrial nations, comes at a time when international organizations may be more needed than ever .

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8816.

in new window

Date of creation: 1998
Publication status: Published in Human Development Report (1998): pp. 1-24
Handle: RePEc:pra:mprapa:8816
Contact details of provider: Postal:
Ludwigstra├če 33, D-80539 Munich, Germany

Phone: +49-(0)89-2180-2459
Fax: +49-(0)89-2180-992459
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8816. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.