To: Nani G. Oruga, The Bees Trees
From: Chris N. Eppers, Solar Musketeers
Re: What are the GEF's objectives and purpose? How did it come about? What are
the Conventions that use the GEF? How has it evolved?
Dear Nani,
Here are some basics on the GEF, such as what it is and why it was set up.
If you're interested, in another letter I'll explain more about how the GEF
works. I have organised this section around the questions you asked. Annex 4
lists some documents that are useful for more information. To give you mote
manageable bits of information, in this letter I've only covered the purpose
of the GEF and how it has developed. In my next letter I'll talk about how the
GEF is organised.
What is the GEF?
The GEF provides financing, normally as a grant, for projects that will benefit
the global environment in the four focal areas of biodiversity loss, climate
change, ozone layer depletion, and cleaning and preventing the degradation of
international waters. Projects relating to land degradation can also be funded,
provided they meet with the objectives of at least one of the other focal areas.
The organisations that carry out the work of the GEF, or implement it, are called
Implementing Agencies (IAs). They are the United Nations Development Programme
(UNDP), the United Nations Environment Programme (UNEP), and the World Bank.
Parties to both the Convention on Biological Diversity and the Framework Convention
on Climate Change have adopted the GEF as their financial mechanism. The arrangements
between the GEF and each Convention are currently interim ones. Later the Parties
will have to decide whether or not to continue the arrangement permanently.
It would be highly unlikely, though, for either to break off the relationship.
Both conventions have provisions for financial assistance to help eligible signatories
to meet their obligations. Each convention has particular eligibility criteria.
However, if a country does not meet these criteria, but still meets the other
GEF eligibility criteria, then it can receive funding in the desired focal area,
but outside the financial mechanism in question. I have added some background
information on these conventions in Boxes 2.1 and 2.2; Annex 3 has the addresses
of their secretariats.
Funding from the GEF is limited to countries, called 'recipient countries',
which qualify for technical assistance grants from UNDP or loans from the World
Bank. The latter can be either from the International Bank for Reconstruction
and Development, or the International Development Association. I think you know
these are both part of the World Bank. To receive funding in all of the focal
areas, except international waters, a country must be party to the relevant
treaty:
Biodiversity - Convention on Biological Diversity
Climate change - Framework Convention on Climate Change
Ozone - Montreal Protocol on Substances that Deplete the Ozone Layer (In
addition, countries must have ratified the London Amendments and have fulfilled
their obligations to report on the production and consumption of ozone depleting
substances and trade according to the requirements of the Protocol.)
One of the key aspects of funding from the GEF is that it does not usually
cover the full cost of projects; its assistance is limited to financing only
the costs of achieving global environmental benefits. The standard explanation
is that the GEF covers the "difference or increment between a project undertaken
with global environmental objectives in mind, and the costs of an alternative
project that the country would have implemented in the absence of global environmental
concerns". In the language of the GEF these are incremental costs. There
has been and continues to be a lot of debate about the definition of incremental
costs, as well as global environmental benefit. In another letter (Letter 12),
I'll go into more detail on these topics.
In certain cases, the GEF will cover the full costs of a project. This might
be, for example, when a country has a project to study and report on its sources
and sinks of greenhouse gases. This is a requirement under the climate convention,
but it is not something a country strapped for cash would normally spend any
money on. The project, at least from a development perspective, does not provide
much in the way of national benefits. The country, though, would still be expected
to contribute at least a small portion of the financing or provide in-kind services
such as office space or part of the salaries.
Often you will come across the word 'agreed' before these cost terms, as in
'agreed incremental cost'. This simply means that the recipient country and
the GEF must negotiate and agree on these costs.
Currently all GEF grants must be endorsed by the recipient country government.
UNDP administers a Small Grants Programme, which gives very small grants (maximum
US$50 000) directly to NGOs. The programme is operating in 33 countries, and
is being expanded. Letter 10 has more details on the programme. It's possible
that the GEF will eventually be able to give larger grants directly to NGOs.
For the period 1994-1997, the GEF has almost US $2 billion. Climate change and
biodiversity activities have each been allocated about 40%, with the remainder
for international waters and ozone projects.
How did the GEF come about?
The GEF emerged from the concern expressed in the late eighties for global
environmental issues. This concern predominated in industrialised countries,
particularly European ones. Of the many ideas for financing environmentally
beneficial projects proposed by various governmental and non-governmental institutions,
the GEF was the one, which finally received the necessary political and financial
support. The proposal that actually led to the creation of the GEF was made
by France and supported by Germany. More than a year of negotiations ensued
before the GEF was officially established in October 1991. At this time it was
created as a 3 year experiment, and called the GEF Pilot Phase, officially abbreviated
as GEF-P. The Pilot Phase ran until the middle of 1994.
Some of the reasons why the Pilot Phase agreement was achieved so quickly included
its experimental nature; the fact that it was placed in an existing institution;
that it included both the World Bank and United Nations organisations; that
beyond the 'membership' fee, the size of industrialised contributions were not
fixed at a minimum level; and that it focused on the global environment. Another
important element was that contributions from industrialised countries were
supposed to be in addition to what they were already giving for development
activities. (In the jargon, this concept is called Additionality').
Box 2.1: Framework Convention on Climate Change
The Framework Convention on Climate Change is an international agreement
between countries, which commits them to take action to limit their emissions
of greenhouse gases, such as carbon dioxide (CO2, methane, and nitrous
oxide (N2O). It was signed by 155 governments at the Rio "Earth Summit",
in June 1992. The ultimate objective is:
. stabilisation of greenhouse gas concentrations in the atmosphere at
a level that would prevent dangerous anthropogenic (human) interference
with the climate system.
The Convention emphasises that developed countries are mainly responsible
for historic and current emissions and must take the lead in combating
climate change. It recognises that the first priority of developing countries
must be their own economic and social development, and that their share
of total global emissions will rise as they industrialise.
Commitments
For all countries: All must submit information about
the quantities of greenhouse gases that they emit and about their national
'sinks' (process and activities that remove these gases from the atmosphere,
notably forests and oceans/. They must carry out national programmes for
mitigating climate change and adapting to its effects and strengthen scientific
and technical research and systematic observation related to the climate
system. Finally they should promote development and diffusion of relevant
technologies and education programmes and public awareness about climate
change and its likely effects.
Developed countries: They must adopt policies designed
to limit their greenhouse gas emissions and protect and enhance their
greenhouse gas 'sinks' and 'reservoirs'. They have announced that they
will seek to return to their 1990 emissions levels by 2000 and must submit
detailed information on their progress. The Conference of the Parties
will review the overall implementation and adequacy of this commitment
· at least twice during the 1990s. Furthermore, these countries must transfer
to developing countries, financial and technological resources above and
beyond what is already available through exiting development assistance,
and help-developing countries that are particularly vulnerable to the
adverse effects of climate change to meet the costs of adaptation. This
is done through the GEF, which is the interim financial mechanism. The
GEF receives guidance from the Conference of Parties, and it accountable
to it.
Further impetus for establishing the GEF was given by the United Nations Conference
on Environment and Development held in 1992, and the climate and biodiversity
conventions, with their provisions for a financial mechanism. Donor governments
were particularly interested in avoiding a proliferation of new funding mechanisms,
and therefore pressed that one 'facility', administered by existing institutions,
serve the various global environmental conventions.
If you want the in-depth, official history of the GEF, then read From Idea
to Reality: The Creation of the Global Environment Facility. It's by Helen Sjöberg
and published by the GEF (Working Paper 10, 1994).
Box 2.2: The Convention on Biological Diversity
The Convention on Biological Diversity (CBD) is a legally binding agreement
between governments committing them to take action to stop the world wide
loss of biological diversity - the variety and variability of living organisms
and genetic resources, including the ecosystems of which they are a part.
At the 1992 Earth Summit in Rio de Janeiro, 150 governments signed the
treaty, and in December 1993 the Convention became effective as international
law. The Convention takes a comprehensive rather than a sectoral approach
to biodiversity conservation. It links biodiversity to food security,
economic development, human survival and ethics. The Convention's objectives
are conservation of biodiversity, sustainable use of biodiversity's components,
and fair and equitable distribution of benefits derived from genetic resources.
Issues Covered
National sovereignty and common concern. The Convention
recognises that States have sovereign rights and responsibility over their
own biological resources and that biodiversity is a. common concern of
humankind.
Conservation and sustainable use. Each Party is to create
national biodiversity plans and strategies including biodiversity legislation,
integrated policy formulation, public and private cooperation, recognition
of indigenous peoples, public education, biosafety and special measures
for conservation and sustainable use /protected area networks, protection
of traditional knowledge, economic incentives, monitoring, gene banks,
etc.).
Access to genetic resources. The Convention breaks away
from the idea of free access to genetic resources. calling instead for
the regulation of access under the authority of national governments.
Each Party can then bilaterally negotiate mutually a reed terms for recognising
the value of raw materials, biotechnology transfer and the fair and equitable
sharing of benefits derived from the use or transfer of technology derived
from genetic resources.
Financing. New and additional financial resources from
the industrialised countries is to flow to developing countries party
to the convention. This is to enable developing country Parties to meet
the agreed full incremental costs they incur to implement measures which
fulfill their obligation to this Convention and allow them to benefit
from its provisions. The GEF is the interim financing mechanism and is
to be directly accountable to the Conventions' Conference of the Parties.
How has the GEF evolved from experiment to establishment?
The speed at which the GEF Pilot Phase was set up, as well as the reasons behind
its swift creation, generated a variety of criticisms and highlighted a number
of problems. During the Pilot Phase, the GEF administration was located in the
World Bank. This led to tensions between the Bank and UNDP and UNEP Environmental
NGOs argued that because GEF projects could be associated with World Bank projects,
that GEF funds would just give a green appearance (or `greenwash') to environmentally
unfriendly projects, as well as prevent the Bank from making fundamental changes
in how it dealt with environmental concerns.
Many, both observers of and actors in the GGF', were concerned about its organisation,
also known as its 'governance structure'. It was difficult to distinguish a
clear line of responsibility or Accountability for decisions. NGOs were particularly
concerned about 'transparency', or the ability to see how and why decisions
were being made at all levels of the GEF, from projects to policy.
Many NGOs and developing countries were critical of the focus on the global
environment, when there were so many pressing local and national environmental
concerns. Because of the global environmental focus, there was also the fear
that governments and people would not be supportive of the projects, as they
might not benefit from them.
Because of the pressure to allocate funds quickly, many of the projects were
developed in a top-down fashion. Or, projects in the pipeline of the various
Implementing Agencies were modified to be eligible for GEF funding. The haste
resulted in many issues being ignored. These included a coherent strategy for
choosing projects, a monitoring and evaluation system, and forms of NGO participation.
NGOs were often instrumental in bringing to light many of these problems.
Towards the end of the Pilot Phase, serious discussions began on whether the
GEF should be continued in a more permanent form, and, if so, what should be
changed. To help answer this question, an independent evaluation of the GEF
was commissioned. The evaluation team presented their results (Independent Evaluation
of the Pilot Phase, May 1994) in December 1993, six months before the end of
the Pilot Phase. Their findings confirmed many of the NGO criticisms. It provided
many recommendations as to how the Facility needed to be changed in order to
address its shortcomings. The recommendations are worth knowing and I have listed
them below:
Clearly articulate the GEF mission.
Develop programme objectives and strategies.
Reform the leadership, management, and organisational relationships of the
GEF.
Clarify and establish clear lines of accountability for the GEF.
Establish a permanent mechanism for identifying lessons and promoting their
application in GEF programmes.
Following the development of GEF strategies, establish common guidelines
for the implementing organisations' requirements for the management of GEF
operations; and undertake an independent review of these capacities.
Improve participation in the GEF programme at country and community levels.
Establish mutually beneficial collaboration with non-governmental organisations.
Ensure that strategies and programme guidelines are in place before programme
initiatives are undertaken with the funds anticipated from the replenishment
for GEF I.
In March 1994 participating countries concluded negotiations to restructure
the Facility. The resulting agreement addressed many of the above recommendations.
It included key institutional changes, universal membership, and greater transparency
and democracy in the governance arrangements. The precise modes for their implementation
and other recommendations not included in the agreement will probably be in
place by mid-1996. They will still require tuning and regular updating. (The
formal title of the agreement is The Instrument /or the Establishment of the
Restructured Global Environment Facility and is usually referred to as The 'Instrument'.)
Hope you're having fun with this! In my next letter, I'll explain how the GEF
is organised.
