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Round Table Contents

UN Agencies and the OECD

Jim MacNeill

In the context of projecting institutional change, Westerners tend to think about the future in rather optimistic terms. The G7 in Halifax will be in large part a celebration of the positive consequences of globalization, open markets, and new technologies. The leaders will rightly look with favour on the enormous growth prospects in China, SouthEast Asia, parts of Latin America and Eastern Europe; prospects that have made frequent fliers out of western leaders opening doors for vast trade delegations.

But there is another side to this. The glass is not only halffull, it is halfempty. The Brundtland Commission found in its work that since World War II there has been a steady, decadebydecade increase in the frequency, the scale, and the impact of environmental disasters, and also the economic, social, and security crises that are rooted, in part, in those disasters. These trends are continuing and are in the news everyday, although often the commentators do not link them to ecological breakdown. There is famine, there are refugees, and a growing set of crises in Africa, the collapse of fisheries on the east coast of Canada and elsewhere, the loss of forests, the loss of species, marine disasters ¾ and so goes the litany.

The driving forces behind these trends ensure that they will get worse before they get even worse. The global population will double in the next 35-40 years, and, at the same time, arable land will be more than cut in half, per capita. The rising incomes and levels of consumption built into the incredible growth prospects in some parts of the world are based largely on traditional forms of energy and agriculture and urban development. And traditional forms of development draw down the base of ecological capital needed locally and internationally to continue the process of development. New technologies like genetic engineering, biotechnology, and the communications revolution all hold great promise, and they may well ameliorate the impact of rising numbers and rising consumption. Or they may make it worse. Western technological optimism always assumes the best; but the fact is that we don't know what might happen in the future, nor is history always encouraging.

In this context, there are two critical questions. The first is: can the international community increase its institutional capacity to deal with the negative environmental, social and security effects of these trends? If so, how can this best be done?

The second question is: can the international community make its development agencies, trade agencies, energy, agricultural, and other sectoral agencies directly responsible and accountable for formulating policies and budgets that encourage development that is sustainable in the first place? In other words, can the environment, the economy, and political considerations be integrated into decision making to ensure that environment, economy and trade are more mutually reinforcing? The opportunities here are absolutely enormous. If this can be done, how can it be done best?

Separation or integration ¾ or both? These are the two questions that must be addressed.

With regard to the first question, Dan Esty says that the international community needs a new Global Environment Organization (GEO). He says that the United Nations Environment Programme (UNEP) can't do the job needed. Why? Because of its limited mandate, its derisory funding, its location in Nairobi, and so on. The international community therefore needs a new GEO, modelled after a combination of the General Agreement on Trade and Tariffs (GATT) and the World Health Organization (WHO) with perhaps a little of the International Labour Organization (ILO) thrown in, a big boy or girl that can stand up to the big boys and girls as the fourth pillar of the Bretton Woods system.

Given the trends, I believe we need an international environmental protection agency as proposed by

Dan, and we need it urgently. But, like it or not, we must build on what we've got. We must build on UNEP. Cleaning house and starting from scratch is not a political option. To move in the direction of a Global Environment Organization, UNEP must be built upon. Given the politics of the United Nations, scrapping UNEP, as Dan suggests, is simply not an option. If Dan's proposal for a GEO is seen as a threat to UNEP, the Kenyans will mobilize the Africans, the Africans will trigger Southern solidarity, and his initiative will be dead in the water.

The same could be true of the alternative recommended by the Commission on Global Governance: transforming the Trusteeship Council into the Trustee of the Global Commons and "the primary UN forum on global, environmental, and related matters." In its report, the Commission makes mention of a role for the UN Commission on Sustainable Development (CSD); but I can't find what role it proposes for UNEP. Is it to be subsumed in some way?

These are important questions. There is a clear need for an international environmental protection agency to deal with the negative trends that are in the growing pipeline of unsustainable development. But it must be presented in a way that incorporates the interests of the existing agencies. In my view, the NRTEE's Task Force should endorse the draft recommendation that the G7 support a properly constituted and properly mandated study of the options, including the role of UNEP, the CSD and other agencies. It may well conclude that UNEP should evolve into something along the lines of the separate international environmental agency proposed by Dan.

The second question concerns integration. Can the international community integrate the environment into economic and political decision making? This question is even more important than the first. If environmental agencies are given the mandate and the necessary resources, they can deal with some of the negative effects of unsustainable economic, trade and other policies. They can reduce certain environmental emissions, (the Montreal Protocol has done so with CFCs), and they can recycle, reforest, rehabilitate and restore other damage after the fact. But, unfortunately, environmental agencies cannot do much about the policies and the budgets that are causing the damage in the first place. They can certainly study; they can exhort; they can act as a conscience, a proselytizer, and an advocate; they can demand; they can pound the table; but when push comes to shove, they cannot make the decisions that have to be made to change the policies that are causing the problems in the first place, the policies that are driving unsustainable forms of development.

We had an object lesson in this last week when Canadian environment ministers got together in Toronto to decide how Canada would meet its Rio commitment to stabilize CO2 emissions at 1990 levels by the year 2000. Sad to say, but the ministers decided that they could not decide to change any of the policies driving ever higher CO2 emissions in Canada.

There is a reason why the federal government's 1994 budget provides $5.2 billion in subsidies and tax expenditures for the fossil fuel industry, thus promoting global warming, and only $16.5 million to promote energy efficiency. These figures sadly reflect the balance of the political forces underlying the Canadian energy system. Environment Canada or UNEP can demonstrate again and again ¾ as they have ¾ that these subsidies don't make any economic sense, or any environmental sense. They certainly don't make any trade sense. Indeed, they are tradedistorting. But until they make no political sense, the subsidies will not change.

The fact is that the balance of political forces between our environment agencies ¾ local and international ¾ and our economic, trade, energy and other development agencies, is grossly unequal. And so is the balance of professional forces. UNEP does not have the professional capacity to stand up to the international economic agencies such as the banks, the International Monetary Fund (IMF), the General Agreement on Trade and Tariffs (GATT), the Food and Agriculture Organization (FAO), or the United Nations Development Programme (UNDP). And even if UNEP did have sufficient professionals on its staff, they could not do homework of comparable quality to some other agencies because UNEP does not have access to the data. The same is true locally and nationally. Despite very good intentions, great effort, and several leaps forward such as the Clean Air Act and the Montreal Protocol, our environmental agencies have fallen further and further behind. If you doubt that, look at the trends since 1972 ¾ the trends that brought us to Rio.

We need an international environmental protection agency. But, in addition, as a matter of urgency, we need to make our economic, energy, agriculture and other development agencies ¾ our banks and trade agencies ¾ directly responsible and accountable for formulating policies and budgets that encourage development that is sustainable in the first place.

Can this be done? Obviously it will not be easy. There are cultural problems and there are political obstacles that cannot be overestimated. But, on the basis of my experience during the past year, I believe that it is possible to move significantly in the right direction.

Since May of 1994, I have been advising the UNDP on a fundamental reorganization of its work on environment and sustainable development. This experience suggests that the environment can be integrated with, in this case, development policy and resource allocation decisions within a large UN agency. But only if certain preconditions exist. The most important preconditions are leadership and commitment at the top. UN agencies are intensely hierarchical. There is simply no way to integrate environment in economic and political decision making if the person at the top is not determined to make it happen, or if that individual fails to sustain that determination long enough to institutionalize change.

Every institution has within itself a culture to defend itself and to preserve the status quo, whatever that is. This is not necessarily a bad thing, depending on what is being defended.

Ever since the late 1960s, governments and institutions have been under pressure to reorganize to address the environment. This has triggered instinctively (not necessarily by design) a defensive strategy on the part of existing organizations designed to keep the new environmental groups at bay and under control. The strategy is very simple. I would summarize it in three points:

First, keep the environment separate in its own division or directorate within an organization, or keep it within its own agency or department within a government. Second, give the division or agency a limited mandate focussed on the effects of economic and fiscal and trade and sectoral policies, and give it limited instruments to deal with those effects, preferably only afterthefact, addon regulatory measures. And third, keep the environment as far away as possible, for as long as possible, from the tables where the key economic ¾ fiscal, budget, trade, energy ¾ and other policy and resource allocation decisions are made.

That's the strategy in a nutshell. It is built into almost every government and corporation's established institutional culture. And it is manifest in the way that environmental protection has been organized since the late 1960s, both nationally and internationally.

Most recently, this institutional culture was in evidence when the drafters of the North American Free Trade Agreement (NAFTA) decided to establish a separate organization, the North American Commission on Environmental Cooperation (NACEC), to deal with the environment (after President Clinton was elected and something had to be done). The Brundtland Commission recommended the integration of environmental and trade agendas around a single table and within a single organization. In the case of NAFTA, this option was not considered or, if it was considered, it was not favoured. NACEC can do important things, but the NACEC table and the NACEC agenda are not the NAFTA table and the NAFTA agenda. The same thing appears to be happening in the World Trade Organization. That is, separation, not integration.

It is interesting that separation is often favoured by environmental agencies themselves and by environmental NGOs. Some clearly feel more comfortable dealing with these issues at their own table with their own converted colleagues ¾ their own converted brothers and sisters ¾ rather than at the main table, where they would have to learn a new language and to struggle with the hard politics of economic and trade agendas, and with those representing economic and trade interests.

The World Bank has gone through several reforms in the past decade. Each reform has served to strengthen the environmental division within the Bank. Nonetheless, it has retained the principle of separation. Each stage of reform has been criticized, most recently by the Bank's own evaluations, for a failure to integrate environmental concerns into the Bank's decisions on energy, agriculture, and other projects. Things have improved enormously; but the pressure is on now for yet another reform in the World Bank. This time I hope there will be a stronger move in the direction of integration. The IMF is considering whether to deal with similar pressure to bring environment into the Fund. The IMF should decide to do it and to do it in a way that ensures integration at the top rather than separation down below.

To some extent, the Organization for Economic Cooperation and Development (OECD) is a model of what might be done, not because of any design ( a separate environment directorate was established in the OECD in 1970) but because it is a small organization. All directors at the OECD have equal access to the SecretaryGeneral and ready access to the OECD Council. As a director for eight years at the OECD, I launched joint working parties with the economic, agricultural, energy, and some other directorates, with the full support of the SecretaryGeneral. Without that support it could not have happened. And even with that support, overtures to the Trade Directorate were smothered with friendliness: nothing ever happened, and it was never clear why.

Finally, a brief word about interagency coordination ¾ the siren call of the second committee in New York. When young diplomats at the UN run out of substance they fall back on a standard speech calling for better interagency coordination ¾ speeches that were very likely first written in foreign affairs departments back in 1946 and are simply dusted off every year and repeated.

Everybody agrees that interagency coordination is absolutely essential. This conviction results in numerous exercises in the United Nations where there are interagency commissions, committees and task forces. In UNEP, there is a committee called SWIMTEP, which absorbs enormous energy on the part of senior officials in all agencies who go from meeting to meeting to meeting ad infinitum.

Two comments on this: one, the transaction costs are very high; two, the results are extremely minimal.

If effective interagency coordination is beyond the reach of the international system, it is because it is beyond the reach of national systems. Every agency in the international system is a client of a different national department. FAO is the client of the departments of agriculture. The World Health Organization is a client of health departments. UNDP is a client of the Canadian International Development Agency (CIDA) and other aid agencies. The World Bank is a client of finance departments. UNEP is a client of environment departments, and so on. Delegates to the governing bodies and the working groups of these agencies have their own priorities and agendas, which are often in conflict. These agencies often disagree violently at home, and they take their disagreements abroad to continue their domestic fights in the international arena.

There are many obstacles to interagency coordination, and some of them can be repaired with greater or lesser effectiveness. Total effectiveness is probably out of reach, because the real obstacles are rooted in failure at home, and the reform of international institutions for environment and sustainable development must begin at home.

Jim MacNeill is Chairman of the International Institute for Sustainable Development, Senior Advisor to both the Administrator of the United Nations Development Program and the International Development Research Centre.

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