| United Nations |
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E/CN.17/1997/17/Add.1 |
Economic and Social Council
Distr. GENERAL
17 March 1997
ORIGINAL: ENGLISH
COMMISSION ON SUSTAINABLE DEVELOPMENT
Fifth session
7-25 April 1997
Critical issues and policies for sustainable development:
energy, transport and water
Report of the High-level Advisory Board on Sustainable
Development for the 1997 review of the Rio commitments
Addendum
CONTENTS
Paragraphs Page
INTRODUCTION ............................................... 1 - 6 3
I. THE ACHIEVEMENTS OF THE UNITED NATIONS CONFERENCE ON
ENVIRONMENT AND DEVELOPMENT .......................... 7 - 10 4
II. IMPEDIMENTS TO SUSTAINABLE DEVELOPMENT ............... 11 - 16 5
A. Globalization .................................... 12 5
B. Environmental concerns as priority concerns ...... 13 - 14 5
C. Official aid ..................................... 15 - 16 6
III. THE WAY FORWARD ...................................... 17 - 46 6
A FRAMEWORK FOR ACTION ............................... 20 - 46 7
A. Making use of democracy .......................... 20 - 24 7
B. Education and information ........................ 25 - 27 8
C. Innovation and technology transfer ............... 28 - 29 8
D. Creating markets and market-based instruments .... 30 - 36 9
E. Trade policy ..................................... 37 10
F. Urban and rural dimensions ....................... 38 - 42 11
G. Regional and subregional cooperation ............. 43 - 44 12
H. Economic reform and new finance .................. 45 - 46 13
IV. ENERGY ............................................... 47 - 62 13
V. TRANSPORT ............................................ 63 - 70 16
VI. WATER ................................................ 71 - 81 19
VII. GENERAL RECOMMENDATIONS .............................. 82 - 85 21
Annexes
I. Sessions of the board held to date and subjects addressed ........ 22
II. Glossary of important terms and acronyms ......................... 23
INTRODUCTION
1. The United Nations Conference on Environment and Development (UNCED) was a
milestone in linking environment and development. It adopted an international
strategy for sustainable development, established goals and action plans for
implementing sustainable development, defined responsibilities, and made
commitments to provide financial resources and transfer technology to the
developing countries.
2. It was already obvious at UNCED that the achievements of the Conference
would depend entirely on the practical follow-up to the legal, moral and
political commitments that were made. Although much progress has been
achieved, especially in broadening awareness of the close interaction between
development and the environment, it must be acknowledged that many of the
targets of Agenda 21 1/ are a long way from being met and will not be met
without a sustained resurgence of the spirit of cooperation and commitment
that characterized UNCED. Some developed countries, for example, will only
partially achieve the targets that they accepted under the United Nations
Framework Convention on Climate Change and the official development assistance
(ODA) commitments that they made at UNCED.
3. The High-level Advisory Board on Sustainable Development does not think
that the solution to the discrepancy between aspiration and achievement in
securing responsible and sustainable development lies in changing the
commitments of Agenda 21. What is needed is the mobilization of forces at all
levels - global, regional, subregional, national and local - and the forging
of new alliances between those forces to attain the agreed goals.
4. The general basis for securing sustainable development is the presence of
adequate institutions, knowledge, skills and access to technology and
financial resources, which will need to converge in the design and
demonstration of sustainable - that is, responsible in a long-term perspective
- ways of managing the environment, producing goods and services, meeting
basic needs, and improving the economic and social standards of living for the
world as a whole, especially for the poorest communities. Achieving those
goals will require the empowerment and participation of the people affected,
which in turn can best and most effectively be brought about within the
framework of a functioning democratic system. A strongly motivated
sustainable development constituency, endowed by its members with the
necessary local and national financial support, must be cultivated.
5. Since the very essence of a democratic system is competition between views
and interests which are at variance with each other, it is evident that clear
incentives must be created for achieving sustainable development. Politicians
must not be allowed to abdicate their crucial role in designing development
strategies and regulating market activities; but without market forces working
in the desired direction, politicians will face insurmountable difficulties in
fostering sustainable development. Well-organized and creative political and
civic leadership will be needed to design and implement policies for rallying
special interests that otherwise would not work in the direction of
sustainable development.
6. The present report must be seen as one of many inputs to the 1997 UNCED
review process. The Board has concentrated on the areas of energy, water and
transportation, because they are of paramount importance for sustainable
development in the coming decades. After briefly reviewing the achievements
of UNCED and continuing impediments to sustainable development, the present
report identifies a way forward that includes fiscally responsible government
actions, more effective economic incentives, improvement in the enabling
conditions for change, and other market-oriented policies designed to optimize
sustainable development in the areas of energy, water and transportation,
while building in a concern for social equity. The Board's recommendations
for action are presented throughout the report together with the rationale for
the recommendations and a consideration of their implications. For ease of
reference, recommendations are highlighted in bold type. In addition, a
number of important terms and acronyms are defined in annex II.
I. THE ACHIEVEMENTS OF THE UNITED NATIONS CONFERENCE
ON ENVIRONMENT AND DEVELOPMENT
7. UNCED demonstrated the common desire of all countries to establish global
partnerships and make concerted efforts towards sustainable development.
UNCED and its follow-up processes have played an important role in promoting
global cooperation to facilitate strategies for sustainable development. Many
countries have formulated their own Agenda 21 programmes for sustainable
development and have integrated them into their long-term economic and social
development programmes. In spite of the fact that there have been problems
and difficulties in implementing the commitments made at UNCED, the
significance and role of the Conference should not be underestimated.
8. Sustainable development is not a static and dogmatic concept concerning
only the environment. It is a dynamic long-term process, including economic
and social development as essential elements, seen in perspectives that may
change over time, and leading to improved quality of life for all human
beings, the eradication of poverty and the reduction of inequality. The
concept of sustainable development carries inherent tensions, in particular
between short-term economic needs and expectations and the demands of
political and social stability, on the one hand, and the goal of long-term
sustainability for future generations on the other. Implementing sustainable
development is therefore inevitably an incremental process that needs to be
re-evaluated and reinforced as it proceeds.
9. Since UNCED, the concept and the principles of sustainable development
have been increasingly accepted, reaffirmed and, in certain respects,
developed into concrete programmes by subsequent high-level conferences and
meetings. Particular areas have been developed by the 1993 World Conference
on Human Rights at Vienna, the 1994 International Conference on Population and
Development at Cairo, the 1995 World Summit for Social Development at
Copenhagen, the 1995 Fourth World Conference on Women at Beijing, the 1996
United Nations Conference on Human Settlements (Habitat II) at Istanbul and
the 1996 World Food Summit in Rome, as well as by the 1994 Global Conference
on the Sustainable Development of Small Island Developing States at
Bridgetown, Barbados. The UNCED principles have been extended through the
adoption of the United Nations Convention to Combat Desertification in Those
Countries Experiencing Serious Drought and/or Desertification, particularly in
Africa, in 1994, and follow-up work on the 1992 United Nations Framework
Convention on Climate Change and the Convention on Biodiversity. Regional
conferences have also made important contributions to the development and
implementation of sustainable development.
10. Statements by Governments, business leaders and organizations of civil
society have repeatedly proclaimed the need to protect the environment,
conserve natural resources, preserve social peace and democracy, eradicate
poverty, eliminate racial and gender discrimination, and promote sustainable
patterns of production and consumption. While those statements of principle
are often not followed by substantive action, it is important to capitalize on
them to enhance the evolving culture of sustainable development and to promote
concrete actions by Governments, business and civil society. That process
will require clear and realistic priorities in order to ensure the realization
of existing commitments on the transfer of financial resources and technology.
II. IMPEDIMENTS TO SUSTAINABLE DEVELOPMENT
11. Since UNCED, political action in many countries has led to considerable
progress in increasing recognition of the need for sustainable development;
but the five years that have elapsed since UNCED have not on the whole been
enough for that recognition to have been translated into concrete action
producing identifiable results. Given that the establishment of sustainable
development practices is a long-term process, the Board believes that the
political will to achieve sustainable development must be greatly strengthened
in all countries and at all levels of government.
A. Globalization
12. Globalization of the world economy contributes substantially to
development through increased international trade, investment flows and
information exchange. With globalization, however, the effectiveness of
national public policy requires greater cooperative effort by all Governments
in a multilateral framework. Since markets do not take into account external
costs, Governments at both the national level and within the framework of
multilateral agreements need to develop and implement policy instruments for
ensuring the sustainability of development in the globalized economy. The
Board wishes to emphasize its concern with that issue and intends to return to
it in the future.
B. Environmental concerns as priority concerns
13. The advocates of sustainable development have not yet succeeded in
raising environmental concerns to a high priority in all countries. The
perception remains in some quarters that environmental protection is something
that can and should be addressed only when a country is rich enough to do so,
and that it is a "low rate of return" activity. Yet the evidence is mounting
that local environmental destruction can accelerate the poverty spiral not
only for future generations but even for today's population. It is obvious
that countries which recklessly deplete their natural resources are destroying
the basis of prosperity for future generations, but few policy makers have
been able to persuade their constituents that as forests disappear and water
is exhausted or polluted, it is the poor of today, especially children and
women, who suffer most.
14. Low-income households, communities and countries have very limited
resources for investing in environmental protection or taking risks on new
sustainable livelihoods. Wealthier individuals, communities and countries
will not only have to adopt more sustainable patterns of production and
consumption for themselves but will also have to bear most of the economic
burden of the changes that will be required of low-income people and countries
for global sustainability. The transition from current production and
consumption patterns to sustainable development, which may constrain
short-term economic growth and create hardships for people in some economic
activities, must take into account the need for social and political stability
and the need for Governments to maintain the confidence and support of their
populations.
C. Official aid
15. It is disturbing that ODA levels have fallen in real terms from over
$60 billion per year (1994 dollars) in the early 1990s to about $55 billion in
1995. Despite the concomitant increase in private capital flows, which have
been concentrated in a relatively few countries, ODA remains an essential
element for sustainable development, especially in least developed and other
vulnerable countries, and the commitments for new and additional resources
should therefore be met.
16. The Global Environment Facility (GEF) was created to cover the
incremental costs to developing countries of implementing projects and
programmes addressing selected global environmental problems. However, the
incremental costs of switching from dirty to clean technologies across a whole
range of economic sectors will vastly exceed the funding available to GEF.
Moreover, instead of placing new and additional resources at the disposal of
developing countries to secure global benefits, GEF funding consists, at least
partly, of diversions from conventional aid funds.
III. THE WAY FORWARD
17. The way forward should consist of several sets of actions emerging from
a focus on capacities and incentives and pursued simultaneously. There is a
need for increased effort and investment in sustainable development,
particularly in developing countries, but there is much that can be done by
making better use of existing resources for sustainable development through
the better management and deployment of resources.
18. The Board considers Agenda 21, as it is, to be the starting point for
the necessary further work towards sustainable development. Agenda 21 should
be complemented, however, by the reaffirmed and somewhat enlarged commitments
made at the high-level conferences and meetings on different aspects of
development held since 1992 so that all aspects of development are brought
into an organic concept of sustainability. This is not a matter of choice; it
is an imperative.
19. In the light of the above-mentioned impediments to sustainable
development, a general framework for action is set out below. The Board
considers that the proposals which it contains, together with the
recommendations that follow in sections IV-VI on energy, transport and water,
even if only partly implemented, would be sufficient to set the world on a
path of sustainable development. There is no reason why all these areas of
policy cannot be acted upon simultaneously.
A FRAMEWORK FOR ACTION
A. Making use of democracy
20. A key characteristic of good governance is that it is based on law.
This makes it possible for citizens to foresee the legal and social
consequences of their acts. Norms have to be created to secure a democratic
framework as well as a sound economy. Only responsible political leadership
can accomplish this. Furthermore, such leadership must not only organize
itself to cope with clashes of interest on the national level but must also
address the externalities of globalization, a challenge that is so formidable
that it may well go beyond the traditional potential influence of the United
Nations.
21. Citizens' rights and duties have to be properly established. It is, not
least in the perspective of development, of paramount importance to settle the
question of property and resource use rights. If they do not exist, they need
to be created so that those who control assets have an incentive to conserve
them rather than allowing them to degrade for fear that they will be
appropriated by others. Legal regimes can be based on private or corporate
property, where appropriate, but should also include community, government and
international common property regimes.
22. Making true use of democracy and its mechanisms means that all strata of
societies should be given proper possibilities to voice their concerns. This
is applicable at the national, regional and international levels.
23. Sustainable development requires that greater use be made of the skills
and knowledge possessed by women; the empowerment and mobilization of women
must be promoted as a requisite for positive change. Reducing poverty means
dealing with women's issues as a priority, including the implementation of the
recommendations of the Fourth World Conference on Women (Beijing,
4-15 September 1995). Those recommendations should be reviewed and realistic
targets established.
24. The organizations and associations of civil society should be mobilized
in the effort to achieve sustainable development through the principle of
sharing responsibility. Education programmes should enlighten and empower
people to take responsibility for their own sustainable development and that
of future generations, on an individual and collective basis.
Non-governmental organizations of all kinds - from religious organizations to
labour unions and from general study circles to specialized environmental
interest groups - can influence the general public as well as political
decision makers to pay due attention to sustainability.
B. Education and information
25. It is now widely understood that the single most decisive factor in
sustainable development is human capital. Developing human capital means
emphasizing education and health, both as ends in themselves and as a means to
economic growth and sustainable development. A fundamental prerequisite for
sustainable development is an adequately financed and effective educational
system at all levels, particularly the primary and secondary levels, including
a focus on the local environment in the context of sustainable development.
Adult literacy programmes that focus on environmental concerns should also be
organized. Only an enlightened public opinion well aware of common values
will be receptive to arguments that emphasize long-term benefits as opposed to
immediate or more short-term benefits. Tertiary education should also be
fostered in order to strengthen a cultural base that is receptive and able to
absorb the new technologies and information flows necessary for sustainable
development.
26. Education and information are crucial for making people understand the
motives of and needs for sustainable development. The efficiency of
information dissemination and different techniques for that purpose need to be
improved. Moreover, the question of engendering a morally responsible and
sustainable lifestyle goes beyond the question of information techniques, and
must be addressed in the larger framework of each society's concept of quality
of life.
27. In view of the lack of recognition of the economic importance of
environmental sustainability, the Board calls for better and more aggressive
dissemination of the large body of research that shows the high economic value
of properly managed natural resources. Such efforts would address a failure
of information, and would be relatively inexpensive to pursue.
C. Innovation and technology transfer
28. Research and development are central to sustainable development but are
generally inadequately funded in developing countries. Research and
technology transfer must be supported, from long-term fundamental research to
short-term applications, in order to build mature local bases of expertise and
experience. Development - the conversion of research results to practical
applications - must rely on partnerships between developed and developing
countries and among different economic sectors, making use of information
technology. Technology transfer, if it is to be successful, not only requires
an injection of capital but more importantly requires technically mature
recipients fostered through research and development, and must be based on
joint ventures and long-term collaborations.
29. The Board recognizes that in order for innovation and technology
transfer to be successful in developing countries, it must be fostered taking
into account the global shift from an industrially oriented development to one
based on information technologies.
D. Creating markets and market-based instruments
30. A great deal of resource degradation takes place because some resources
have no markets (markets are said to be "missing") or only limited markets
("incomplete" markets). Without a market for clean air, for example, the only
means for achieving substantial improvements in air quality is direct
regulation. While direct regulation has an important and continuing role to
play, the costs of direct regulation are a major concern worldwide. As the
Board has previously recommended, a mix of regulatory and economic instruments
that require and encourage companies to be safer, less polluting and more
efficient in the use and management of resources should be used to create
markets for resources and cleaner technologies.
31. The creation of markets allows market forces to establish demand and
supply for improved environmental quality and resource conservation, and to
determine the least costly ways of meeting national or international
standards. The many different means of creating and reinforcing resource and
environmental markets include environmental charges and taxation, tradeable
emission permits, tradeable resource-use quotas, tax-subsidy schemes,
deposit-refund schemes and the elimination of subsidies. Such mechanisms
should be used to make the interplay between legislation and the market more
effective, enabling society to effectively and efficiently regulate the
management of natural resources, particularly when market forces are not
sufficient by themselves. The chlorofluorocarbon agreement serves as an
example of how common understandings of a problem, and the order of magnitude
of the costs of addressing it, led to intergovernmental regulation with
positive effects on the market in spite of initial opposition by special
interests.
32. The essence of market measures is that they raise the price of polluting
and resource-intensive technologies relative to cleaner and
resource-conserving technologies, thus providing a major stimulus to
technological change. Even modest institutional changes of that sort can
generate major economic responses, with substantial environmental benefits.
33. The most effective policy instruments will depend on the characteristics
of a country. In colder climates, thermal efficiency standards for buildings
are important. Sweden and the Netherlands, among other Organisation for
Economic Cooperation and Development (OECD) countries, have established
mandatory high standards for insulation. In tropical countries, standards for
air conditioners and refrigeration are more important. In Singapore, where
air conditioning is estimated to account for 25 per cent of total electricity
consumption, mandatory standards for air conditioning and thermal efficiency
have been incorporated into building regulations. Benefits can also be
realized by reducing uneven consumption of electricity between day and night,
for example through price incentives for shifting energy consumption to
low-demand periods.
34. Consumer preferences, shaped by such instruments as eco-labelling, can
also promote sustainable development. Eco-labelling criteria, however, may
become disguised trade barriers, and the credibility of eco-labelling schemes
can be undermined if different schemes proliferate. Several initiatives have
been taken in the field of forestry, such as the Forest Stewardship Council's
initiative to develop a widely acceptable criterion for eco-labelling in
forestry, and similar efforts by the International Organization for
Standardization (ISO). Universally accepted guidelines for eco-labelling are
urgently required.
35. In some cases, neither direct regulation nor market-based instruments
may be needed. There is a growing trend towards "self-regulation", whereby
corporations agree to establish their own measures and targets for improving
environmental quality, subject to some understanding that, if they fail,
Governments may intervene and regulate. The emergence of voluntary agreements
may be based on national or regional systems of environmental guidelines, such
as the 33/50 programme in the United States of America, the BS 7750 standard
in the United Kingdom of Great Britain and Northern Ireland, the Regulation on
Eco-Management and Audit of the European Union, and the ISO 14000
environmental management standards. In some cases, voluntary programmes
carried out in cooperation between private enterprises and government agencies
have demonstrated methods for achieving greater environmental protection at
lower cost than existing regulations.
36. The most effective market-based motivation is corporate self-interest.
The environmental action plans of industrial corporations are largely devoted
to reducing costs for energy and raw materials. Such planning should be
encouraged, if only as a first step towards more comprehensive planning of
environmentally sound production. Producers are also demanding clean
production methods, not only from themselves but also from their
subcontractors, are increasingly calculating costs in terms of life-cycles and
environmental impacts, and are using their efforts for publicity and marketing
purposes. In order to make national market-based instruments effective in the
international context, and to discourage "free riders", a global partnership
based on multilateral regulation is needed.
E. Trade policy
37. Further efforts are required to make trade and environmental policy
mutually supportive at the national, regional and global levels. At the
national level, frameworks need to be established to monitor the environmental
and social impacts of trade liberalization so as to be able to design and
implement effective policies to address any unintended negative consequences.
It may be possible to integrate procedures for harmonizing trade and
environmental policies into regional trading arrangements more quickly than
into international trade agreements. However, it is essential to complete the
task of reconciling the trade provisions of multilateral environmental
agreements with the disciplines and dispute settlement procedures of the World
Trade Organization.
F. Urban and rural dimensions
38. The greatest challenges to sustainable development arise at two
extremes: in rural areas of low-income countries that have not had access to
modern sustainable development technologies, and rapidly growing metropolitan
areas with their high concentrations of economic activity and resource
consumption. While most of the world's population and a disproportionate
number of people in poverty still live in rural areas, the continuing rapid
migration from rural areas to towns and cities will soon make the world
population predominantly urban. The process of urbanization facilitates
sustainable development by giving more people access to productive and
sustainable technologies and reducing pressure on ecologically fragile areas;
but it poses enormous problems for urban planning and management, which must
meet the growing demand for energy, water and transportation, while coping
with increasing volumes of solid, liquid and gaseous wastes.
39. Sustainable urban development must address an entire complex of needs,
including provision of safe water and sanitation, protection of air quality,
access to public transportation, control of congestion and noise, and disposal
of waste. Technologies to address those problems exist, but the costs of
developing urban infrastructure, particularly in already built-up areas, are
extremely high. Realistic pricing of public services and resources, perhaps
through commercialization or privatization, while ensuring affordable basic
services for low-income people, can be an essential element of financing urban
infrastructure and public services.
40. Where municipalities are not able to provide needed services, community
efforts to meet local needs can be encouraged, and small-scale credit can be
made available to small businesses and the informal sector. Broad
participation in the planning and management of public services and
infrastructure development, with public participation at the community level
and interest group participation at the municipal level, will promote public
involvement in the efficient operation and maintenance of public facilities.
41. In rural areas of developing countries, where large numbers of people do
not have access to clean water, electricity or other modern energy sources,
modern transportation and communications systems, and other requirements for
development, the urgent need is to extend access to basic services,
infrastructure and development opportunities as quickly as possible at
affordable prices. However, low population densities, low incomes and often
inhospitable terrain in rural areas make the extension of electricity grids
and communication and transportation networks very expensive. It is essential
to develop low-cost approaches to basic services for low-income rural areas,
with temporary subsidies or cross-subsidies, where necessary, to achieve the
benefits of universal access to basic services and social integration.
Realistic pricing in areas currently receiving subsidized water, energy and
transportation services could help mobilize resources for providing such
services to unserved areas.
42. The development of rural areas, with improved access to water, energy
and transportation, can lead both to environmental improvement, such as the
replacement of fuelwood with clean energy, and environmental deterioration,
such as erosion, salination and deforestation as a result of increased
agricultural intensity. Sustainable rural development thus requires
integrated planning for rural areas, with local participation, in the context
of national development strategies.
G. Regional and subregional cooperation
43. While it is obvious that global environmental threats, such as global
warming, need to be tackled on a worldwide level, many problems of resource
degradation and environmental pollution arise and can most effectively be
addressed at the regional level. Examples include transboundary acid rain,
the pollution of shared lakes and seas, competing demands for the waters of a
river that flows through several countries and ocean pollution. In such
contexts, countries may be discouraged from acting unilaterally to protect or
conserve resources since their efforts may be undermined or neutralized by
others who take advantage of the unilateral action for their own benefit
without reciprocating. The key to effective regional cooperation lies in
ensuring that each party is better off with a regional agreement than without
it. The gains need not be solely environmental, social or financial, but
could also be political, for example by ensuring an alliance with other
affected countries and contributing to political stability. There are many
examples of such regional cooperation, such as Europe's agreements on
transboundary acid rain control, the Regional Seas Programme of the United
Nations Environment Programme and the Zambezi River Basin Project. The
chances of such agreements are highest: (a) when negotiations recognize that
early agreement confers gains in terms of future cooperation, perhaps on quite
different issues of common concern, and (b) when the costs of compliance are
minimized. The second issue is important, and helps explain why global
agreements can in some cases be successfully negotiated, such as the Montreal
Protocol.
44. In view of the regional or subregional character of many environmental
problems, as well as those that affect only a few countries, or even problems
affecting a single country that is too poor to cope with them effectively, it
is necessary for regional and subregional organizations, such as the regional
commissions, OECD, the European Union, the Association of South-East Asian
Nations, the Southern African Development Community, the Southern Cone Common
Market, the Asia Pacific Economic Cooperation Council, the Central American
Common Market, the Caribbean Community and the Economic Community of West
African States, to face that challenge through multilateralism. Their
political and economic capabilities should be joined with the financial
resources of the Bretton Woods institutions, regional development banks and
subregional funds. A good example of cooperation for solving regional
environmental problems is the work of the Nordic Environment Finance
Corporation and the Nordic Governments in the Baltic States, in the Russian
Federation and in Eastern and Central Europe. Regional organizations
concerned with trade should work to harmonize trade and environmental
policies. An example of a subregional mechanism for that purpose is the
Commission on Environmental Cooperation established by members of the North
American Free Trade Agreement.
H. Economic reform and new finance
45. The Board sees an urgent need to improve the efficiency of the use of
existing resources for sustainable development. This must involve structural
reforms of political, social, educational and economic systems, implementation
of accountability and the elimination of corruption in order to improve
countries' absorptive capacities. This will lead to the emergence of self-
supporting sustainable development and productive societies that are able to
attract finance competitively through the market.
46. The Board feels that new injections of capital for sustainable
development are required in all countries, particularly developing countries.
That new capital is envisaged to come from a redirection of private capital
from mature markets to markets with new absorptive capacity created for
sustainable development; from the removal of existing subsidies; from domestic
savings; from debt-relief; and from public monies, including increased ODA.
Efforts should be made to provide the necessary flexibility to allow those
reallocations to take place naturally in response to incentives.
IV. ENERGY
47. Due to the great size of the energy sector and its central role in all
aspects of economic and social life, major changes in energy production and
consumption patterns will occur only gradually. Promoting such changes will
require a variety of coordinated measures to promote energy efficiency and
conservation, including regulatory measures, research and development, and
more rational pricing. Each country should develop an integrated strategy for
sustainable energy development, based on such measures and coordinated
internationally through a global intergovernmental process. The Board
recommends the initiation of an intergovernmental process, with appropriate
linkages to the private sector and to non-governmental organizations, to
develop an integrated approach to the implementation of energy policies with a
view to achieving the energy-related objectives agreed at UNCED and the World
Solar Summit, and in the United Nations Framework Convention on Climate
Change.
48. Energy is essential for development, but its production and use, if
inefficient:
(a) Causes pollution, which has local and regional impacts on human
health, especially in urban areas;
(b) Causes damage to crops, forests, water and biodiversity, and has
global impacts through climate change;
(c) Wastes resources that could be reallocated to alternative uses for
greater improvements to human welfare;
(d) Consumes non-renewable resources that will be needed by future
generations.
Sustainable development, in both the short and long term, therefore requires a
reorientation of the world's energy sectors to improve energy efficiency and
to allow the accelerated development of renewable energy sources.
49. Price is a major factor affecting the efficient use of energy; as long
as energy from different sources is not priced at its full cost, inclusive of
the environmental damage it causes, there is no possibility of meeting the
energy needs of the existing global population, let alone the needs of the
expected increased population.
50. The Board therefore recommends that all Governments, especially the
Governments of OECD countries, seek to realize the benefits of revised energy
pricing through:
(a) Eliminating subsidies to energy production and consumption,
especially to fossil fuels and nuclear energy, within 10 years;
(b) Rational pricing of energy to encourage conservation and efficient
use, and to reflect energy life-cycle environmental damages and risks, taking
into account the costs to future generations of depleting non-renewable
resources.
51. Raising energy prices to reflect the full costs will:
(a) Raise energy efficiency by promoting the adoption of known
conservation technologies;
(b) Encourage the development of new conservation technologies;
(c) Encourage a switch-over to renewable and low-carbon forms of energy;
(d) Encourage investment in the exploration and development of new
energy supplies.
52. Attempts to raise energy prices, however, will meet a number of
obstacles:
(a) Energy-supply industries will oppose such measures because of the
short-term effect on the demand for their products;
(b) Energy-consuming industries will be concerned about the impact of
raised energy prices on their costs of production and international
competitiveness;
(c) Disadvantaged social groups may suffer from increased prices,
particularly considering that a higher share of their income is spent on
energy.
53. Some of those obstacles can be reduced by:
(a) Recycling energy tax revenues back to industry through reduced
taxation on other industrial inputs, especially labour, thereby encouraging
employment and at the same time discouraging excessive energy consumption, the
"double dividend". That dual effect of energy taxation will help correct the
long-term unemployment problems that have arisen from the rising cost of
labour relative to the price of energy;
(b) Utilizing some of the tax revenues to compensate low-income groups
for higher prices;
(c) Ensuring that energy price rises are phased in on a gradual basis so
that industry and households have time to adapt by revising their expectations
about future energy prices and by improving their energy efficiency;
(d) Finding ways to minimize the impact of increasing prices on
competitiveness, including through harmonization of policies among countries
at similar levels of development.
54. The instruments for correcting energy prices might include:
(a) Removal of subsidies;
(b) Removal of irrational price controls;
(c) Carbon/energy taxes;
(d) Taxes on local and regional air pollutants (sulphur oxides, nitrogen
oxides, particulates);
(e) Tradeable pollution permits on a national basis.
55. The Board draws attention to the need to accelerate investment in energy
conservation, in renewable forms of energy and in new generations of energy
technology. The Board re-emphasizes the importance of full energy pricing,
together with the many other policy weapons available for promoting such
investments and the transition to new energy systems. Estimates indicate that
currently only about 10 per cent of financing for energy research and
development is allocated to renewable energy.
56. Among the energy-sector investments under consideration by Governments
and bilateral and multilateral agencies, the Board draws special attention to
the multiple benefits that accrue from supplying electricity to the maximum
feasible number of households. Those benefits go beyond the provision of heat
and power to the ability to store food in hygienic conditions, the provision
of light for children's schoolwork, improved education and literacy, and
access to modern communications. Provision of electricity to unserved
populations should be a priority, undertaken on the basis of programmes for
specific regions over periods of 5 to 10 years. Improved access for small
enterprises and microenterprises can also contribute to economic and social
development.
57. In some cases, differential energy pricing, with different prices for
different types of consumers, can be useful for achieving social and economic
goals while promoting sustainable development. That is feasible for
electricity, for example, although not for liquid transport fuels. Where
differentiation is possible, low or "lifeline" tariffs may be given to poor
households and very much higher tariffs to wealthier consumers, with the
profits from the latter being used to subsidize the cheaper tariffs for poorer
consumers. Such cross-subsidies are widely practised in many countries and
are recommended, but it is important that the average price for the sector
reflect the full marginal costs of supply.
58. For urban low-income households, the problem is largely one of
affordable connections to existing grids and avoiding the dangerous illegal
connections that are often made. In those areas, lifeline pricing and
cross-subsidization can contribute to making electricity affordable for all.
59. For rural areas not connected to grids, given the need for a transition
from non-renewable to renewable energy sources, the Board recommends a
sustained programme of investment in decentralized rural energy schemes, based
on renewable energy, where reasonable, with the incremental cost of such
schemes to be met, where necessary, from global sources, such as the Global
Environment Facility (GEF).
60. Recommendations to raise the prices of energy have been made many times
before. Considerable sensitivity remains about such measures, since one of
their immediate effects is clearly to harm the budgets of households and
companies, and there will be difficult adjustments to be made in many cases.
Nonetheless, many such policy measures have been implemented, and subsidies
have been removed or reduced in many countries. One way to introduce more
rational pricing would be to eliminate politically motivated price controls,
shifting the responsibility for determining and monitoring price guidelines to
independent regulatory authorities, with consumer representation and acting
within the framework of transparent rules.
61. As energy subsidies are reduced, financial resources are released for
alternative uses, including compensation for particularly hard-hit groups of
people. Compensation may also be indirect, for example by providing a public
service that could not previously be afforded.
62. Price increases can be introduced gradually so that consumers develop an
in-built expectation that energy prices will rise through time. That enables
the price rise to be assimilated and enables consumers to adjust. In the
United Kingdom of Great Britain and Northern Ireland, for example, gasoline
prices increase each year by 3 per cent in real terms as the result of a
policy measure adopted some years ago.
V. TRANSPORT
63. Transportation is central to social and economic development, for
individual mobility, social integration, trade and commerce. However, the
transport sector throughout the world shows alarming and deteriorating
environmental trends, primarily due to increasing vehicle traffic. While new
technologies and vehicle efficiency measures can yield environmental
improvements - and it is of paramount importance that that potential be
realized - the growth of traffic is likely to produce accelerated
environmental and social deterioration in urban areas. Alternative means of
conveying people and freight at substantially lower social costs per
ton-kilometre and person-kilometre must be developed and introduced.
64. Road transport and other forms of transportation to a lesser extent,
impose social costs in the form of accidents; damage to human health from
particulate matter, carbon monoxide, lead, volatile organic compounds and
other pollutants; congestion; noise nuisance; community severance, the
"barrier effect"; local air pollution; transboundary air pollution from
nitrogen oxides and sulphur oxides; and global warming from carbon dioxide
emissions.
65. Studies of the social costs of transportation, undertaken mostly in
developed countries, are in broad agreement on the importance of (a) the motor
car as the dominant source of external costs, and (b) accidents, air
pollution, climate change and noise nuisance as the largest external costs.
Further studies are needed on the costs of congestion and barrier effects -
that is, interference by roads and traffic with pedestrians and cyclists and
the severance of community communications - as well as on the impact on
historic structures.
66. Urban congestion is partly a function of inadequate roads, but the
provision of more and better roads has the effect of generating additional
traffic, which reduces the benefit of the new roads. Congestion in many
cities is caused by poor land-use planning, low road quality and inadequate
traffic management as much as by insufficient quantity of roads. Congestion
imposes significant costs in terms of foregone productivity: it takes up time
and allocates it to unproductive waiting in traffic jams. More indirectly, it
adds to stress and aggravation, reducing work productivity. Provision of
dedicated traffic lanes for mass transit, removal of subsidies for parking
space, and application of advanced technologies to road pricing are among the
policies that can reduce congestion.
67. Imaginative and integrated approaches to transport planning are required
since no single measure is likely to succeed by itself. The growth of long-
distance transport and the non-local nature of many of the impacts of
transport means that such planning must include local, national and regional
authorities, including transportation, urban development and environmental
agencies. Broad participation is essential to the effectiveness of such
planning, including representatives of public interest groups, communities and
industry. Particular attention should be paid to ensuring that low-income
communities have access to affordable public transportation systems and are
involved in the planning of systems that serve them. Each country, with local
participation and international coordination, should develop a long-term
strategy for transport planning.
68. The Board considers that the best prospect for securing significant
gains in the transport sector is yielded by a combination of policy measures,
such as:
(a) Urban land-use planning, including improved measures for the
revitalization of city and town centres, avoidance of out-of-town shopping
complexes and better management of congested roadside space, as the Board has
already recommended in its earlier work;
(b) Proper pricing of transport fuels, vehicle use, and road and parking
space. Measures to that end would include increasing gasoline and diesel
taxation to encourage both reduced travel and the transition to low-pollution
fuels, raising annual vehicle taxation, charging economic prices for parking
space, and charging for the use of congested roads;
(c) Investment in mass-transit systems, if necessary with subsidies, to
reflect the environmental and social benefits of such systems. Innovative
sources of finance need to be found to meet the high capital costs of mass
transit systems. An example of such an innovative finance source would be a
levy on the increased property values arising from the system. Alternatively,
road users other than mass transit might be surcharged to generate the
necessary revenues for financing mass transit systems;
(d) Road traffic management systems that give preference to
high-occupancy vehicles;
(e) Rational allocation of spending on reducing the large costs due to
transportation accidents;
(f) Use of innovative public-private partnerships for the financing,
construction and maintenance of transportation systems;
(g) Encouragement of commercially motivated efforts by automobile
manufacturers to develop electric or solar-powered vehicles or collective
transportation schemes as alternatives to traditional automobiles;
(h) Promotion of the use of telecommunications and other information
technologies to reduce transportation demand;
(i) Removal of the implicit subsidy for air traffic arising from the
international agreement that precludes taxation of aviation kerosene.
69. Opposition to such measures can be expected from groups with vested
interests, but there is mounting evidence of public concern at the
environmental costs of unconstrained road transport and business concern at
the costs of congestion. There are, therefore, increasing prospects for
building strategic alliances based on voluntary control agreements and
cooperation among land-use planners, citizens and non-governmental
organizations. However, that increasing concern by itself is unlikely to
reverse trends in the near future.
70. The Board therefore recommends that Governments throughout the world
give urgent and serious attention to the potential for improving well-being
and environmental quality through the programme of action outlined above.
Such a programme of action should be targeted on several cities in the various
regions of the developing world, with international collaboration between city
authorities, urban planners, and bilateral and multilateral sources of
finance. Blueprints for implementing such schemes should be available within
five years.
VI. WATER
71. Clean water is a vital resource for human existence. It is becoming
increasingly scarce in a growing number of countries, and the various users -
domestic, industrial, agricultural, aquaculture, hydropower, transportation,
tourism, and infrastructure and receiving water maintenance - must compete for
it. There is mounting evidence that in the next few decades, water scarcity
may reach crisis proportions, especially in arid areas and large cities.
Water is thus a major challenge to humanity, which hitherto has failed to give
it the attention that it requires.
72. Many people still see water as a "free good", that is, something that
should not be brought into the domain of economic pricing. That view is not
only wrong but counterproductive since water supply does cost money and the
money it absorbs has profitable uses elsewhere. It matters a great deal,
then, that water be supplied efficiently and without making major demands on
limited public resources. Efficient pricing becomes one of the most important
ways of ensuring that public supplies are reliable and clean. The idea that
water should be priced at low and "affordable" levels detracts from those
efficiency requirements, and also ignores the fact that water subsidies have
not benefited the poor. Moreover, the evidence suggests that when households
participate in decision-making as the users of water, they make water
utilities accountable, whereas currently they have little incentive to worry
about the standards of provision. Sensibly priced water gives the householder
a stake in its efficient provision while allowing cost recovery for the water
utility, thereby reducing the demand for taxpayers' money for subsidies.
73. The Board believes that rational prices, including all externalities,
must be determined for all uses, and that processes must be developed to
progressively move towards charging in accordance with such prices. That
objective must be achieved in a way that minimizes the economic and social
dislocations of price restructuring. The development of future large water-
supply systems must adopt pricing that reflects all external costs, including
waterlogging; salinization; habitat alteration; impact on endangered species;
long-term deterioration of water quality due to changing land-use practices in
catchment areas; cultural and social dislocation; and the cost of imposed
risks.
74. Water resources should be managed on the scale of total river basins,
including underground aquifers. Local, regional and international
collaborations must be established to avoid conflicts within each river basin
and its access basins. Since the utilization of water resources is increasing
as a result of growing populations, urbanization and industrialization, it is
clear that river-basin planning processes should be put into place in all
large river basins in developing countries in order to allow sustainable
development of their water resources. Particular emphasis must be placed on
encouraging countries that share a river basin to collaborate in order to
optimize the use of their water resources and ensure sustainable development.
Efforts should also be made to develop new technologies for the full
optimization of economic returns and resource sustainability throughout entire
river basins.
75. River basin authorities should effectively involve local authorities in
their governance structures and avail themselves of expert consultants.
Authorities in different countries, or in different regions of large
countries, can benefit from exchanging experiences in dealing with similar
issues.
76. There are many obstacles to improved management of freshwater resources:
(a) Conflicts between users of common water resources, especially when
they are in different countries;
(b) Resistance to altering traditional water-use patterns, for example
by reallocating water from agricultural to other uses;
(c) Resistance to pricing mechanisms in place of historical methods of
allocating use rights, in part due to misplaced views that water is a free
good.
Those obstacles, however, can be overcome through the proposed strategic
planning process provided that all stakeholders are encouraged to contribute
to that process.
77. Water should be viewed in the context of the whole water cycle from
catchment to the treatment of waste water, including the maintenance of water
storage basins (surface and subsurface) and the health of receiving basins.
Pricing structures must account for the costs associated with the
sustainability of all components of the water cycle.
78. There is an urgent need to improve the efficiency of water use by
reducing demand, improving delivery, recycling waste water and optimizing
water-quality maintenance in storage basins.
79. Large urban centres, especially in developing countries, have totally
inadequate water delivery and waste management systems. Even those with
waste-water treatment facilities have large sludge disposal problems. New
technologies must urgently be developed to solve those problems.
80. In addition to providing financial support, international cooperation
might include the establishment of an international consultative research
group on water, which could, for example:
(a) Promote research and development on the efficient use of water;
(b) Invite contributions from engineers and behavioural scientists;
(c) Disseminate its findings through education and training, bearing in
mind psychological attitudes and political issues.
81. A high priority should be given to ensuring that all sectors of society
in both urban and rural areas have access to adequate water and waste-water
management. That will require enlisting traditional technologies, community
input and the development of new technologies. The Board believes that
different river basins will require different solutions, and many will be
better served by the enhancement of traditional solutions than by the
construction of sophisticated modern installations.
VII. GENERAL RECOMMENDATIONS
82. The objective of the Board in preparing the present report has been to
complement Agenda 21 with recommendations for concrete actions for its
implementation in the critical areas of energy, transport and water. If even
some of the actions proposed by the Board are carried out, a major step will
have been taken on the road to sustainable development, not only in a direct
practical way but also in providing examples of what can be achieved. The
actions proposed in the present report, which have been highlighted in
sections III to VI above, can be summarized in three general recommendations,
as set out in paragraphs 83-85 below.
83. There is an urgent need to strengthen democratic and participatory
processes for planning and implementing sustainable development so as to
involve all concerned social groups at the local, national, regional and
international levels.
84. There is an urgent need to strengthen capacities for the efficient and
sustainable use of resources through increased investments in scientific
research, technological development, education and training, infrastructure
development and the transfer of technology.
85. There is an urgent need to increase economic incentives for sustainable
development based on full and comprehensive pricing that reflects all
economic, social and environmental externalities, with targeted and explicit
subsidies, where necessary, to prevent social dislocations and hardships for
the disadvantaged.
Notes
1/ Report of the United Nations Conference on Environment and Development, Rio
de Janeiro, 3-14 June 1992, vol. I, Resolutions Adopted by the Conference
(United Nations publication, Sales No. E.93.I.8 and Corrigendum), resolution
1, annex II.
Annex I
SESSIONS OF THE BOARD HELD TO DATE AND SUBJECTS ADDRESSED
First session, 13 and 14 September 1993
Organizational session.
Second session, 17-22 March 1994
1. Linkages between economic, social and political development in a changing
world.
2. New approaches to finance and technology.
3. Establishment of new partnerships between the United Nations and
non-governmental entities.
Third session, 17-21 October 1994
1. Linkages between economic, social and political development in a changing
world.
2. Value-based education for sustainability in the context of capacity-
building.
3. Concrete ways of forging alliances.
Fourth session, 30 May-1 June 1995
1. Mobilizing finance for sustainable development.
2. Enhancing cooperation and coordination for sustainable development.
3. Alliances between the United Nations system and non-governmental partners.
Fifth session, 29-31 January 1996
1. The communications revolution and sustainable development.
2. Sustainable energy and transportation systems.
Sixth session, 4-6 September 1996
Organizational session for report for 1997 review.
Annex II
GLOSSARY OF IMPORTANT TERMS AND ACRONYMS
APEC: Asia Pacific Economic Cooperation Council, aims to promote consultation
and cooperation and to lead to free-trade area, established in 1989; 18
members on both sides of the Pacific.
ASEAN: Association of South-East Asian Nations, forum for political,
economic, social and cultural cooperation, leading to free-trade area,
established in 1967; 7 members.
CACM: Central American Common Market, established in 1960; members are Costa
Rica, El Salvador, Guatemala, Honduras and Nicaragua.
CARICOM: Caribbean Community, common market, established in 1973; 14 members.
CEC: Commission on Environmental Cooperation, council of ministers and
secretariat established under NAFTA (see below) to discuss environmental
matters arising under NAFTA.
ECOWAS: Economic Community of West African States, established in 1975;
16 members.
Externalities: External costs, or externalities, represent the economic,
social or environmental losses or benefits that result from the production of
goods or services but are not included in the market price. They may include
pollution, congestion, unemployment and noise. External costs can be
internalized through taxes or subsidies, or by making producers or consumers
responsible for eliminating or compensating the damage.
Free rider: An individual or institution that benefits from actions by others
for the common good without contributing. In the case of public goods that
benefit everybody whether or not they pay their share of the costs, such as
clean air, there is little economic incentive to pay. Regulatory measures to
require cost-sharing or economic incentives for participation may be required
to discourage free riders.
MERCOSUR: Southern Cone Common Market, established as a free-trade area in
1991 and as a customs union in 1994; members are Argentina, Brazil, Paraguay
and Uruguay.
NAFTA: North American Free Trade Agreement, took effect in 1994; members are
Canada, Mexico and the United States of America.
NEFCO: Nordic Environment Finance Corporation, aims to provide credit
financing and joint venture participation in environmental projects in Central
and Eastern Europe, established in 1990; members are Denmark, Finland,
Iceland, Norway and Sweden.
UNCED commitments: The United Nations Conference on Environment and
Development (UNCED) was held at Rio de Janeiro from 3 to 14 June 1992; it
adopted the Rio Declaration on Environment and Development, Agenda 21
(programme of action for sustainable development), and the Non-legally Binding
Authoritative Statement of Principles for the Global Consensus on the
Management, Conservation and Sustainable Development of All Types of Forests.
The United Nations Framework Convention on Climate Change and the Convention
on Biological Diversity, which were negotiated separately, were opened for
signature at UNCED. The United Nations Convention to Combat Desertification
in Those Countries Experiencing Serious Drought and/or Desertification,
particularly in Africa, negotiations for which were initiated at UNCED, was
adopted in 1994 and is considered part of the UNCED process.
UNEP Regional Seas Programme: United Nations Environment Programme activity,
with 13 regional programmes; 10 of the programmes now have action plans
defined by conventions and agreements, beginning with the Mediterranean Action
Plan adopted in 1975.
World Solar Summit: Held at Harare on 16 and 17 September 1996; organized by
the United Nations Educational, Scientific and Cultural Organization; adopted
the Harare Declaration on Renewable Energy and Sustainable Development, and
the World Solar Programme 1996-2005.
Zambezi River Basin Project, or Zambezi Project: Regional project developed
with the assistance of the United Nations Environment Programme and managed by
the Southern African Development Community, based on the Zambezi Action Plan
adopted in 1987. The Action Plan focuses on information and data collection
and dissemination, and integrated water management planning. The Zambezi
River Basin is shared by eight countries: Angola, Botswana, Malawi,
Mozambique, Namibia, the United Republic of Tanzania, Zambia and Zimbabwe.
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