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Davos Dispatch #2: Latin America Seizes Leadership on Amazon, Climate
January 31, 2009
What a difference 20 years can make. Twenty years ago, I was the World Bank point person organizing a response to the Houston G7 Summit’s mandate to the bank and what was then called the European Community or EC to devise an Amazon forest protection program.
The resulting Amazon initiative was a compromise between the Germans, who wanted a broader G7 push on climate change, and the Americans (Bush 41) who didn’t. Of course no one even asked the Brazilians (or Peruvians or Bolivians or other Amazon countries) — this was before the rich countries and the multilaterals discovered the concept of local “ownership” and psychological eons before a G-20 put Brazil at the summit table.
A reasonable program was eventually cobbled together which the Brazilians accommodated (perhaps tolerated is the right word). But like so many donor-financed and supplied efforts lacking local demand, it evidently left little mark.
Times have changed. Dramatically. Yesterday here in Davos I heard three heads of state from Latin America seize leadership on “green” issues. Here are several more or less direct quotes from their remarks:
- Latin America can lead the world in low-cost biofuels
- We will not allow the Kyoto mistake — leaving forests aside — to be repeated at Copenhagen
- We are innovating on incentives for behavioral change — and scaling up a successful program to change consumer behavior (concerning switching to energy-efficient appliances)
- Green development and social development must and can go together
- We will put together a Green Fund with country contributions tied to income per capita and emissions per capita (what a good idea — the emissions part!)
- We have to create economic incentives — get coal cost and forest value reflected in prices (my econospeak translation of what was actually said)
- We welcome Obama’s commitment but we rely on our own leadership
What changed in the last 20 years? I would say: the science, the vanishing ice caps and other symptoms; the success of economic policymaking in Latin America and resulting price stability; and in most countries in the region two decades of democracy, rising educational levels, and civic activism; plus globalization and interdependence — with their hefty mix of openness and vulnerability.
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February 3rd, 2009 at 6:26 pm
The following is an informal letter about the Amazon that I sent to my colleagues at the World Bank in 2004 as an Executive Director.
Dear Friends and Colleagues
Today we approved a US$505 million Programmatic Reform Loan for Environmental Sustainability to Brazil. Frankly, how could it be otherwise, when in fact we should be on our knees thanking a country like Brazil that with so many other problems commits to repaying 100% of principal plus interest of an environmental-sustainability loan that will benefit the whole world and all of us.
Honestly, I do believe the World Bank should occupy a stronger leadership in these matters from the very beginning, advocating for the cooperation of the rest of the world. If silly windmill projects can have access to carbon credits, the Brazilian environmental program should too.
For instance, if 20% of a loan like this were to be repaid by some international-support mechanism, this would not only motivate the Brazilian government to sell environmental protection locally, but it would also be a clear sign that in these matters, Brazil does not stand alone. Of course any external assistance would have to come with the clear understanding that it does not impose additional conditions on the country, as this is the best and perhaps only way to guarantee true sustainability and ownership of such programs.
This morning we had a two-hour discussion about the Development Committee agenda. Frankly, however, the issue of how the world can help in crucial global matters, as in the case of the Amazon—where the need of avoiding the very negative externalities of large deforestation have to compete with so many other urgent local needs, as well as with the rising opportunity costs of not exploiting the forests—should be a foremost issue. If it already is there—for instance hidden in a global taxation initiative—I very much welcome it but, if not, we should strive to put it there.
Last year at least 25,000 hectares were deforested in the Amazon. At a low carbon value of US$20 per hectare/year, this would indicate a value of about US$50 million a year if the program were successful at stopping deforestation. Add ten years of stopped deforestation, and the value of this would be—in approximate Kyoto terms—about US$500 million a year for the rest of the world. If this is so, how come we can spend so much time and money on expensive initiatives such as the Extractive Industry Review, and not come up with something more reasonable for the Amazon, than to have the Brazilians pay for it, 100%?
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