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A FREE PUBLICATION The Road to 2050 - text.indd 2 04/21/2006 4:58:25 PM CONTENTS Foreword v Acknowledgments vi Part One -- e Vision 1 Section 1: A Wealthier More Equitable World by 2050 1 e World in 2050 3 e Challenges Ahead 5 Part Two -- e Challenges 7 Section 2: Managing Natural Wealth Sustainably 7 Evidence on the Importance of Natural Resources 9 Natural Resources and Wealth Accumulation 10 Some Conclusions on Natural Resources and Sustainability 11 Section 3: Improving Governance 14 e Case for Better Governance 15 Social Accountability--Working on the Demand Side 17 Lessons and Challenges on Social Accountability 19 Section 4: Socially Sustainable Development 21 Where We've Come From 23 Putting Communities in the Driver's Seat 24 Safeguards 24 Social Analysis 24 Participation and Civic Engagement 25 Violent Conflict 25 Global Implications of Local Conflicts 26 Section 5: Agricultural Productivity and Competitiveness 28 A New System for Productivity and Competitiveness 30 From Research and Development to Innovation Systems 31 Realigning International Agricultural Research to Meet New Challenges 32 iii The Road to 2050 - text.indd 3 04/21/2006 4:58:25 PM The Road to 2050 Building a Foundation for Global Cooperation in Agricultural Knowledge 33 Section 6: e Challenge of Addressing Climate Change 35 Scientific Understanding of Climate Change 36 Mitigation of Greenhouse Gas Emissions 38 Adaptation to Climate Change 40 Financing Needs and Sources 41 Part ree -- e Response 43 Section 7: Bridging from Local to Global 43 Sustaining Natural Wealth 44 Improving Governance through Increasing Transparency 45 Socially Balanced Development 45 Boosting Agricultural Productivity and Competitiveness 46 Managing Climate Risks 47 Issues without Passports-- e Need for Global Issues Management 48 Boxes 5.1 Impact of the Consultative Group on International Agricultural Research on prices, production, land use, and trade 29 6.1 End-use technologies and practices 39 Figures 1.1 Historical and projected population 2 1.2 Historical and projected GDP 2 2.1 Shares of wealth by income group, 2000 9 2.2 Shares of natural wealth in low-income countries 10 2.3 Decomposition of genuine saving in Bolivia, 2003 11 3.1 Key constraints to business, by Region 15 3.2 Conditions for social accountability 19 4.1 Ratings for World Bank projects addressing social development themes, 1972­2002 22 5.1 India--Poverty reduces as yields increase 29 5.2 Overview of agriculture innovation systems 32 5.3 Scope of the International Assessment of Agricultural Science and Technology for Development 34 6.1 e global climate models for the twenty-first century 37 iv The Road to 2050 - text.indd 4 04/21/2006 4:58:25 PM FOREWORD L ong-term thinking produces better short-term decisions. By envisioning the world of 2050 we can pinpoint the critical choices that will need to be made now if our vision of a wealthier, more equitable, more sustainable world is to be achieved. We see several dimensions to the challenge. e first is achieving better manage- ment of natural resources--this is a particular concern in low income countries, which are highly dependent on these resources. Stronger governance is an es- sential ingredient, cutting across all development domains. Social development is key--cohesive, inclusive, accountable institutions build stronger societies and minimize social conflict. Feeding 9 billion people while reducing pressures on other natural resources will require a major boost to agricultural productivity and competitiveness. Climate change will pose additional risks in all these do- mains--environmental, social, agricultural--and will require major changes in global governance. Looking forward, we see a growing need for global issues management. Whether the issue is climate change, emerging infectious diseases, failed states or loss of biodiversity, it is clear there is a growing list of problems that do not stop at na- tional borders. International institutions such as the World Bank need to bridge the gap between global priorities and national and local perspectives --they are mutually dependent. Our optimistic vision of 2050 is achievable, but only if governments, civil society, business, and the development community work together, building action-oriented coalitions that can make a real difference. We look forward to the journey. Ian Johnson and Steen Jorgensen Environmentally and Socially Sustainable Development e World Bank v The Road to 2050 - text.indd 5 04/21/2006 4:58:25 PM ACKNOWLEDGMENTS T his work was prepared under the leadership of Ian Johnson and Steen Jorgensen, with contributions from Ian Bannon, Kirk Hamilton, Sergio Jellinek, Daniel Kaufmann, Eija Pehu, Kristyn Schrader, Robert Watson, and Melissa Williams. vi The Road to 2050 - text.indd 6 04/21/2006 4:58:28 PM The Vision SECTION 1 A Wealthier More Equitable World by 2050 A long-term perspective on development offers some grounds for optimism. While gross domestic product (GDP) growth has been uneven across countries and over decades, developing countries have enjoyed significant growth in life expectancy and levels of education since 1960. If GDP growth in developing countries can return to the rates of the 1960s and 1970s, then we can foresee a significantly changed world by 2050--a world at once more wealthy and more equitable. Aiming for this involves both creating opportunities and overcoming constraints. For the environment and natural resources, there are clear risks tied to growth. But there are also unexploited opportunities to transform natural capital into produced, human, and social capital. Governance is a major constraint on development today, and rectifying this will require both institutional reforms and the mobilization of civil society. Development must encompass the goals of cohesion, inclusion, and accountability if social 1 The Road to 2050 - text.indd 1 04/21/2006 4:58:31 PM The Road to 2050 well-being is to rise and conflicts are ies and towns of developing countries. to be avoided. New agricultural tech- With 2 percent growth of per capita nologies must fill an impending gap GDP in rich countries (the average between population growth and food over the past 20 years) and 3.3 percent supply--other sectors, including energy in low- and middle-income countries and water supply, face similar challeng- (an optimistic figure, representing the es. Further movement is required on the growth experienced in the 1960s and "aid and trade" agenda. And climate 1970s), world income would be more change risks must be reduced through than $135 trillion, up from $35 trillion mitigation and adaptation. today. With these growth rates, 40 per- cent of world income in 2050 would Consider a vision of the world of 2050. be earned in low- and middle-income e United Nations medium popula- countries--twice their share today tion projection suggests that world (Figure 1.2). population could be 9 billion, up from 6 billion today (Figure 1.1). Almost all If per capita incomes in low- and that increase will show up in the cit- middle-income countries do rise at 3.3 percent a year, the average income in Figure 1.1 Historical and projected population these countries would be $6,300 by 10 2050. Basic human needs for shelter, Developing 9 countries food, and clothing could be more than High income 8 countries met. And people would be healthier and 7 more skilled. Even pessimistic estimates place life expectancy in 2050 in today's 6 (billions) low- and middle-income countries at 72 5 years (up from 64 today) and under- 4 Population five mortality at 17 per 1,000 live births 3 (down from 85 per 1,000 today). Adult 2 illiteracy rates could be less than 5 per- 1 cent, a fifth of today's 25 percent. 0 2000 2050 In 2050, more than 65 percent of the Figure 1.2 Historical and projected GDP population will live in urban areas. 160.0 Unless current trends are reversed, the Developing 140.0 countries number of slum dwellers lacking tenure High income countries security and access to services--cur- 120.0 rently estimated at 934 million--will $ 100.0 double to 2 billion. If city dwellers are 9951n 80.0 to enjoy healthy and productive lives, rillioT their need for infrastructure, housing, 60.0 and social services will have to be met. 40.0 But this demand also presents a great 20.0 opportunity. Because most of these in- 0.0 frastructure and housing investments 2000 2050 have yet to be made, they could be de- 2 The Road to 2050 - text.indd 2 04/21/2006 4:58:31 PM Sustainable Development for the 21stCentury signed to contribute to environmentally soon to prevent undesirable outcomes sustainable urban environments. much later. e nature of growth in the rich world is also an issue. Today, 80 percent of global GDP goes to only 20 percent of THE WORLD 2050 IN the world's people. Consumption pat- terns for energy, water, food, manufac- At the assumed growth rates, the total tured goods, and services are highly GDP of developing countries in 2050 skewed and will remain so for the near will be twice that of industrial coun- future. Are those patterns sustainable? tries today. is change raises some Probably not, for as incomes in devel- stark questions: How resource-inten- oping countries grow, consumption will increase to meet people's expecta- sive will these economies be? How en- tions. ergy- and carbon-intensive? How pol- lution-intensive? A world with $135 trillion in GDP sim- ply cannot rely on current production We can draw some tentative conclu- and consumption patterns. If subsidies, sions by looking across industrial and mispricing, and inadequate taxation of developing countries today. Economies environmentally damaging products restructure as they grow, with most continue to provide the wrong incen- growth occurring in service sectors, tives for consumers and producers in which are less harmful to the environ- the rich world, and if the developing ment. Services could constitute 60 per- world emulates the consumption pat- cent of GDP in developing countries terns in rich countries, we can expect in 2050, but that figure would still be great damage to the environment and 10 percentage points lower than in in- its ability to sustain growth. A major dustrial countries today. It is therefore transformation, starting in the rich possible that primary and industrial world, will be needed to decouple sectors will have a significant weight growth and environmental impacts and in the economies of developing coun- to radically change the composition of tries. the world's output toward high-input efficiency and environmental responsi- Higher incomes will almost certainly bility. Future patterns of consumption reduce pressure on local biomass as an and production must become a part of energy source. But the energy substi- the global public policy dialogue. tuted may be carbon-intensive; his- torically, each 1 percent increase in is paper considers the challenges we GDP has led to a 1 percent increase in will face if this optimistic outcome is carbon dioxide (CO2) emissions. Tech- to be achieved. What are the possible nical progress and structural change consequences of a much larger scale of can make a difference, however. From human activity? inking about the 1980 to 1996, the average CO2 emitted long term can pinpoint some of the per dollar of world GDP fell by 12.5 critical decisions that must be taken percent. 3 The Road to 2050 - text.indd 3 04/21/2006 4:58:32 PM The Road to 2050 If present trends continue, the world lutions. Poor countries suffer four times of 2050 will also be much less biologi- the incidence of environmental disease cally diverse. Part of the challenge is to found in rich countries. Dealing with reduce the number of poor communi- indoor air pollution and hygienic prac- ties dependent on fragile ecosystems. tices could have a major effect on the Particularly important is finding the global burden of disease. Poor people financing to preserve biodiversity, both have little voice in the decisions that through protective expenditures and affect them. Poor households depend through compensation to communities on the quality of local natural resourc- that may have to restrict their exploita- es for their livelihood. Poor countries tion of natural areas for the benefit of and poor households are inordinately their countries and the world as a whole. at risk from natural disasters. Small is- Ecotourism can help pay for preserva- land states, South Asian countries, and tion, as can new approaches such as Sub-Saharan Africa are all particularly systems of payments for environmen- vulnerable to global climate change, tal services. which is aggravated by consumption patterns in rich countries. Many decisions in the near term will have long-term consequences. Much Meeting the targets of the Millennium of the infrastructure built in the next Development Goals (MDGs) for 2015 20 years will still be with us in 2050. is an essential step on the road to a Perhaps more important, some choices prosperous and sustainable world and are irreversible or can be reversed only potentially the basis for a virtuous cycle with great difficulty. Species loss is an of growth and human development in often-cited example of this. Carbon di- poor nations. Faster growth is the key oxide, once emitted, has an atmospher- to meeting the targets, and the payoffs ic adjustment time of more than 100 will be great. Faster growth means less years. Climate change will reduce the extreme poverty, less child malnutri- quantity and quality of water in most tion, and faster progress on many of the arid and semiarid regions in addition to increasing the frequency of floods other MDGs. But the benefits of that and droughts worldwide. With almost growth must be widely spread, and it any degree of warming, climate change must be environmentally and socially will decrease agricultural productivity responsible. throughout the tropics and subtropics, What will it take for such steady gains in it will increase the incidence of vector- income to materialize? Macroeconom- and waterborne diseases and heat stress ic stability will need to be sustained. mortality, it will make hydropower less reliable in some regions, and it will ad- Massive infrastructure will have to be versely affect biodiversity at the species financed and built, with investment and ecosystem levels. expenditures in developing countries rising from today's $200 billion a year Incomes and pressures on the global to nearly $1.5 trillion in 2050. And environment are now distributed very technological progress will be required unequally and therefore need global so- across a whole range of sectors. 4 The Road to 2050 - text.indd 4 04/21/2006 4:58:32 PM Sustainable Development for the 21stCentury THE CHALLENGES AHEAD ment, integrated pest management, conservation, and the institutions that can engender better practice. Adapting Growing to a world economy of $135 to climate change is another key pri- trillion poses enormous risks to the ority. New agricultural technologies natural environment, and the risks are will drive this growth, but technology greatest in developing countries. Invest- alone cannot do the job. Agricultural ment decisions in the near future must growth also requires better markets, factor in those risks and provide some better infrastructure (especially rural insurance against undesirable surprises. roads), better rural financial services, Some of the most difficult issues will and better policies, phasing out the involve trade-offs between preserving ones that discriminate heavily against natural systems and pressing forward agriculture. with development. Truly global issues will require collective action on an un- Acting now also means making progress precedented scale. on the "aid and trade" agenda. Develop- ment assistance, partnered with good Sustained growth is the key to realizing a world without poverty by mid-cen- governance in recipient countries, can tury. What will fuel this growth, and be a powerful engine for growth. But what will support it? For all countries, research suggests that the benefits from investments in human capital, includ- expanding trade by reducing the trade ing health, will be essential. But this barriers faced by developing countries growth and development depend, in could dwarf development assistance. turn, on critical inputs, particularly wa- By 2015, annual income gains from ter and energy. Supplying energy, water, expanded trade could equal $350 bil- and sanitation, not to mention trans- lion in developing countries (compared port and communications, will require with current aid flows of roughly $50 major infrastructure investments. It is billion), while increasing incomes in increasingly clear that investments in rich countries by $170 billion. electricity, water supply, and sanitation underpin not only growth in incomes ese factors--human capital, energy, but growth in healthfulness and reduc- infrastructure, agricultural productiv- tions in mortality as well, particularly ity, aid and trade--will clearly be es- for children under the age of five. sential underpinnings for achieving a wealthier, more equitable world by With rising incomes and population 2050. In what follows we discuss the growth, the demand for food could cross-cutting issues that are key to mak- double by 2050. Higher incomes will ing this vision a reality: shift the pattern of demand toward higher-protein foods, with consequenc- · What is the role of natural re- es for fisheries, aquaculture, and live- sources in development? Section stock husbandry. Sustaining agriculture 2 depicts the composition of the will require close attention to land and wealth of nations and draws con- water degradation, nutrient manage- clusions on sustainability. 5 The Road to 2050 - text.indd 5 04/21/2006 4:58:32 PM The Road to 2050 · How important is governance for Section 6 looks at the impending development? Section 3 presents the challenges in mitigating greenhouse evidence on governance reforms and gas emissions and adapting to cli- creating the demand for better gov- mate change. ernance. · Can we bridge the gap from local · How do we build cohesion, inclu- to global? Section 7 summarizes the sion, and accountability within de- challenges we foresee--in natural veloping societies? Section 4 builds resource management, governance, the case for socially sustainable de- social development, food and agri- velopment. culture, and climate change--and · How will we feed a world of 9 bil- makes the case for global issues man- lion people? Section 5 presents the agement to deal with the expanding challenges inherent in boosting array of development issues that are agricultural productivity and com- truly global in scope. petitiveness. · How do we buffer the poor against the worst effects of climate change? 6 The Road to 2050 - text.indd 6 04/21/2006 4:58:33 PM Challenges The SECTION 2 Managing Natural Wealth Sustainably C an poverty reduction be sustained? e end of the twentieth century saw a renewed commitment to ending poverty, as embodied in the Millennium Development Goals. However, deep concerns remained that current rates of depletion and degradation of natural resources may undermine any progress to date. Achieving sustainable outcomes will require sustaining the total wealth--pro- duced, human, institutional, and natural--on which development depends. e exploitation of commercial natural resources in the form of minerals, energy, farmland, forests, and fish stocks can contribute to development. However, it is important to understand the indirect role played by many other natural resources in the development process. ese roles include biodiversity conservation, nonextractive uses (such as ecotourism), and the regulatory and cultural services provided by forests and other natural assets. As the Millennium Ecosystem Assessment documented, protecting and enhancing 7 The Road to 2050 - text.indd 7 04/21/2006 4:58:34 PM The Road to 2050 the environmental services provided of resource rents--truly a gift of nature. by natural resources is a key challenge, Sustainable management of these re- particularly in developing countries. sources will be the optimal policy, but the question of the optimal stock size Natural resources are special economic is complex. goods because they are not produced. As a consequence, they will yield economic Land resources are potentially sustain- profits--rents--if properly managed. able if managed well. Land is particu- ese rents can be an important source larly important in the poorest countries of development finance, and countries because it is a direct source of livelihood like Botswana and Malaysia have suc- and sustenance for many poor house- cessfully leveraged natural resources to holds. bolster growth. Natural resources play three basic roles erearenosustainablediamondmines, in development: but there are sustainable diamond-min- ing countries. Implicit in this statement · e first role, mostly applicable to is the assumption that it is possible the poorest countries and poorest to transform one form of wealth-- communities, is that of local natu- diamonds in the ground--into other ral resources as the basis of subsis- forms of wealth, such as buildings, ma- chines, and human capital. Achieving tence. this transformation requires a set of · e second role is as a source of institutions capable of managing the development finance. Commercial natural resource, collecting resource natural resources can be impor- rents, and directing these rents into tant sources of profit and foreign profitable investments. Resource policy, exchange. Rents on exhaustible, re- fiscal policy, political factors, institu- newable, and potentially sustainable tions, and governance structure all have resources can be used to finance in- roles to play in this transformation. vestments in other forms of wealth. In the case of exhaustible resources, Exhaustible resources, once discov- these rents must be invested if total ered, can only be depleted. Consum- wealth is not to decline. ing rents from exhaustible resources is · e third role is as the source of en- therefore literally consuming capital, vironmental services--watershed which motivates a well-known policy protection and pollination, for ex- rule for sustaining development: in- ample--that underpin many other vest resource rents in other forms of capital. economic assets. e value of agri- cultural land is closely tied to the Living resources are unique because value of the environmental services they are a potentially sustainable source supporting its productivity. 8 The Road to 2050 - text.indd 8 04/21/2006 4:58:34 PM Sustainable Development for the 21stCentury EIRESOURCES VIDENCE ON THE Figure 2.1 Shares of wealth by income group, 2000 MPORTANCE OF NATURAL 100 90 80 Figure 2.1 provides summary informa- 70 59 tion on the shares of natural resources 68 60 80 in the total wealth of industrial and developing countries. A high share tnecr 50 Pe of natural wealth does not automati- 40 cally imply that natural resources are 30 26 important for growth, but it does at a 13 2 minimum imply that these resources 20 are important for current well-being. 10 19 17 16 0 Figure 2.1 classifies the total wealth of Low income Middle income High income OECD nations into three broad components across low-, middle-, and high-income Produced capital Natural capital Intangible capital countries. Produced capital is the fa- miliar blend of buildings, machines, Source: Where is the Wealth of Nations? World Bank 2006. Oil states excluded. and infrastructure that is measured in standard national accounts. Natural poorest households in these countries capital is the value of agricultural land, are usually the ones that depend on forests, and subsoil resources such as these resources the most. minerals and energy. Intangible capital is analysis also shows how the share is the value of everything else--human of natural resources in total wealth capital, social capital, and the quality of declines as incomes rise. is does not institutions and governance. e under- mean they are unimportant or that lying estimates of total wealth per capita are nearly $440,000 in high-income they can be exploited indiscriminate- countries, nearly $28,000 in middle- ly--food, fiber, minerals, and energy income countries, and less than $8,000 are essential for economic activity and in low-income countries. well-being. Rather, this demonstrates how intangible assets become propor- Intangible capital is by far the largest tionately much more important as coun- share of total wealth in all countries. tries develop, with the productivity of For the poorest countries, however, people increasing along with the quality natural capital is a larger share of total of their institutions. In fact, the value of wealth than produced capital. is sug- natural capital per person actually rises gests that properly managing natural with income, from roughly $2,000 per resources must be a key part of develop- capita in low-income countries to nearly ment strategies, particularly since the $9,000 in high-income countries. 9 The Road to 2050 - text.indd 9 04/21/2006 5:52:51 PM Sustainable Development for the 21stCentury theory suggests that if current net sav- in this instance) plus damages from lo- ing is negative in a given country, then cal and global air pollutants results in its future welfare must decline. In other a negative net saving rate--total wealth words, if we care about sustainability we in Bolivia actually declined in 2003. need to be concerned about the net rate of wealth creation. Decision makers in Bolivia presumably believed that the rate of wealth creation Resource dependence complicates the in the country was nearly 12 percent of measurement of saving effort because gross national income in 2003--this is depletion of natural resources is not what was reported in the national ac- visible in standard national accounts. counts. But a fuller analysis highlights Countries can believe they are on a the extent to which depletion and dam- sustainable path, when in fact they are age to the environment affect the bot- running down their total wealth. Figure tom line on wealth creation. 2.3 looks at genuine saving in Bolivia to illustrate this point. is Figure makes the importance of re- SOME CONCLUSIONS ON source depletion and pollution damages NATURAL RESOURCES AND clear in any assessment of wealth cre- SUSTAINABILITY ation in a resource-dependent economy. While investments in human capital partly offset the value of depreciation If development is approached as a pro- of produced capital, the depletion of cess of portfolio management, then the natural resources (mostly natural gas figures make clear that both the size Figure 2.3 Decomposition of genuine saving in Bolivia, 2003 Percent GNI Depreciation of 10 fixed capital Depletion of natural Education resources expenditures 0 Pollution damages Gross Net Net saving\ Genuine saving Genuine saving saving plus education excluding saving expenditures pollution damages Source: Where Is the Wealth of Nations?, World Bank 2006. 11 The Road to 2050 - text.indd 11 04/21/2006 4:58:35 PM The Road to 2050 and composition of the portfolio vary return on investment, a standard tenet widely across levels of income. Man- of public finance. aging each component of the portfolio well and transforming one form of asset Each year some 10­20 developing into another efficiently are key facets of countries have negative genuine saving development policy. rates. What should the policy response be? Monetary and fiscal policies affect While the analysis of wealth sheds light saving behavior, and public sector dis- on sustainability, it is also directly rel- saving can be a key target of policy. If evant to the question of growth. As investment in human capital is mea- noted earlier, growth is essential if the sured as saving, then efforts to increase poorest countries are to enjoy increases effective education expenditures can in well-being. Growth will be illusory, boost overall saving. For natural re- however, if it consists primarily of con- sources, the general prescription is not suming the assets, such as soil nutrients, to simply reduce exploitation but rather that underpin the economy. to reduce incentives for overexploita- tion, which will typically entail reforms e linkage between measured changes in the resource sectors. in real wealth and future well-being only holds if our measures of wealth are suit- e policy responses to questions of ably comprehensive. is is the prime natural resources and sustainability motivation for expanding the measure break down according to the different of wealth to include a range of natural roles that natural resources play in de- and intangible capital. is richer pic- velopment: ture of the asset base also opens the door to a range of policy interventions that · For poor communities dependent can increase and sustain growth. on natural resources for subsistence, there is growing evidence that efforts e notion of development as portfolio to devolve ownership and control of management is powerful. Certain as- local resources to communities--to sets in the portfolio are exhaustible and nature conservancies or forest user can only be transformed into other pro- groups, for example--can have ductive assets, such as infrastructure or important impacts on income and human capital, through investment of well-being. This generally means resource rents. Other assets are renew- building capable local institutions able and can yield sustainable income to manage and share benefits from streams. Economic analysis can guide the resource base. decisions concerning the optimal size · For countries with commercial natu- of these assets in the portfolio. Some ral resources, the economic benefits assets, such as produced capital, de- from these resources can be maxi- preciate over time. National savings mized through incentive structures can be used to invest in natural assets, that reduce overextraction (tradable produced capital, or human capital. fishing rights, for example), trans- e choice of investment will depend parent mechanisms for allocating on the asset with the highest marginal resource rights, suitable instru- 12 The Road to 2050 - text.indd 12 04/21/2006 4:58:35 PM Sustainable Development for the 21stCentury ments (royalties, corporate taxes) example) that the resource provides for revenue collection, transparency to lowland farmers. One solution to concerning resource revenue genera- this sort of problem is to set up pay- tion, and budgetary processes that ment schemes from beneficiaries to can direct resource revenues into providers. Preserving environmental productive investments. services could also entail a larger role · For natural resources that are the for management at the landscape source of environmental services, and watershed scale. e external the key concern is that many of these nature of many environmental ser- services are provided as externali- vices means that they may be at risk ties--that is, the provider of the ben- when development decisions are be- efit is distinct from the beneficiary. ing made--this puts a premium on us owners of upland forests may programs to identify, quantify, and be unaware of the benefits (in the value these services more systemati- form of stream flow regulation, for cally. 13 The Road to 2050 - text.indd 13 04/21/2006 4:58:35 PM SECTION 3 Improving Governance G ood governance is increasingly understood to be an important factor determining economic performance. If the optimistic vision of a richer, more equitable world by 2050 is to be achieved, improving governance must play a key role. While in many countries there is an obvious need for improved macro-level governance--the performance of national institutions--the welfare of poor households and poor communities is closely tied to governance at the local level. Voice and accountability at the local level are powerful tools for sustainable development. Improving governance is not only about building and strengthening public and private institutions--the supply side. It is also about building citizen engagement and voice--the demand side. Governance can be defined as the traditions and institutions by which authority in a country is exercised for the common good. is includes the process by which those in authority are selected, monitored, 14 The Road to 2050 - text.indd 14 04/21/2006 4:58:40 PM Sustainable Development for the 21 stCentury and replaced--the political dimension, whereby over several decades resource- the government's capacity to effectively rich countries have registered poorer manage its resources and implement growth performances than resource- sound policies--the economic dimen- poor countries did. Corrupt natural sion, and the respect of citizens and the resource institutions can give favored state for the country's institutions--the groups access to resources, while rent- institutional respect dimension. In con- seekers pocket the revenues from natu- trast, corruption is defined more nar- ral resource exploitation--revenues that rowly as the abuse of public office for could be financing productive invest- private gain. ments for the country. Rent-seeking displaces productive economic activity, with consequent effects on growth. THE CASE FOR BETTER Figure 3.1 illustrates the main con- GOVERNANCE straints faced by businesses in different regions of the world. Corruption tops the list in South Asia, Sub-Saharan Af- Research shows that countries can rica, and transition economies, while derive a very large "development divi- it is a close second in Latin America dend" from better governance. A coun- and developing East Asia. Bureaucracy try that improves its governance from is a serious constraint on governance a relatively low level to an average level everywhere, including in countries that could almost triple the income per capi- belong to the Organisation for Eco- ta of its population in the long term and could similarly reduce infant mortality and illiteracy. Figure 3.1 Key constraints to business, by Region 60 Governance also matters for a coun- try's competitiveness and for income distribution. In the case of corruption, ) 50 research suggests it is equivalent to a major tax on foreign investors. In many %(3potni 40 developing countries, corruption repre- sents a "regressive tax" on the household 30 sector as well: to gain access to public services, lower-income families pay a disproportionate share of their incomes ntiartsnocgnitropersmriF20 in bribes compared with higher-income groups, and they often end up with less 10 access to such services because of cor- ruption. 0 OECD East Asia East Asia South Asia Sub-Saharan Transition Latin NICs developing Africa America Poor governance in the natural resource sectors appears to be a major explana- Infrastructure Bureaucracy Corruption Tax Regulations tion for the "natural resource curse," Source: Executive Opinion Survey 2004, World Economic Forum. 15 The Road to 2050 - text.indd 15 04/21/2006 4:58:43 PM The Road to 2050 nomic Co-operation and Development While it is true that institutions often (OECD). Tax regulations constitute a change only gradually, in some countries severe constraint in OECD and in post- there has been a sharp improvement in socialist transition countries, in contrast the short term. is defies the view with regions such as South Asia, where that while governance may deteriorate they rank low as an impediment relative quickly, improvements are always slow to the other constraints. and incremental. For instance, there has been a significant improvement since Similarly, infrastructure is a major con- 1996 in the "voice and accountability" straint in Africa and developing Asia, in indicator in countries ranging from contrast to the East Asian tigers and, Bosnia, Croatia, and Ghana to Indo- to an extent, to Latin America and the nesia, Serbia, and Sierra Leone. And the transition economies. is does not im- improvements exhibited by some Afri- ply that in these regions it is unimport- can countries in a short period of time ant to focus on infrastructure invest- challenge the "Afro-pessimists." ments, since this type of survey gives A common fallacy in thinking about only a relative ranking across different governance is to focus solely on the constraints for each country. But the failings of the public sector. e reality fact that infrastructure was not rated is much more complex, since power- at the top in so many countries--in ful private interests often exert undue Latin America, Africa, transition influence in shaping public policy, in- economies, and others that suffer from stitutions, and state legislation. In ex- infrastructure problems and are in dire treme cases, "oligarchs" capture state need of investments--is a sure sign of institutions. And many multinational the extent to which some other factors, corporations still pay bribes in some largely governance and corruption, im- countries, undermining public gover- pose even more severe constraints on nance in emerging economies. ere are business development. also weaknesses in the nongovernmen- tal sector. Further, traditional public Better governance is not a luxury that sector management interventions have only rich countries can afford. It is mis- not worked because they have focused leading to suggest that corruption is due on technocratic "fixes" rather than real to low incomes and to invent a rationale institutional reform. for discounting bad governance in poor countries. In fact, the evidence points When it comes to governance reforms, to the causality being in the direction historical and cultural factors are far of better governance leading to higher from deterministic--witness, for in- economic growth. A number of emerg- stance, the diverging paths in terms of ing economies, including the Baltics, governance of neighboring countries in Botswana, Chile, and Slovenia, have the Southern Cone of Latin America, shown that it is possible to reach high the Korean peninsula, the transition standards of governance without yet economies of Eastern Europe, and having joined the ranks of wealthy na- Southern Africa. ere are reform strat- tions. egies that offer particular promise. e 16 The Road to 2050 - text.indd 16 04/21/2006 4:58:43 PM Sustainable Development for the 21stCentury coupling of progress on improving voice by corrupt officials. And transnational and participation--including through corporations should refrain from brib- freedom of expression and women's ery and support improving governance rights--with transparency reforms can practices in host countries. As for the be especially effective. international financial institutions and donors, there is a need to anchor aid Increases in transparency can be par- decisions within a governance frame- ticularly catalytic for change. A partial work. Improving transparency will be list of transparency reforms would in- key. However, none of this can work clude: unless countries themselves take the lead in improving governance. · Public disclosure of assets and in- comes of politicians · Public disclosure of political contri- butions SOCIAL ACCOUNTABILITY-- · Public disclosure of draft legislation WORKING ON THE DEMAND and parliamentary votes SIDE · Enactment and effective implemen- tation of conflict-of-interest laws · Public blacklisting of firms guilty of As donors increasingly focus on im- bribes in public procurement proving governance, it is becoming · Enactment and effective implemen- clear that democratic elections, legisla- tation of freedom-of-information tive oversight, and administrative and laws financial mechanisms are needed but · Freedom of the media, including the are not enough to increase the transpar- Internet ency and accountability of the public · Fiscal and public financial transpar- sector and service providers. Elections, ency in and of themselves, are a weak and · Transparent and competitive pro- blunt instrument with which to hold curement. governments accountable. Improve- ments in administrative and financial e challenge of governance and anti- systems certainly help, but they are corruption confronting the world today insufficient unless they are accompa- strongly argues against "business-as- nied by increased demand from citizens usual." A bolder approach is needed, and other stakeholders for better access, and collective responsibility at the quality, and responsiveness in the deliv- global level is called for. e rich world ery of public services. must not only deliver on its aid and trade liberalization promises, it must e 2001 World Development Report on also lead by example. OECD countries poverty recognized accountability as an should ratify and effectively imple- integral component of empowerment ment the 2003 UN Convention against and hence poverty reduction. e need Corruption and should take steps, as to strengthen accountability relation- Switzerland is starting to do, to repa- ships between policy makers, service triate assets looted and stashed abroad providers, and clients was at the core of 17 The Road to 2050 - text.indd 17 04/21/2006 4:58:43 PM The Road to 2050 the 2004 World Development Report on decisions that affect their livelihoods making services work for the poor. e and welfare. The degree to which a donors' interest and support for social person or group is empowered is influ- accountability derives from their inter- enced by agency (the capacity to make est in promoting poverty reduction and informed choices) and opportunity (the sustainable development. After concen- institutional context in which choice is trating for many years on the supply exercised). By providing critical infor- side of public sector and governance mation on rights and entitlements and reforms, the development community by introducing mechanisms to enhance now takes a more comprehensive ap- citizen voice and influence on policy proach by focusing also on citizen makers and service providers, social ac- engagement to enhance public sector countability initiatives enhance these accountability and performance--the two key determinants of empowerment. demand side of governance. Of particular importance is the poten- tial of social accountability to empower Social accountability is about affirming social groups who are systematically ex- and operationalizing direct account- cluded from political, social, and eco- ability relationships between citizens nomic development, such as women, and the state. It therefore refers to the young people, ethnic or other minori- broad range of actions and mechanisms ties, and the extreme poor. that citizens can use to hold the state to account, as well as actions by the Efforts by citizens and civil society government, civil society, the media, groups to hold governments account- and other social actors to promote or able have traditionally included a facilitate these efforts. e concept of range of social actions, such as public social accountability underlines both demonstrations and protests, advocacy the right and the corresponding respon- campaigns, investigative journalism, sibility of citizens to expect and ensure and public interest litigation. In more that the government acts in the best recent years, a new generation of social interests of its citizens. e obligation accountability has emphasized direct of government officials to be account- dialogue and negotiations with govern- able to citizens derives from notions of ment counterparts and service provid- human rights and the need for citizens ers, relying on the use of participatory to understand and play an active and methods, expanded data collection and responsible role in exercising those analysis, and enhanced spaces and op- rights--an important part of building portunities for citizen and civil society citizenship. engagement with state and political actors. Over the past two decades, it has be- come clear that empowerment is critical Social accountability mechanisms can to poverty reduction. For such efforts contribute to improved governance and to be sustainable, the poor must move genuine democracy by enhancing the from being passive recipients of govern- capacity of ordinary citizens to obtain ment and donor aid (beneficiaries) to information, voice their needs, and de- empowered actors (agents) in shaping mand accountability between elections. 18 The Road to 2050 - text.indd 18 04/21/2006 4:58:43 PM Sustainable Development for the 21stCentury By involving citizens and civil society in mechanisms between the government monitoring government performance, and citizens and on the willingness and by enhancing transparency and infor- the capacity of state and civil society mation disclosure, and by exposing actors to engage constructively (Figure government failures and misdeeds, so- 3.2). In order to be effective, social ac- cial accountability mechanisms are po- countability mechanisms often need to tentially powerful tools against public be preceded or complemented by efforts sector corruption. to enhance both the willingness and the capacities of key actors. A number of new tools and approaches have emerged in recent years to opera- tionalize this increasing focus on social accountability. ese include, among LESSONS AND CHALLENGES others, public participation in policy ON SOCIAL ACCOUNTABILITY making, participatory budgeting and public expenditure tracking mecha- nisms, and participatory performance Social accountability shows consider- monitoring and evaluation using such able potential to promote governance, tools as citizen report cards and com- improve development effectiveness, and munity score cards. empower citizens, especially those who are poor and marginalized. A number e scope for enhanced social account- of lessons are emerging from the experi- ability will vary in each country context, ence of the World Bank and other do- depending on a range of factors related nors with social accountability. to the enabling environment. e ef- fectiveness of social accountability ef- · Social accountability is about more forts will depend critically on bridging than tools--it is about reforming Figure 3.2 Conditions for social accountability EnablingPolitical environment Bridging Government mechanisms Citizens/CS Willingness and Capacity to research, capacity to disclose Information analyze, demystify, and disseminate Legal Socio- Willingness and Constructive cultural capacity to listen Voice approach; Coalition-building Willingness and Credibility; capacity to engage Negotiation Public support Economic 19 The Road to 2050 - text.indd 19 04/21/2006 4:58:44 PM The Road to 2050 political and institutional cultures, Although we have made a promising changing mindsets, strengthening start in developing new approaches to civil society capacity, building citi- strengthen social accountability, much zenship, and above all helping to remains to be done in making this construct a new set of state-citizen agenda a part of the core business model relations. in development institutions. Over the · Both supply and demand sides mat- coming years, attention will need to ter. Social accountability is about focus on: strengthening bridging mechanisms. e demand for accountability by · Mainstreaming social accountabil- citizens must be matched not only ity across operational and analytical by the willingness of the govern- work, particularly in building own- ment and service providers but also ership in client governments by their ability to respond to civic · Strengthening the evidence base demands. on the positive impact of social ac- · Access to information is vital. e countability on governance and sus- quality and accessibility of public tainable development outcomes information and data are key de- · Training and encouraging innova- terminants in the success of social tion on social accountability accountability mechanisms. A com- · Strengthening donor coordination mon element of almost all successful and international networks of social efforts is the role of an independent accountability practitioners. media. 20 The Road to 2050 - text.indd 20 04/21/2006 4:58:46 PM SECTION 4 Socially Sustainable Development F or decades the main development debates focused on economic development, underlined by a belief that economic growth was enough to solve the complex problems of poverty and income inequality. Today development practitioners and theorists have shifted toward a new approach that incorporates the social dimensions of economic activity--from including all segments of society to encouraging more transparent and accountable institutions. Social development tools enabled develop- ment practitioners to consult people directly about poverty. eir own voices tell us that poverty is about more than low income--it is also about vulnerability, exclusion and isolation, unaccountable institutions, and powerlessness. Increases in income are not enough to sustain poverty reduction. Sustainable change requires social change--with systematic attention to embedded social, political, and economic exclusion, to social cleavages 21 The Road to 2050 - text.indd 21 04/21/2006 4:58:51 PM Sustainable Development for the 21stCentury incomes are on average 15 percent lower empowerment involving commu- at the end of a conflict than they would nity-driven development (CDD), have been otherwise. ere is also ample civic engagement, and social ac- evidence that more inclusive, cohesive, countability and accountable institutions in a given · Vulnerability--from a concern with year correlate with higher growth in the marginal and disadvantaged groups following decade. to a broader concern with social vulnerability and exclusion and the policies and institutions that affect these groups WHERE WE'VE COME FROM · Institutions--from the analysis of formal institutions and rules to a In the 1970s and early 1980s, the major focus on local-level institutions, so- objective of social scientists in develop- cial capital, and formal and informal ment institutions was to improve proj- rules ect effectiveness. As the adverse social · Conflict--from post-conflict physi- impacts of large-scale development cal reconstruction to rebuilding the projects became more evident and the social and economic fabric of societ- understanding of poverty more com- ies torn apart by conflict, a conflict- plex, approaches and tools were devel- sensitive approach to development, oped to incorporate the social consid- and increasing concern with conflict erations and the views of the poor into management and prevention project design. e mid-1990s saw a Evolving good practice, as reflected in flurry of conceptual and organizational the World Bank's social development changes--foreshadowed by the 1995 strategy, for example, suggests that so- UN World Summit on Social Devel- cial development is based on three op- opment--that put social development erational principles: inclusion, cohesion, concepts and practitioners into the and accountability. Inclusive institu- mainstream of development efforts. tions promote equal access to opportu- Since 1997, the social development nities, enabling everyone to contribute agenda has evolved around five key to social and economic progress and axes: share in its rewards. Cohesive societies enable women and men to work togeth- · Social analysis--from project-based er to address common needs, overcome analysis to broader social analysis of constraints, and consider diverse inter- projects, policies, and country strat- ests--they resolve differences in civil, egies to enhance poverty outcomes nonviolent ways, promoting peace and and social change security. Accountable institutions are · Participation--from consultation transparent and respond to the public and individual beneficiary involve- interest in an effective, efficient, and ment in project implementation to fair way. 23 The Road to 2050 - text.indd 23 04/21/2006 4:58:51 PM The Road to 2050 PUTTING COMMUNITIES IN has been an issue for nearly two decades. THE DRIVER'S SEAT Today social safeguard policies within development institutions are sharply focused on indigenous peoples, re- Although development within commu- settlement, and cultural heritage. Over nities had been part of the development the years, attention to social safeguard agenda since the 1970s, in the late 1990s issues has increased within the develop- donors began to recognize that commu- ment community. nity involvement and control over the planning, design, and implementation of projects could be effective--leading to a major increase in funding to com- SOCIAL ANALYSIS munity-driven projects. CDD differs from earlier approaches The need to consider the impact of in a number of ways. It entails com- social factors in project appraisal has munity authority and control over de- been recognized at least since 1984, and cisions and resources, and it enhances guidance on carrying out social assess- local community accountability for the ments was provided by the World Bank use of the resources. ese types of op- in 1994. e major innovation was to erations have also provided opportuni- bring social analysis and participatory ties to achieve a number of other social processes together under a single ap- objectives. Rules and incentives gener- proach, and the guidelines laid the ally promote the inclusion of women, groundwork for efforts to mainstream minority groups, isolated communities, social assessment and participation in and the very poor--groups frequently lending and analytical work to improve excluded from development activities. project quality. Community involvement and experi- A major effort has been initiated within ence builds social capital and empow- the development community to clarify ers communities by allowing them to and formalize the purpose and key ele- define their own needs, decide how ments of social assessments and to make to meet them, and control resources. them more rigorous and systematic. e Transparency and accountability mech- objectives of social assessment were to anisms in CDD approaches in turn re- improve poverty and social outcomes duce corruption and strengthen citizen by enhancing social inclusion, strength- demand for greater accountability by ening social cohesion, increasing social local governments. capital, and reducing adverse social impacts. Recognizing that attention to social issues is fundamental to pov- SAFEGUARDS erty reduction and project quality but that a mandatory social assessment for individual projects along the lines of Concern about the environmental and environmental assessments was not social impacts of development projects likely to be feasible, efforts shifted to 24 The Road to 2050 - text.indd 24 04/21/2006 4:58:51 PM Sustainable Development for the 21stCentury more upstream social analysis as a way tions (NGOs) in both the North and to mainstream social concerns. the South in order to more fully reflect civil society views in development proj- In recent years, social analysis work at ects. the project level has expanded in two new directions. First, as the social de- As the importance of participation to velopment agenda gained traction, there institutional accountability became was a clear need to move beyond the as- more apparent, and its links to gover- sessment of project impacts to an analy- nance and development became more sis of key social issues at the country evident, the need to facilitate dialogue level. To date, over 15 Country Social between borrowers and civil society or- Analyses have been completed by the ganizations (including but not limited World Bank, complemented by a num- to NGOs) has become an important ber of Conflict Assessments specifically part of development assistance. Par- targeted and designed for countries af- ticipatory processes have been adopted fected by violent conflict. Since 2002, across development projects, in country poverty and social impact assessment assistance strategies, and in poverty as- (PSIA) of economic reforms and adjust- sessments and Poverty Reduction Strat- ment operations has been developed by egy Papers. the World Bank, the IMF, and major donors. Key aspects of this work include disaggregating social groups, undertak- ing stakeholder analysis, recognizing in-VIOLENT CONFLICT dividual and institutional interests, and assessing social and political risks in e eruption of violent conflict repre- order to fully understand the distribu- sents the complete breakdown of social tional impacts of policy reforms. More cohesion. e interest of social develop- than 100 PSIAs have been undertaken ment practitioners in the conflict and across the developing world in the past development agenda emerged naturally four years and are now influencing the from: design of development policy lending. · Work on vulnerability, which was clearly linked with the social impact PENGAGEMENT of conflict ARTICIPATION AND CIVIC · A recognition in the 1990s that in the post­Cold War era the vast majority of violent conflicts occur In the 1970s and early 1980s, participa- within countries and that social ex- tion referred primarily to community clusion, marginalization, and unac- involvement in implementation, such countable institutions provide the as building and maintaining roads and grievances that fuel civil conflicts irrigation systems. e development · e realization that building social community has since engaged more capital through community-driven fully with nongovernmental organiza- approaches not only restores liveli- 25 The Road to 2050 - text.indd 25 04/21/2006 4:58:52 PM The Road to 2050 hoods but also promotes social cohe- focus on restoring human and social sion across communities capital and on promoting social inclu- sion and cohesion to avoid a relapse into With a growing portfolio in countries violence. recovering from conflict, the develop- ment community has had to clarify its engagement in post-conflict recon- struction. At the World Bank, a new GLOBAL IMPLICATIONS OF operational policy has redefined the LOCAL CONFLICTS Bank's role in the context of a more comprehensive approach to develop- ment--from an approach focused on Concern over the past two decades with rebuilding infrastructure to one that global security threats has led the inter- seeks to understand the root causes national community to focus increased of conflict, to integrate a sensitivity attention on two global, interrelated to conflict in donor activities, and to issues: human security and countries promote assistance that minimizes the affected by violent conflict or fragile or potential causes of conflict. failed states. Over the years, the World Bank has led Building on the work of Amartya Sen the way in cutting-edge research on the and others, the UN Human Security links between development and conflict Commission proposed shifting atten- and has built up considerable expertise and skills in assisting countries affected tion from the security of the state to by conflict. Today, it is in the forefront the security of people. It places people, of international efforts to rebuild soci- rather than nation states, at the center eties torn apart by conflict--from Af- of the security agenda. Human secu- ghanistan and the Balkans to Timor- rity focuses on empowering as well as Leste, Haiti, Liberia, Sudan, and the protecting vulnerable people--seeking Democratic Republic of Congo. It is freedom from want as well as freedom also actively engaged in countries still from fear. Human security thus joins beset by conflict, such as Colombia, and integrates the international com- Nepal, and Somalia. munity's main agenda items of peace, security, and development. is agenda e major breakthrough was the rec- is wholly consistent with the principles ognition that conflict, unlike a natural disaster, is not an exogenous shock but of social development. is deeply rooted in the development pro- e challenge of meeting the MDGs cess itself--in effect, conflict is a failure has also called attention to the large of development. A social development lens called attention to the fact that share of the world's poor who, through where conflict occurs within a country's no fault of their own, live in countries borders, post-conflict recovery needs affected by violent conflict or in fragile to be about more than the bricks and states incapable of delivering basic ser- mortar of reconstruction--it needs to vices, including security. 26 The Road to 2050 - text.indd 26 04/21/2006 4:58:52 PM Sustainable Development for the 21stCentury Research from the social and economic states amounts to a restatement of social fields has highlighted the characteris- development objectives at the country tics of societies that are more resilient level. to conflict, including: In addition to contributing to meeting · Political and social institutions that the MDGs, social development has an are largely inclusive, equitable, and important role to play at the country accountable level in improving human security and · Economic, social, and ethnic diver- assisting deeply divided countries avert sity--pluralism and inclusion, rather the risk of new or renewed conflict. Pro- than polarization and dominance moting social structures and institu- · Growth and development that raise tions that are more cohesive, inclusive, incomes and opportunities across and accountable--the core principles of society social development--can make a major · A culture of dialogue rather than contribution to reducing global poverty violence. and ensuring the next generation inher- its a more peaceful and safer world. In short, working to reduce the global threats posed by conflict and by fragile 27 The Road to 2050 - text.indd 27 04/21/2006 4:58:52 PM SECTION 5 Agricultural Productivity and Competitiveness T he Green Revolution increased crop yields through research and development (R&D) in improved technology and through investments in infrastructure and agricultural services. As a result, it re- duced poverty and hunger while fostering economic growth, especially in Asia and Latin America. Even beyond the Green Revolution, investment in agricultural research has had a major impact on poverty reduction through its direct effects on producer incomes, its indirect effects on consumer welfare through lower food prices, employment, and wages, and its growth-induced effects throughout the economy (Figure 5.1 and Box 5.1). Studies in India and China by the International Food Policy Research Institute have shown that investments in agricultural R&D had a higher impact on poverty reduction than most other public investments, behind only education in China and rural roads in India. Studies consistently show high returns to investments in agricultural research in developing countries, averaging over 40 percent. Rates of return tend to be higher for research in industrial countries and for 28 The Road to 2050 - text.indd 28 04/21/2006 4:58:57 PM The Road to 2050 and well-being. ese problems and de- centralized public research or knowl- mands require fundamental changes in edge systems to cater to this trend. the culture and business of the sector. e agricultural sector once relied on e private sector is becoming a more formal, supply-driven R&D systems prominent player as the source of to ensure ample food supplies. It now knowledge generation, diffusion, and must draw from policy and manage- application. A substantial part of the ment reforms, market forces, empow- technology package that farmers use-- ered farmers and other stakeholders, fertilizers, machinery, pesticides, and and a broader spectrum of science and seeds--has been designed by and sup- technology solutions to meet growing plied through private businesses. With and diversifying demands. increasing intensification, the role of the private sector as technology supplier will increase. While the trend is global, available statistics on agricultural re- A NEW SYSTEM FOR search show that the role of the private PRODUCTIVITY AND sector today is clearly more prominent COMPETITIVENESS in industrial than in developing coun- tries. A number of forces, including shifting Degradation of natural resources and demand patterns, improved technology, public concern over environmental is- integrating trade, and market pressures, sues are shifting research priorities and are shaping the evolution of the agri- funding toward broader issues, many culture sector. Strengthened research of them global in nature: sustainable systems will increase the availability of use of land, water, forests, and biodi- new knowledge and new technologies, versity; mitigation of and adaptation but not necessarily the number of in- to climate change; pesticide residue novations that will be implemented by minimization; livestock waste manage- agricultural producers. Several inter- ment; water quality preservation; and related developments have led to this watershed protection, to name a few. conclusion. ere are also increasing opportunities for agriculture to provide environmen- Agricultural development is increas- tal services through carbon farming ingly market-oriented rather than pro- and biodiversity conservation. Success duction-driven, for example. While for in meeting these challenges requires most of the last century major progress sharply increased skills in research on in agricultural development was made natural resources management, social by improving the productivity of staple sciences, and environmental issues. food crops, the situation is now chang- ing. With falling staple food prices Future increases in agricultural produc- and rising urban incomes, the goal has tivity must come from intensification shifted to diversifying agricultural pro- rather than exploitation of additional duction to livestock and higher-value natural resources. Agricultural sys- crops. But it has often been difficult for tems must use natural resources more 30 The Road to 2050 - text.indd 30 04/21/2006 4:59:00 PM Sustainable Development for the 21stCentury efficiently and repair past damage to can make important contributions to ecosystems. is depends on the appli- sustainable and equitable agricultural cation of scientific knowledge, devel- development, but it is not sufficient to opment of farmers' skills, and a policy ensure a productive and competitive framework to improve resource use and agricultural sector. conservation. e conditions must be put in place e public sector still produces much to ensure that this knowledge actually of the agricultural research relevant to leads to accelerated development. is the poor. Small farmers have limited realization has led to extensive changes purchasing power and cannot finance in rural development strategies and ag- research. Private firms see limited op- ricultural research systems in the indus- portunity for profits from providing trial world. In particular, agriculture technologies to small farmers, so they has borrowed the concept of national do not invest sufficiently in this type innovation systems from the industrial of research. Moreover, much of the sector. is ensures that new knowl- knowledge that the private sector de- edge is relevant in the market context velops builds on information developed and that the role of the private sector in in publicly funded research. the development and diffusion of new With the private sector increasingly knowledge is explicitly recognized. In- serving the commercial farming sector, novation systems consist of the institu- public funding must focus more sharply tions, enterprises, and individuals that on the poor, giving priority to the com- demand and supply knowledge and modities, regions, and technologies that technologies and the rules and mecha- are important to this group. For this to nisms by which these different agents work, the public sector has to use bot- are interacting. tom-up, participatory processes to iden- tify, execute, and evaluate research. And In this concept, the focus is not on the these processes must be sure to address science suppliers but on the totality of gender, since women are responsible for actors who are involved in innovation. 60­80 percent of food production in Private sector investment, the finan- developing countries. cial system, the policy and regulatory environment, and stakeholder partici- pation are more explicitly recognized. FDEVELOPMENT End-market demands are more inte- ROM ESEARCH AND R grated, and the conditions that need to TO INNOVATION SYSTEMS be fulfilled for innovations to become successful are spelled out more clearly (Figure 5.2). Development depends on knowledge, much of which needs to be generated e effectiveness of the agricultural in- in or adapted to the national context. novation system depends on three main A strong science and technology system elements: 31 The Road to 2050 - text.indd 31 04/21/2006 4:59:00 PM Sustainable Development for the 21stCentury Consultative Group on International A OUNDATION Agricultural Research (CGIAR) to FOR BUILDING FCOOPERATION develop a new set of system priorities. IN AGLOBAL GRICULTURAL Developed in close consultation with KNOWLEDGE its stakeholders and led by the CGIAR Science Council, the vision for the lon- ger term is one in which the CGIAR How can we reduce hunger and pov- provides international public goods erty, improve rural livelihoods, and through agricultural research aimed facilitate equitable, environmentally, at the alleviation of poverty. e five socially, and economically sustainable priority areas are: development through the generation, access to, and use of agricultural knowl- · Sustaining biodiversity for current edge, science, and technology? is is and future generations the core question of the International · Producing more and better food at Assessment of Agricultural Science and lower cost through genetic improve- Technology for Development (IAAS- ments · Reducing rural poverty through ag- TD). is unique international effort ricultural diversification and emerg- will evaluate: ing opportunities for high-value · e relevance, quality, and effective- commodities and products · Promoting poverty alleviation and ness of agricultural knowledge, sci- sustainable management of water, ence, and technology (AKST) land, and forest resources · e effectiveness of public and pri- · Improving policies and facilitating vate sector policies as well as insti- institutional innovation to support tutional arrangements in relation sustainable reduction of poverty and to AKST to meet the development hunger. goals of environmental sustainabili- ty, improved rural livelihoods, nutri- ese priorities were determined based tional security, and human health. on the need to meet expected impact, to focus on international public goods, IAASTD is co-sponsored by FAO, and to recognize the existence of alter- UNEP, UNESCO, GEF, UNDP, native sources of supply of research. e WHO, and the World Bank. It brings CGIAR aims to progressively devolve together governments, NGOs, the pri- some site-specific research to National vate sector, producers, consumers, the Agricultural Research Systems. Special scientific community, and signatories attention will be paid to building part- of multilateral environment agreements ner capacity in Sub-Saharan Africa. Research-for-development objectives to share views and gain common un- are being pursued through the CGIAR derstanding and a vision for the future. Centers' core programs, through sys- e main output of the assessment to temwide and ecoregional programs, and be completed in September 2007 is a through the broader partnership-based series of critical, in-depth global and challenge programs. subglobal assessment reports. 33 The Road to 2050 - text.indd 33 04/21/2006 4:59:01 PM SECTION 6 The Challenge of Addressing Climate Change G overnments today face one of the greatest challenges of the new millennium: how to achieve pros- perity for all while preventing economic growth from irreversibly changing the planet's climate. Sustaining global prosperity becomes increasingly difficult with a climate that continually becomes warmer and more unstable. But economies cannot grow without increasing energy consumption. And today's energy generation depends primarily on carbon-emitting fuels that result in human-induced climate change. ere is general agreement that the way that energy and environmental challenges are addressed in the next two decades will to a large degree determine whether growth is sustainable. Un- fortunately, new, cleaner, and more efficient technologies remain underutilized, while carbon-intensive energy infrastructure and inefficient cities are being rapidly built and expanded--setting the capital stock for decades. 35 The Road to 2050 - text.indd 35 04/21/2006 4:59:08 PM The Road to 2050 SCIENTIFIC UNDERSTANDING projected increases in the incidence of OF CLIMATE CHANGE vector-borne diseases such as malaria and dengue and water-borne diseases such as cholera, as well as in heat- ere is wide recognition that human- stress mortality. Hunger alleviation is induced climate change is a serious en- threatened by projected reductions in vironment and development issue. e agricultural productivity in the tropics Earth is warming--with most of the and subtropics for almost any amount warming of the last 50 years attribut- of warming, as well as by depleted fish- able to human activities, predominantly eries. Biodiversity and the goods and in the energy and agricultural sectors. services of many ecological systems, especially coral reefs, are likely to be Most greenhouse gases (GHGs) are pro- adversely affected. Developing coun- jected to increase significantly over the tries and particularly poor people in next 100 years--carbon dioxide (CO2), developing countries are the most vul- for example, which has increased from nerable. about 280 parts per million (ppm) to 377 ppm since the pre-industrial era, Several recent scientific findings sug- is projected to reach 540­970 ppm by gest there is even greater reason for 2100 (Figure 6.1). e global mean sur- concern: face temperature, which rose by about 0.7o Celsius over the last 100 years, · Increased oceanic acidity is likely is projected to increase by a further to reduce the oceans' capacity to 1.4­5.8o Celsius by 2100. e spatial absorb CO2 and affect the entire and temporal patterns of precipitation, marine food chain. which have already changed, are pro- · A regional increase of only 2.7o Cel- jected to change even more in the fu- sius above present (associated with a ture. Sea levels rose 10­25 centimeters globally averaged temperature rise during the last 100 years and are pro- of about 1.5o Celsius above today) jected to rise an additional 8­88 cen- could trigger a melting of the Green- timeters by 2100, and most non-polar land ice cap. glaciers are retreating. e frequency · An increase in ocean surface tem- of extreme events, such as heat waves, perature of 1o Celsius is likely to lead droughts, and floods, is also projected to extensive coral bleaching. to increase. · A reversal of the land carbon sink is possible by the end of this century. e observed changes in climate have · Destabilization of the Antarctic ice already affected ecological, social, and sheet becomes more likely above 3o economic systems, and poverty allevia- Celsius, and the Larson B ice shelf tion and sustainable development are is already showing signs of instabil- threatened by projected changes in cli- ity. mate. Over the next 100 years, water · e North Atlantic ermohaline availability and quality are expected to Circulation may slow down or even decrease in many arid and semiarid re- shut down within the next 100­200 gions. Human health is threatened by years. 36 The Road to 2050 - text.indd 36 04/21/2006 4:59:08 PM Sustainable Development for the 21 stCentury Figure 6.1 The global climate models for the twenty-first century (A) Carbon dioxide emissions of the six (B) Projected carbon dioxide concentrations IPCC SRES scenarios 1300 Scenarios Scenarios A1B 1200 A1B 25 A1T A1T A1FI 1100 A1FI A2 A2 C/yr) B1 (ppm) 1000 B1 B2 B2 20 (Gt IS92a 900 IS92a ation 800 15 700 emissions concentr 2 2600 10 CO CO 500 400 5 300 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100 Year Year (C) Anthropogenic sulfur dioxide emissions (emissions of other greenhouse gases and aerosols were included in the climate model ear)y but are not shown) Scenarios per 150 A1B A1T A1FI sulphur A2 of B1 B2 IS92a tonnes 100 of (Millions 50 Emissions 2 SO 2000 2020 2040 2060 2080 2100 Year (D) Temperature level responses (E) Sea level responses 6 1.0 All Scenarios Several models IS92 A1FI all SRES Scenarios A1B A1B envelope 5 A1T All SRES envelope A1T 0.8 A1FI including land-ice A2 Model ensemble C) A2 uncertainty all SRES ( ° B1 B1 envelope B2 B2 4 Several models IS92a (TAR method) All all SRES IS92 0.6 envelope change (metres) 3 iser Model average elv all SRES envelope le 0.4 2 Temperature Sea 0.2 1 Bars show the range in 2100 produced by Bars show the 0 several models 0.0 range in 2100 produced by 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100several models Year Year Source: Intergovernmental Panel on Climate Change. Based on the current understanding of the increase in global mean surface tem- the climate system and the response of perature to less than 2o Celsius above different ecological systems and socio- pre-industrial levels and keeping the economic sectors, if significant global rate of change below 0.2o Celsius per adverse changes are to be avoided, the decade. Recent probability analysis best guidance today suggests limiting suggests that accomplishing the for- 37 The Road to 2050 - text.indd 37 04/21/2006 4:59:09 PM The Road to 2050 mer with relatively high certainty will on lower-cost cleaner technology. But require keeping the equivalent CO2 we do know this: action cannot wait. concentration below 400 ppm. It also suggests that stabilizing the equivalent CO2 concentration at 450 ppm would imply a medium likelihood of staying MITIGATION OF below 2oC above pre-industrial levels. GREENHOUSE GAS And if the equivalent CO2 concentra- EMISSIONS tion were to rise to 550 ppm, this out- come would be unlikely. Significant reductions in net greenhouse Instead of declining, however, global gas emissions are technically feasible GHG emissions are increasing.Despite due to an extensive array of technolo- the Kyoto Protocol coming into force, gies and practices in energy supply and emissions have increased in OECD demand, waste and land management, countries and are growing rapidly in and industrial sectors--many at little developing countries, especially China or no cost to society. However, realiz- and India. Because of global economic ing this technical potential will involve growth, the world is experiencing a the development and implementation of boom in energy use that is dominated by supporting policies to overcome barriers coal-power generation of unprecedented to the diffusion of these technologies proportions. Unless concrete actions are into the marketplace, increased fund- taken now to provide a long-term policy ing for R&D, and effective technology and investment framework for carbon transfer. emission reductions, the largest produc- ers of coal-fired electricity--the United Reducing projected GHG emissions in States, China, and India--will remain the energy production and supply sector carbon emission­intensive. Conse- will require a broad portfolio of tech- quently, decisions taken today on tech- nologies, including: nologies and policies in these countries will have irreversible consequences on · Increased power plant efficiency, GHG emissions and hence on develop- such as sub-critical to super-critical ment paths for 40­60 years. thermal power plants, and ultimate- ly integrated gasification combined Given that the Earth's climate has al- cycle (IGCC) coupled with carbon ready changed and that further change capture and storage (CCS) is inevitable, future alterations need to be mitigated by reducing projected · Increased use of natural gas as a emissions of greenhouse emissions at bridging fuel in a transition period the same time that countries adapt to until renewable energy technologies climate change. e exact nature of become commercially available the trade-off between mitigation and · Reduced transmission and distribu- adaptation is veiled by uncertainty on tion losses the actual impacts and on the potential · Increased use of renewable energy progress of research and development technologies (biomass, solar, wind, 38 The Road to 2050 - text.indd 38 04/21/2006 4:59:09 PM Sustainable Development for the 21stCentury run-of-the-river and large hydro- that can improve the efficient end-use power, and so on) of energy in the transportation, build- · Nuclear power. ings, and industry sectors, thus reduc- ing the demand for energy (Box 6.1). New efficient coal technologies and the Improved efficiency in energy use of- renovation and modernization of ex- fers one of the greatest opportunities isting inefficient thermal power plants to address energy security, price, and are by far the most important priorities environmental concerns. in the short to medium term, as coal will remain a primary energy source of Finally, only with accelerated R&D will many OECD and developing countries, new technologies move into the realm particularly China and India. While of commercial viability and adoption. widespread adoption of supercritical e level of investments in energy tech- coal technologies would substantially nology R&D in the public and private improve efficiency in many developing sectors is significantly less in real terms countries, it would not over the long than historically. Promising technolo- term solve the problem of carbon emis- gies include in the near term CCS and sions. e real savings could come from fuel cells, as well as end-use efficiency combining IGCC with CCS, where the options (zero-emission vehicles, for in- technology virtually eliminates carbon stance, and more efficient buildings), emissions into the atmosphere, mak- and over the long term hydrogen as an ing coal essentially a carbon-clean energy carrier and nuclear fusion. In- fuel. However, IGCC is still in its creased OECD public sector support early stages and therefore is expensive. for energy R&D that is predictable and With substantial effort and lower cost long-term is needed to overcome the manufacturing at scale, IGCC could technical challenges to commercial de- become commercially competitive in ployment of promising advanced clean 7­10 years. energy technologies. To complement low-carbon energy sup- Reducing carbon emissions must be ply technologies, there are numerous complemented by efforts to reduce technologies, practices, and policies emissions of the more radioactively po- Box 6.1 End-use technologies and practices · Transportation: E cient gasoline/diesel engines, urban planning, urban mass transport systems, modal shifts to inter- and intra-city rail and water transport · Buildings: Insulation, advanced windows, new lighting technology, e cient space cooling and heating, water heating, refrigeration, and other appliances · Industry: Cogeneration, waste heat recovery, pre-heating, new e cient process technologies, e cient motors/drives and improved control systems, incineration of waste gases · Municipalities/Urban Local Bodies: District heating systems, combined heat and power, e cient street lighting, e cient water pumping and sewage systems · Agricultural: E cient irrigation pumps, land management (such as a orestation, reforestation, reduced deforestation, and no-till agriculture). 39 The Road to 2050 - text.indd 39 04/21/2006 4:59:09 PM The Road to 2050 tent greenhouse gases such as HFC-23, · Establishment of credible legal and nitrous oxide, and methane. ese are regulatory frameworks that provide low-cost, high-impact investments, as the stability on rules and prices that these gases have a much greater impact will induce investments into finan- than CO2 per ton of gas. ese in turn cially viable products can be complemented by improved land · Development of enabling policy use, land-use change, and forestry (LU- environments through regulatory LUCF) activities. Afforestation, refor- interventions, such as appliance estation, improved land management, energy efficiency standards and la- and agroforestry provide a wide range beling policies, mandated utility de- of opportunities to increase carbon up- mand-side management programs, take. Slowing deforestation provides an- mandatory energy audits, industrial other opportunity to reduce emissions. energy efficiency norms, market ac- LULUCF activities have the potential cess for clean energy generators, to sequester up to 1­2 gigatons of car- carbon taxes bon per year over the next 50 years, · Creation of market-based approach- which is equivalent to 10­20 percent es, such as emissions trading, risk of projected fossil fuel emissions over mitigation instruments, and inno- the same period. e Kyoto Protocol vative clean energy and energy ef- limits the total credit that its ratifiers ficiency funds can claim from LULUCF activities, · Voluntary programs and education however, and only afforestation and and training. reforestation activities are eligible under the Clean Development Mechanism. Many of these policies feed back onto each other--for example, legal and in- Many energy-efficient technologies stitutional responses give rise to eco- have not been adopted on a wide scale nomic incentives that in turn will push because of poor pricing policies and an technological initiatives such as renew- incomplete legal and regulatory reform able energy and energy efficiency. Policy agenda. In addition, there are non-pric- targets for renewable energy that exist ing as well as pricing bottlenecks, such in 45 countries today are one example as transaction costs, insufficient infor- of how to accelerate the use of energy mation availability, and institutional technologies that do not emit GHGs. constraints. Significant restructuring of the energy system will require energy-sector re- ADAPTATION TO CLIMATE form, including: CHANGE · Removal of subsidies to reflect the true cost of energy supply Some further climate change is inevita- · Internalization of the costs of exter- ble, and ecosystems and human societ- nalities (such as local and regional ies will thus need to adapt to new condi- air pollution) through markets, tions. ese changes will expose people taxes, or subsidies to the adverse effects of climate change, 40 The Road to 2050 - text.indd 40 04/21/2006 4:59:09 PM Sustainable Development for the 21stCentury some of which may be countered with or can be developed at relatively low current coping systems while others cost. Given the probability of more ex- may need radically new behaviors. Cli- treme weather events, there is an urgent mate change needs to be factored into need to upscale emergency response national and sector-wide development mechanisms. plans. While its adverse consequences can be reduced by adaptation measures, Successful adaptation will require the they cannot be completely eliminated. efforts of many--from governments that should include adaptation in sec- Climate variability is already a major tor and national development planning impediment to reducing poverty and to communities that need to cope better will become increasingly so as the with changing conditions. Adaptation Earth's climate warms. Most of the steps activities range from economic measures needed to adapt to a future climate are such as insurance for extreme events to compatible with those necessary to re- capacity building for alternative crop duce vulnerabilities to current climates. cultivation and management of the im- Immediate attention is needed for small pacts of sea level rise, infrastructure and island states and low-lying coastal areas investment for water storage, ground- exposed to storms, but for most coun- water recharge, storm protection, flood tries the longer-term challenge is in the mitigation, shoreline stabilization, and key sectors related to agriculture and as- erosion control. sociated water resource management. Adaptation in developing countries is more difficult than in OECD countries INANCING AND because of increased exposure to climate FSOURCES NEEDS impacts, restricted human capital and technological capacities, and limited ac- cess to credit markets and international e incremental costs of mitigating markets. greenhouse gas emissions is estimated to range from less than $10 billion a Adaptation will require the transfer of year to over $200 billion (in 2005 dol- existing technologies, new technologies, lars), depending on the stabilization tar- and the revision of planning standards get, the pathway to stabilization, and the underlying development pathways and systems. Priority funding is needed of developing countries. e central to develop typologies of country cases estimate for stabilizing carbon dioxide to better understand options and costs; at 550 ppm, for instance, is about $60 to establish better planning and screen- billion per year. e reduction in pro- ing tools, especially for hydrological and jected GDP increases moderately when biological resource management; and to passing from a 750 ppm to a 550 ppm "climate proof" agriculture through a concentration stabilization level, with new generation of drought- and water- a much larger increase in passing from resistant seeds and breeds. Much of the 550 ppm to 450 ppm. e percentage technology and knowledge needed for reduction in global average GDP over adaptation is either currently available the next 100 years for stabilization at 41 The Road to 2050 - text.indd 41 04/21/2006 4:59:09 PM The Road to 2050 450 ppm is about 0.02­0.1 percent a produce a revenue stream to developing year, compared with projected annual countries consistent with their national average GDP growth rates of 2­3 per- sustainable development goals. cent. To deal with the scale of investment Developing countries are not expected needed in climate change, it is there- to bear the additional costs of a low- fore imperative that a long-term, stable, carbon economy because of the recog- and predictable regulatory system be nition of common yet differentiated established, based on a wide variety of responsibilities in the United Nations principles, common policies, energy Framework Convention on Climate efficiency improvement goals, and Change and because industrial coun- tries are responsible for most of the an- technology standards or targets. Ide- thropogenic GHGs currently in the at- ally a framework should be established mosphere. ere are only three sources that reaches out to 2050 to produce of funding for mitigating greenhouse market certainty, stimulate R&D, and gas emissions: voluntary actions, inter- allow time for appropriate policies to national grants, and trade. While all are be enacted. Even with an improved potentially important, trade is likely to regulatory environment and the use confer the biggest flow of funds--be- of policy and political risk mitigation tween $20 billion and $120 billion per instruments, the challenge of financing year. incremental costs and reducing technol- ogy risks will be significant. Financing Market mechanisms and incentives can significantly reduce the costs of miti- vehicles are needed that could blend gation. International project-based and grants with carbon finance and pro- emissions-rights trading mechanisms vide funds to collateralize clean energy allowed under the Kyoto Protocol, in technologies. combination with national and regional mechanisms, can reduce the costs of e overall annual costs to adapt to mitigation for OECD countries that projected climate change--that is, to have ratified the Kyoto Protocol. In climate-proof development--are likely addition, countries can reduce net to lie in the range of $10­40 billion a costs of emissions abatement by taxing year, of which about a third is associated emissions (or auctioning permits) and with public finance. Most of the ini- using the revenues to cut distortionary tial funding will come from the public taxes on labor and capital. Project-based sector, but this needs to be integrated carbon trading can facilitate the trans- in national development planning and fer of climate-friendly technologies and private investment plans. 42 The Road to 2050 - text.indd 42 04/21/2006 4:59:12 PM Response The SECTION 7 Bridging from Local to Global A ctions must be taken in this decade to lay the foundations that will carry us well into the middle of this century. Global and national policies, investment strategies, and new institutional relation- ships need to be developed. In today's interconnected world, the management of fragile ecosystems, transboundary water systems, communicable diseases, climate change, and scientific and techno- logical pathways and knowledge systems all warrant attention. Management of these systems will require cooperative action. And in today's mobile world, issues of demographic change, migration, and social conflict need to be addressed. is fact suggests greater attention to promoting the long-term development of human capital and stable, inclusive societies. We have argued that there are grounds for optimism when we take a 50-year view of the prospects for development. e optimistic vision of a wealthier, more equitable world is achievable, but we should 43 The Road to 2050 - text.indd 43 04/21/2006 4:59:17 PM The Road to 2050 not doubt the scale of the challenges low-income countries consists of crop- we face. is paper has emphasized five land and pasture. issues that will be critical in achieving this vision: We are learning how devolution of resource management to local com- · Sustaining natural wealth munities can boost profits from these · Improving governance resources. For agricultural land, the key · Achieving social development is clearly boosting yields while preserv- · Boosting agricultural productivity ing soil quality, as discussed later in and competitiveness this section. For commercial resources, · Managing climate risks such as minerals and energy, avoiding Many of these challenges are local, and the distorting effects of large resource local investments and institutional re- rents is vital--the solutions here span forms will suffice to deal with the is- macro policies and better governance sues. But there is a large and growing in the resource sectors. Transparency set of challenges that are truly global in in commercial natural resource man- nature. Dealing with these will require agement is particularly important in increased coordination at the global order to ensure that the benefits of re- level. This final section offers sum- source abundance are not hijacked by mary thoughts on the challenges we special interests. Water will need to be have highlighted and concludes with a managed as an economic good. We see discussion of some "issues without pass- living resources--forests and fish--in ports" that we foresee. decline in most of the developing world. Better governance and the rule of law are the linchpins in transforming natu- SUSTAINING NATURAL ral resource wealth into sustainable eco- WEALTH nomic development. Finally, the Millennium Ecosystem As- Better management of natural resources sessment concluded that the majority is a particular concern in the poorest of the environmental services provided countries. ese nations are the most by nature are in decline. In most cases highly dependent on natural resources these services are provided as "externali- as a source of income and wealth, and ties," where the provider of the service the policies and institutions dealing is distinct from the beneficiary. Under with these resource issues tend to be these circumstances it is possible to weakest in these countries. Two priori- ties stand out in low-income countries: make truly damaging development de- first, boosting the profitability of natu- cisions concerning natural resources. ral resources, since these can be a source ere is an urgent need to inventory of development finance; second, better and value environmental services as a management of the soil resource, since first step to designing interventions to fully two-thirds of the natural wealth of better protect them. 44 The Road to 2050 - text.indd 44 04/21/2006 4:59:17 PM Sustainable Development for the 21stCentury priority might be to support procure- THROUGH NCREASING IMPROVINGI GOVERNANCE ment reforms, stronger accountability TRANSPARENCY institutions in parliament, and freedom of the press; in others, it may be reforms in the judiciary, women's rights, and Partly because there is a higher com- customs and excise. fort level with technocratic "fixes," traditional themes such as public sec- Governance and corruption challenges tor management (including civil ser- are not the exclusive responsibility of vice reforms, codes of conduct, and developing countries, nor are public so on) continue to be given significant institutions the only culprits. e in- prominence in the aid community. By dustrial world must not only deliver on contrast, transparency has been an un- its aid and trade liberalization promises, deremphasized pillar of institutional it must also lead by example. OECD reforms. Even popular lore subscribes countries, which are lagging behind, to the importance of transparency in should ratify and effectively implement the old adage "sunlight is the best dis- the 2003 UN Convention against Cor- infectant." ruption and take concrete steps to repa- triate assets looted and stashed abroad Transparency reforms can span po- by corrupt officials. litical processes (publishing campaign contributions, or publishing votes and draft legislation), public procurement, enforcement of conflict-of-interest laws,SOCIALLY BALANCED and laws on access to information. Free- DEVELOPMENT dom of the media and transparency of public finances are also key. We have learned that for development to Of course, transparency reforms are not be sustainable it must be accompanied the only institutional reform priorities. by positive social change--it is not just International financial institutions and about economic growth. is requires donors can complement these reforms action at the local level to build more by continuing to support traditional accountable institutions, to invest in so- core competencies, helping with ca- cial capital, to include the marginalized pacity building, sharing knowledge, as empowered actors in the development and supporting focused reforms in key process, and to support societies that are institutions in developing economies, more cohesive. It is also clear that when such as in the judiciary, customs, and societies fail, when deep divisions and tax and procurement. ese targeted exclusion are not addressed, countries reforms supporting highly vulnerable erupt into violent conflict or the state institutions would, however, have to be gradually erodes. adapted to specific realities, and thus might vary considerably from country As has become painfully clear, the to country in their priority and in spe- problems of conflict-affected or frag- cific design. In some countries the first ile states do not respect borders. ey 45 The Road to 2050 - text.indd 45 04/21/2006 4:59:17 PM The Road to 2050 provide the breeding grounds for global safe, nutritious, and affordable food threats--from terrorism to the spread increases, the challenge to countries is of HIV/AIDS and other diseases. e to increase the productivity of limited international community spends vast agricultural land and water without amounts of resources trying to recon- harming the natural resource base, struct societies torn apart by violent including biodiversity. Achieving this conflict and to contain the spread of goal will take a concerted effort by the disease and terrorism. A more cost-ef- public, private, and civic sectors act- fective approach is surely to support so- ing at all levels of intervention. At the cial and development processes that can local level, we need to empower rural produce more cohesive societies, better farmers to organize and demand ser- able to peacefully manage social ten- vices and appropriate technology from sions and nurture more accountable and various sources. Farmers will need to effective institutions that do not provide work closely with other stakeholders a springboard for global threats. to develop new varieties and to adapt existing or create new technologies that Social accountability is about reform- meet their needs. ey will also need to ing political and institutional cultures, shift their production patterns to pre- changing mindsets, building citizen- serve the environment. ship, strengthening civil society capac- ity, and above all helping to construct a National and subnational governments new set of state-citizen relations. Both need to create an enabling environment supply and demand sides matter. Social where the private and civic sectors can accountability is about strengthening operate to meet the needs of both farm- bridging mechanisms. The demand ers and consumers. With an average for accountability by citizens must be 20-year delay on returns to research, matched not only by the willingness of governments and the private sector need the government and service providers, to support research systems now, so that but also by their ability to respond to they can reap the benefits in the future. civic demands. Finally, access to infor- Perhaps most important, the public sec- mation is vital. e quality and acces- tor needs to target investments carefully sibility of public information and data to complement private sector activities are key determinants in the success of at the national and international level. social accountability mechanisms. While the private sector invests in com- mercially viable technology, the public sector must focus on technology to meet the needs of the poorest, where BOOSTING AGRICULTURAL the profit margins are not guaranteed. PRODUCTIVITY AND International organizations such as the COMPETITIVENESS CGIAR will be central to generating the science, technology, and practices In the past, major investments in tech- that will form the future of sustainable nology and infrastructure averted a agriculture. Activities such as the Inter- global food crisis. But as demand for national Assessment of Agricultural Sci- 46 The Road to 2050 - text.indd 46 04/21/2006 4:59:18 PM Sustainable Development for the 21stCentury ence and Technology for Development Unfortunately, carbon-intensive energy can help build a consensus among the infrastructure and inefficient cities are stakeholders in agriculture as a basis for being rapidly built and expanded, set- future cooperation that will move the ting the capital stock for decades, while sector forward. new, cleaner, more efficient technologies remain underutilized. Decisions taken Agriculture still retains a central role in today on technologies and policy will the livelihoods of rural people, especial- have profound consequences on de- ly in Africa. Higher rates of growth in velopment paths for 40­60 years. In agricultural productivity are essential to addition to the need to transform the promote broad-based economic growth, energy sector, there needs to be a trans- reduce rural poverty, and conserve nat- formation in land management, with ural resources. Productivity growth, in policies, practices, and technologies turn, is based largely on the application that decrease net emissions of green- of science, technology, and information house gases. provided through national agricultural Many developing countries are not yet innovation systems embracing all the willing to commit to reducing their stakeholders who generate, share, im- greenhouse gas emissions because they port, and use agricultural knowledge fear it will adversely affect their ability and information. to gain access to cheap energy for devel- opment. Yet developing countries and poor people who live there are the most MANAGING CLIMATE RISKS vulnerable to climate change. Climate change threatens the quantity and qual- ity of water, agricultural production, Developing countries recognize that human health, human settlements, and they must accelerate access to affordable ecological systems throughout most of and reliable modern energy services in the tropics and subtropics. e chal- order to decrease poverty and increase lenges, therefore, are to ensure access to affordable, climate-friendly energy productivity, enhance competitiveness, for development and to reduce the vul- and improve their economic growth nerability of socioeconomic sectors and prospects. Transformational policies ecological systems to climate change. and strategies will be needed to meet national expectations of secure, safe, Because of the recognition of common and clean energy and to deal with the yet differentiated responsibilities in the implications of climate change. e United Nations Framework Conven- widespread commercialization of en- tion on Climate Change and because ergy efficiency technologies is an effec- industrial countries are responsible for tive strategy both to reduce local and most of the anthropogenic greenhouse regional air pollutants and to address gases currently in the atmosphere, de- climate change and energy security veloping countries are not expected to concerns without affecting economic bear the additional costs of a low-car- growth. bon economy. To deal with the scale of 47 The Road to 2050 - text.indd 47 04/21/2006 4:59:18 PM The Road to 2050 investment needed in climate change, e lessons learned from the crisis have it is imperative that a long-term, stable, led to better global systems, enforced by and predictable regulatory system be es- institutions such as the International tablished that encompasses the concept Monetary Fund and the Bank for In- of differentiated responsibilities and ternational Settlements, for tracking that promotes cost-effective reductions debt, increasing transparency, and in greenhouse gas emissions through strengthening regulation of financial an international trading system. De- institutions. pending on the specific obligations ne- gotiated, project-based carbon trading From the sustainable development per- could facilitate the transfer of climate- spective, we see a range of issues that are friendly technologies and produce a truly global, spanning: revenue stream of between $20 billion · Emergent infectious diseases of hu- and $120 billion per year to developing mans, plants, and animals, such as countries, consistent with their national avian influenza sustainable development goals. · Loss of biodiversity, which imposes global costs Addressing climate change will require · Damage to the ozone layer national energy sector reform, interna- · Global warming and climate tionally coordinated climate policies, change international collaboration on tech- · Failed states, exporting instability to nology development and diffusion, neighbors and the world. the establishment of new financing Local actions can be important in deal- mechanisms for both mitigation and ing with many of these issues, whether adaptation, and the integration of cli- it is adopting carbon-neutral energy mate concerns in sector and national technologies or eliminating substances economic planning. that harm the ozone layer. But the in- centives for taking these actions must lie in better systems for global coordina- ISSUES tion. For example, individual emitters WITHOUT ASSPORTS P -- THE NEED of carbon dioxide have no incentive to FOR GLOBAL ISSUES MANAGEMENT reduce emissions because most of the damage they do is remote in space and time. e solution to the problem lies e Asian financial crisis of 1997/98 in global agreements that provide the demonstrated in stark terms the risks incentives through regulatory or eco- of financial contagion in global capi- nomic instruments. One very successful tal markets. Unsound policies in indi- example of such a global scheme is the vidual countries led to financial crises Montreal Protocol on Substances at that quickly spilled over to neighbor- Deplete the Ozone Layer. ing countries, where it was feared that similar vulnerabilities existed. Financial It is increasingly apparent that these is- markets around the world felt the pain. sues interact. Some chemicals that dam- 48 The Road to 2050 - text.indd 48 04/21/2006 4:59:18 PM Sustainable Development for the 21stCentury age the ozone layer are highly effective in global finance and strengthening greenhouse gases as well. Global warm- institutions such as the Consultative ing and climate change will affect the Group on International Agricultural incidence of disease, as well as stressing Research are key steps in solving some local "hotspots" of biological diversity. of the most intractable problems of de- Failed states can harbor disease, frus- veloping countries. trating efforts at eradication. Better means to deploy knowledge is long and growing list of global is- and human ingenuity must surely be sues will require that the truly global in- part of the solution to the challenges stitutions--the United Nations system, highlighted in this paper. is will re- of which the World Bank is a part--step quire new thinking on the modalities up to meet the challenge. of international development assistance. e need for finance will not go away ere is also a growing need for the pro- in developing countries, at least not in vision of what might be termed "global the near term. But increasingly it will technological public goods." There be delivery of the "software" of devel- are problems such as tropical diseases opment--creating and sharing knowl- and the vulnerabilities of tropical ag- edge, building capable institutions that riculture that do not lead to profitable can use this knowledge--that will de- investment opportunities for the pri- fine the relationship between donors vate sector. Finances and the ability to and recipients. pay are limiting factors. Innovations 49 The Road to 2050 - text.indd 49 04/21/2006 4:59:18 PM The Road to 2050 - text.indd 50 04/21/2006 4:59:18 PM