A meeting on financial issues of Agenda 21 was convened in Kuala Lumpur, Malaysia on 2-4 February 1994 to prepare for this Working Group meeting. Jointly sponsored by the Governments of Malaysia and Japan, the meeting was attended by 57 experts in their personal capacities and was aimed at providing a forum for eminent persons from all over the world to exchange views on the financial dimension of the follow-up of UNCED.
The Kuala Lumpur meeting was organized as an informal open exchange of views and ideas organized around the specific issues of: the international policy environment and economic instruments conducive to mobilizing domestic and external financial resources to implement Agenda 21, including matters related to terms of trade, commodity prices and access to markets, various forms of debt relief, and the feasibility of international fees, taxes and gradeable permits; the national policy environment and economic instruments conducive to mobilizing domestic and external financial resources to implement Agenda 21, including economic and fiscal incentives and mechanisms, promotion of foreign direct investments, and new schemes for fundraising and voluntary contributions through other private channels, including non-governmental organizations. Two consultants' papers and several background papers were presented at the meeting. The meeting discussed bilateral and multilateral financing mechanisms including Overseas Development Assistance (ODA) and debt reduction and conversion; environmental taxes and subsidies; market-based financial instruments for CO2 abatement including tradeable permits; private sector financing mechanisms; financing issues related to the sectoral clusters to be reviewed by the CSD at its meeting in May 1994; and other financial mechanisms, including the Global Environment Facility (GEF); commodity prices and international commodity related environmental agreements (ICREAs); redirecting military expenditures to sustainable development; and transferable development rights and multilateral implementation of policy reforms.
The report of this meeting, containing specific proposals, was made available to the working group. Some proposals considered worthy of further consideration included: UNDP's Capacity 21 Programme; corporate environmental funds analogous to GEF; increased rent capture on natural resources, in particular timber; the establishment of national environmental funds; the application of emissions trading to pollutants other than CO2; the introduction of environmental stamps; the creation of a matching fund for sustainable development policy reforms; and taxing land values. In all cases, issues related to economic efficiency, cost-effectiveness, environmental impacts, equity (in particular, effects on the poor), administrative requirements, and sustainability must be considered.
The meeting asked the working group to pay particular attention to intensifying efforts to increase ODA and debt relief; increasing the contribution made by the international financial institutions (IFIs) to the financing of sustainable development; encouraging a multilateral process for the coordinated introduction of environmental taxes and the coordinated reduction of environmentally harmful subsidies; utilizing the potential of market-based financial mechanisms for environmental protection; and harnessing the financial contribution of the private sector, especially in cooperation with the public sector, to sustainable development.
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