The World Bank is making Waves at Rio+20

Published by MAC on 2012-04-18
Source: Bretton Woods Project update

Critics warn against "capitalising" of Nature

Nature on the market? The World Bank at Rio+20

Bretton Woods Project update

5 April 2012

The Bank will showcase new initiatives on oceans and the valuation of ecosystem services at the United Nations Conference on Sustainable Development, or Rio+20, in Brazil in late June, but is attracting criticism from civil society groups for its approach to ‘green growth'.

The ‘green economy' is one of the main themes of the conference. The term is often used interchangeably with green growth, one of the Mexican G20's priorities this year.

The Bank has been ramping up its research into green growth, and is due to release its flagship report on the subject before the conference. The Bank's submission to Rio+20 outlines green growth as "climate-resilient, water-smart, land-saving, energy efficient and reliant on diverse energy sources".

It "factors environmental considerations into government policies and business decisions, placing sustainable natural resource management - with its benefits flowing to people - at the heart of future development and growth." The Bank has also stressed that countries need to create a stable regulatory climate and incentive structure to stimulate private sector innovation in green investment and harness investment from financial markets. It has also continued to advocate for an increase in public-private partnerships.

This approach to green growth has drawn criticism from many environmental justice organisations. As Teresa Perez of Uruguay-based NGO the World Rainforest Movement observes:

"The World Bank through its policies has promoted widespread environmental destruction in the name of business and now is positioning itself as a leader in green growth. It comes as no surprise considering that green economy - as it stands - means nothing but creating new markets and opportunities for business to continue expanding its destructive activities such as mining, and industrial tree plantations, while 'compensating' for these destructive activities through 'conservation', turning rich ecosystems into commodities. Both the destructive as well as the new preservationist activities lead to local communities' dispossession of their territories."

Waves

In Rio the Bank will host an event documenting its programme on Wealth Accounting and Valuation of Ecosystem Services (WAVES), where it will propose an international programme of action on ecosystem accounting (see Update 73). WAVES is a partnership led by the Bank that includes the United Nations Environment Programme (UNEP), the United Nations Development Programme, developed country governments and large conservation NGOs.

It aims to develop a method of accounting that includes the economic value of natural resources and ecosystem services into a country's national accounts. The premise, which builds on the work done by UNEP's The Economics of Ecosystems and Biodiversity (TEEB), is that current measurements of economic performance, such as GDP, only account for gains in income from environmentally damaging activities, and do not account for the economic effects of the loss of natural resources or ecosystem services, such as freshwater supply or ecotourism.

The Bank is currently launching a series of pilot projects in developing countries. At the same time it has convened a technical experts committee to develop the methodology, with the long-term aim to provide finance ministries with the tools to use ecosystem accounting in policy analysis and development planning.

Aniol Esteban, environmental economist at UK-based think-tank, the New Economics Foundation, observes that: "The work that the World Bank has been doing over the past years on wealth accounting provides governments with more information and as such is a first step to better policy-making. Visualising the different forms of capital often strengthens the case for sustainable management of natural resources.

"However, it is important to recognise that not all forms of capital are substitutable; that not all ecosystem services can be properly described in monetary terms, and that there are environmental limits within which our economic activity needs to operate."

The committee's mandate also includes an assessment of whether the methodologies developed can be used for market mechanisms such as biodiversity offset schemes. Many civil society groups have pointed to the controversial environmental and social impacts of carbon finance projects, which have developed new markets for commodities derived from natural processes.

Critics fear that methodologies that price ecosystem services could be used to create similar markets for ‘natural capital', and in doing so create new social, environmental and economic risks.

Antonio Tricario of Italian NGO Campagna per la Riforma Della Banca Mondiale observes that: "The World Bank is always very good at anticipating governments in promoting new pilot and market-based mechanisms to address environmental problems. That is what happened before the Kyoto Protocol was signed and then we got ineffective and harmful carbon markets. Today, the Bank is laying the groundwork for the commodification and financialisation of ecosystem services. This won't help the environment or the poor, governments should stop it."

Saving our seas?

In February the Bank launched an initiative aimed at protecting the planets' oceans. The Global Partnership for Oceans is led by the Bank and includes UNEP, as well as governments from small-island states, major conservation NGOs and businesses, including fish restaurant market leader Darden restaurants. Participants are expected to coordinate and pioneer new approaches to overfishing, ocean habitat destruction, livelihoods and ecosystem services. World Bank president Robert Zoellick said he expected pooled investments to reach $1.2 billion in the next five years. The Bank will host an event at Rio+20 where it will showcase the partnership and release a report on oceans.

The forging of high-profile coalitions to address issues of global public goods has been a common fixture in Zoellick's term as president, but Sylvia Earle, oceanographer at the US scientific non-profit institution National Geographic Society, warns against the dangers of such an approach: "To get the World Bank to admit the oceans are in danger is encouraging. But we have to remember it is responsible for bad news as well as good - and is responsible for some of the most egregious mistakes of all time, with their investments in dams and catastrophic agriculture and aquaculture projects ... let's see how this alliance works before we start celebrating. I would like to see the UN ['s laws governing the seas] work more efficiently and effectively."

When discussing the initiative Zoellick emphasised creating the right market conditions for sustainable use of ocean resources, including governance, and the enforcement of rights-based fishing permits for local communities.

WAVES is also a central part of the partnership, with the aim of using natural capital accounting to ensure countries realise the economic benefits of ocean protection.

However, the partnership also controversially proposes that over two-thirds of the world's fish could come from aquaculture, or farmed fish. The partnership will also consider market-based mechanisms for ocean protection, potentially including credits generated by the protection of marine habitats that store carbon, like mangroves forests and sea grass beds.

"The key to the success of this partnership will be new market mechanisms that value natural capital and can attract private finance," said Abyd Karmali, global head of carbon markets at Merrill Lynch.

Ruth Davis, chief policy advisor at NGO Greenpeace UK warns against the integration of what is known as 'blue carbon' into carbon markets: "The essence of markets - including market-based approaches to environmental protection - is that they enable not simply valuation, but trading. Despite powerful evidence that biological carbon trading schemes have proven to be crude, inequitable and ineffective, it seems that the impulse to create new markets in 'oceans services' is hard to resist. We urgently need other more practical and rigorous ways to recognise the value of our oceans and the rights of the millions of people who depend on them."