[Senate Hearing 106-876]
[From the U.S. Government Publishing Office]
S. Hrg. 106-876
ENVIRONMENTAL PROTECTION IN AN ERA
OF DRAMATIC ECONOMIC GROWTH
IN LATIN AMERICA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON WESTERN HEMISPHERE,
PEACE CORPS, NARCOTICS AND TERRORISM
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
JULY 25, 2000
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
__________
U.S. GOVERNMENT PRINTING OFFICE
69-746 WASHINGTON : 2001
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri BARBARA BOXER, California
BILL FRIST, Tennessee ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
Stephen E. Biegun, Staff Director
Edwin K. Hall, Minority Staff Director
------
SUBCOMMITTEE ON WESTERN HEMISPHERE,
PEACE CORPS, NARCOTICS AND TERRORISM
LINCOLN D. CHAFEE, Rhode Island, Chairman
JESSE HELMS, North Carolina CHRISTOPHER J. DODD, Connecticut
RICHARD G. LUGAR, Indiana BARBARA BOXER, California
JOHN ASHCROFT, Missouri ROBERT G. TORRICELLI, New Jersey
(ii)
C O N T E N T S
----------
Page
DeWalt, Dr. Billie R., director, Center for Latin American
Studies; distinguished service professor of Public and
International Affairs and Latin American Studies, University of
Pittsburgh, Pittsburgh, PA..................................... 28
Prepared statement........................................... 31
Eichenberger, Joseph E., Director, Office of Multilateral
Development Banks, U.S. Department of the Treasury, Washington,
DC............................................................. 11
Prepared statement........................................... 14
Mr. Eichenberger's response to additional questions submitted
for the record............................................. 39
Leonard, Carl H., Acting Assistant Administrator, Bureau for
Latin America and the Caribbean, U.S. Agency for International
Development, Washington, DC.................................... 2
Prepared statement........................................... 6
Mr. Leonard's response to additional questions submitted for
the record................................................. 37
Watson, Hon. Alexander F., vice president and executive director
for International Conservation, The Nature Conservancy,
International Headquaters, Arlington, VA....................... 22
Prepared statement........................................... 24
The Nature Conservancy's response to additional questions
submitted for the record................................... 41
(iii)
ENVIRONMENTAL PROTECTION IN AN ERA
OF DRAMATIC ECONOMIC GROWTH
IN LATIN AMERICA
----------
TUESDAY, JULY 25, 2000
U.S. Senate,
Subcommittee on Western Hemisphere,
Peace Corps, Narcotics and Terrorism,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:35 a.m. in
room SD-419, Dirksen Senate Office Building, Hon. Lincoln D.
Chafee (chairman of the subcommittee) presiding.
Present: Senator Chafee.
Senator Chafee. The hearing will come to order. This
hearing of the Subcommittee on Western Hemisphere, Peace Corps,
Narcotics and Terrorism will focus on environmental protection
in an era of dramatic economic growth in Latin America.'' I
would like to welcome the witnesses, and thank them all very
much for appearing before us today.
As the title of the hearing says, we are witnessing changes
in South America and the Caribbean, particularly in the growth
of the middle class and in the slow emergence of democracy and
progress in many areas. I think it is appropriate to address
whether we are seeing the same sort of progress environmental
as well.
As protection, Mr. Leonard says in his testimony, the
countries in Latin America and the Caribbean have made some
progress in advancing the well-being of their citizens in the
past decade. This is great news. People are better educated and
healthier than ever before. Economic reforms have spurred more
growth, and democracy has been embraced in most countries. We
have recently seen good things happening in the Caribbean and
South America, and I think it behooves us to address how the
United States of America can help these nations in
environmental progress as well.
I am also the chairman of the Environment and Public Works
Subcommittee on the Superfund, and as I travel around and look
at the various Superfund sites in my home State of Rhode
Island--there are 14 in all, and I just went to my twelfth
visit yesterday--I am staggered by the cost of the cleanup of
these sites. I would note that much of the damage was done
legally, at a time when people did not know what to do with
some of these toxic wastes. Whether it is a landfill or a tire
dump, it was legal at the time.
Just think to yourself, helping to stop other countries
from making these enormously expensive mistakes is surely in
everybody's best interest, including the environment and the
pocketbook. I mentioned what is happening in Rhode Island, but
there are other examples such as the Hudson River and the Coeur
d'Alene Valley in Idaho. Given the massive price tag into the
billions of dollars--of the cleanup from the mine wastes that
have flowed through the Coeur d'Alene Valley into the lakes and
streambeds. I think that this is something Congress should look
into further.
The developing countries in the Caribbean and South America
are certainly a great test tube of developing countries. All
over the world, of course, countries are developing, Africa and
Asia for example. But here in our own Western Hemisphere, we
can monitor and help, achieve progress in countries, so close
to home.
Last, let me say that a few weeks ago the Senate voted on a
massive aid package to Colombia, most of which went to military
hardware. This should justify a pause as we look at trying to
help these countries. Is it always through arms? Is there a
better way in helping these countries, making friends,
promoting democracy and achieving progress? I would hope so,
and so we welcome the first panel, and Mr. Carl Leonard, who is
a long-time student of Latin America. I believe he first became
involved in 1971. I look forward to your testimony. Welcome.
STATEMENT OF CARL H. LEONARD, ACTING ASSISTANT ADMINISTRATOR,
BUREAU FOR LATIN AMERICA AND THE CARIBBEAN, U.S. AGENCY FOR
INTERNATIONAL DEVELOPMENT, WASHINGTON, DC
Mr. Leonard. Thank you very much, Mr. Chairman, for
inviting me to speak on environmental problems in Latin America
and the Caribbean [LAC], or LAC region.
I would like to emphasize three points. First,
environmental degradation in the LAC region is severe, and has
serious consequences for both the people of the region and the
United States. Second, USAID environmental programs are having
a positive and significant impact, but the dimensions of the
problem are well beyond the resources of the individual donor,
and third, poverty and environmental degradation are
interrelated and interdependent. Poverty is one of the major
forces driving environmental degradation, while sound natural
resource management is essential for reducing poverty and
ensuring future prosperity.
I request that my full written statement will be included
in the record.
Senator Chafee. Without objection.
Mr. Leonard. In the past decade, the countries of the
region have significantly advanced the well-being of their
citizens. People are better educated and healthier, economic
reforms have spurred more robust growth, and democracy is
embraced in most countries. We are encouraged by this progress,
but major challenges remain. Severe degradation of the region's
environment and natural resource base is one of the most
serious challenges. Most alarming, the degradation is
accelerating. The environmental services and resources upon
which economic prosperity, health, security, and stability
depend are being destroyed.
This environmental destruction cannot be viewed in
isolation. From my current perspective and from my experience
as USAID Mission Director in Costa Rica, Bolivia, and El
Salvador, I firmly believe that to safeguard progress and
advance prosperity sound environmental management must be a
high priority within the region's broader development agenda.
The LAC region is blessed with an extraordinarily rich
natural resource base. However, this fortune can mask the
severity of the environmental crisis. For example, LAC has half
of the world's tropical forest, but also one of the world's
highest rates of deforestation. The region lost more than 210
million acres of forest between 1980 and 1995. Brazil, the
country with the greatest amount of tropical forest in the
world, loses more than 1 percent annually, or an area four
times that of Rhode Island.
Of particular concern, countries with the least amount of
remaining forest have some of the highest deforestation rates.
At these rates, some countries will lose their remaining forest
within the next 10 to 20 years.
Similarly, the region is blessed with more fresh water per
capita than any other region of the world, but during the past
50 years it has suffered the greatest decline per capita. The
principal culprits are poor watershed management, misuse of
agricultural inputs, the overdrawing of aquifers, and the lack
of wastewater treatment.
The region's marine and coastal resources include the
second longest reef in the world, and extensive mangroves and
estuaries. These resources harbor globally important biological
diversity, support fisheries and tourism, buffer coastal
communities against storm damage, and are at the core of some
countries' economies.
However, siltation, pesticides, and wastewater are
smothering the region's reefs. Scientists categorize the
survival of two-thirds of the reefs as threatened or highly
threatened. Rapid urbanization, fueled in large part by
immigration from rural areas, is magnifying cities' already
severe environmental problems.
Conditions are particularly severe in shanty towns, where
almost half of city residents live, where the greatest growth
is taking place, and where raw sewage and solid waste are
dumped directly into the environment. More than 90 percent of
LAC's urban and industrial wastewater is released to the
environment untreated.
None of the numerous examples illustrates the impact of
resource mismanagement more clearly than Hurricane Mitch. To
describe Mitch as a natural disaster is a misnomer. Nature
provides the physical phenomena. People produce the
vulnerability through the resource use decisions we make. It is
the combination of the two that leads to disasters.
Mitch left more than 9,000 dead, 3 million people homeless,
and left $8 billion in direct damages. Experts attribute 70
percent of the damage to poor land use decisions. The message
is clear. Ignoring sound environmental practices imperils
development.
Environmental degradation in the LAC region directly
affects the United States. Some impacts are immediately
noticeable, for example, the 1998 fires in Mexico and Central
America that fouled the air of the southern United States. The
impacts of habitat degradation are less immediate, but
profound, including sharp reductions in populations of
migratory birds, an important green species.
Environmental degradation can also lead to human flight.
The 1999 report of the International Red Cross concluded that
the number of people displaced by environmental degradation
outstrips the number displaced by political unrest and war.
Environmental degradation contributes significantly to
immigration pressures.
The most severely affected by environmental degradation are
the poor, who live in the most vulnerable environments, often
squatting on marginalized areas, which maximizes their exposure
to disasters. The poor also lack access to clean water and
sanitation, and often are forced to meet their needs through
environmentally destructive practices such as the clearcutting
of steep slopes for firewood, and slash-and-burn agriculture.
Consequently, the poor are the greatest victims of
environmental degradation, but poverty is one of the most
significant forces driving that degradation.
Rapid population growth makes the challenge more difficult.
Although growth rates have dropped, population levels have not
yet stabilized. Meeting the needs of a growing population
places greater demands on the environment.
Recognizing that improved resource management is essential
to reduce poverty and foster prosperity, USAID follows four
principles in designing our environmental programs. First, we
develop and disseminate environmentally sound practices that
ensure economic returns competitive with or superior to current
wasteful practices.
Second, we engage and empower local communities and
individuals, for community action makes government more
responsive and individual ownership and tenure provide
motivation for stewardship.
Third, we increase public awareness about the consequences
of and alternatives to degradation, and fourth, we promote
policy reforms that direct market forces toward sustainable
use.
Our environment program in the region totals approximately
$65 million each year. I would like to summarize a few
examples. USAID supports sustainable tropical forest management
through policy reform, capacity building, introduction of
sustainable forestry practices, and business market
development. In Bolivia, the USAID program successfully
strengthened the technical capacity of community groups and
fostered partnerships with industry. The area of tropical
forest certified as well-managed has increased fifteenfold,
from 128,000 acres to 2 million acres. Exports of eco-certified
timber have increased from zero to nearly $8 million annually.
We are supporting similar programs in Brazil, Peru, Ecuador,
Honduras, and Guatemala.
In Honduras, USAID's land use and productivity enhancement
project, known as LUPE, improved hillside agricultural
practices. Approximately 38,000 hillside farm families adopted
environmentally sustainable cultivation practices. As a result,
soil erosion losses on steep slopes were reduced from 37 tons
per acre to less than half a ton, saving an estimated 5 million
tons of topsoil annually. Farmers increased their income by
more than 50 percent.
LUPE's effectiveness was vividly demonstrated during
Hurricane Mitch. Although soil erosion and landslides destroyed
many farms, adjacent LUPE sites withstood the ravages of the
storm. The LUPE approach has been adopted and spread by Central
American governments and donors in their commitment to ``build
back better'' after Mitch.
USAID is the leader in assisting LAC countries to conserve
and utilize their biological resources in a sustainable manner.
Our programs have improved protected areas management,
safeguarded key watersheds, strengthened local NGO's and
community groups, assisted indigenous communities to secure
land tenure, and provided environmentally sound economic
alternatives.
For example, the Parks in Peril program, our partnership
with the Nature Conservancy, local NGO's and municipalities,
builds local capacity to conserve biological diversity. The
program has improved protection at 37 park sites covering over
28 million acres.
Industrial pollution impairs human health and degrades
economically important ecosystems. We have demonstrated that
reducing pollution while enhancing business performance is a
win-win approach. Our pilot projects have introduced pollution
prevention technologies that reduce the consumption of water,
energy, and raw materials, and thus improve efficiency and
reduce costs.
Because the challenge is beyond the means of any one actor,
partnerships are essential. Accordingly, we build local
capacity and commitment so programs will continue and have the
opportunity to expand and engage the resources and creativity
of the host country.
Second, we develop models that others adopt. Practical,
simple, and culturally appropriate models have the best
opportunity for being disseminated.
Third, we form partnerships with NGO's, universities, and
other Federal agencies. These institutions are the source of
extensive technical expertise and commitment, which we
complement with our international development experience and
country knowledge.
Fourth, we encourage the ``greening'' of private
investment, for private investment in the region far exceeds
levels of donor assistance.
And fifth, we coordinate closely with the multilateral
development banks and other donors. USAID provides grant
resources that host countries and international financial
institutions frequently lack. We are doing the analyses and
pilot activities needed for the design of larger loan programs.
Coordination among donors can also encourage developing
countries to adopt the reforms necessary for sound development.
In conclusion, environmental degradation threatens
sustained social and economic progress in our hemisphere.
Environment remains the key element in our overall development
strategy. We will continue to implement and buildupon the
successful approaches outlined above to improve environmental
management, conserve biodiversity, alleviate poverty, and
ensure future prosperity.
Finally, we greatly appreciate the interest of this
subcommittee in an environment and development issues, and look
forward to working with you. Thank you for the opportunity to
present our views.
[The prepared statement of Mr. Leonard follows:]
Prepared Statement of Carl Leonard
I. OPENING
Thank you, Mr. Chairman, for inviting me to speak on environmental
problems in the Latin America and Caribbean (LAC) region. Many of these
problems are due to rapid economic and population growth, and
unsustainable land-use practices, as well as other stresses on the
environment. In addressing these issues, I would like to emphasize
three points:
1. First, environmental degradation in the LAC region is
severe and has serious consequences for both the people of the
region and the United States.
2. Second, environmental degradation cannot be addressed in
isolation of other development challenges. In particular the
resolutions to poverty and environmental degradation are
interrelated and interdependent--poverty is one of the major
forces driving environmental degradation, while sound natural
resource management is essential for reducing poverty and
ensuring prosperity within the region.
3. USAID programs to conserve natural resources and foster
their sustainable use are achieving positive results, but the
dimensions of the problem are well beyond the resources of any
individual donor.
II. INTRODUCTION
The countries of LAC have made significant progress in advancing
the well-being of their citizens in the past decade. People are better
educated and healthier than ever before, economic reforms have spurred
more robust growth, and democracy has been embraced in most countries.
We should be and are encouraged by this progress. Nevertheless, the
progress is fragile and major challenges remain.
Severe degradation of the region's environment and natural resource
base is one of the most serious challenges. Most alarming, the
degradation is accelerating. The environmental services and resources
upon which economic prosperity, health, security, and political
stability rest are being destroyed. But, this environmental destruction
cannot be viewed in isolation. Rather, it must be addressed in the
broader context of development challenges including issues of
governance, equity, and human and institutional capacities. From my
current perspective and from my experience as USAID Mission Director in
Costa Rica, Bolivia, and El Salvador, I firmly believe that to
safeguard progress and advance prosperity, sound environmental
management must be a high priority within the region's broader
development agenda.
It is the good fortune of the region to be blessed with an
extraordinarily rich natural resource base. But, this fortune can mask
the severity of the environmental crisis. I will first outline some of
the most significant problems to illustrate the extent of this crisis.
Then I will cite approaches USAID has found successful in helping to
address the region's environmental challenges.
III. EXAMPLES OF ENVIRONMENTAL DEGRADATION
Forests--LAC has half of the world's tropical forests, but also one
of the world's highest rates of deforestation. The region lost more
than 210 million acres of forest between 1980 and 1995. Brazil, the
country with the greatest amount of tropical forest in the world, loses
more than one percent annually, or an area four times that of Rhode
Island. Of particular concern, countries with the least amount of
remaining forests have the highest deforestation rates. For example, if
Jamaica, with only ten percent of its forest remaining, does not reduce
its deforestation rate, it will have no forests by 2010.
What is lost when forests are destroyed?--watershed protections,
soil stabilization, habitat for biodiversity, and employment
opportunities from forest industries and other businesses dependent on
forest services. Left behind frequently are fragile and easily degraded
lands. Conversion to agriculture is the principal cause of
deforestation, but paradoxically much of the cleared land is unsuitable
for sustained agricultural production. The chain of events is all too
common. Declining land fertility leads to declining yields, which
causes farmers to switch land to less productive uses such as pasture,
use more inputs such as chemical fertilizers, and eventually abandon
unproductive lands to move on to clear remaining forests.
Fresh Water--Besides forests, the LAC region is blessed with more
freshwater per capita than any other region of the world, but during
the past fifty years it is also the region that has suffered the
greatest decrease per capita. The principal culprits are poor watershed
management, misuse of agricultural inputs such as fertilizers and
pesticides, the overdrawing of aquifers, and the lack of wastewater
treatment. More than ninety percent of LAC's urban and industrial
wastewater is released to the environment untreated. The consequences
of water mismanagement include: severe health problems (e.g.,
waterborne diseases cause sixty percent of child mortality); reduced
hydroelectric potential; water shortages and increased costs for
industry, agriculture, and homes; reduced shipping capacity; and
extensive damage to freshwater, coastal, and marine ecosystems.
Marine Resources--The region's extensive marine and coastal
resources include the second longest reef in the world, and extensive
mangroves, sea grass beds, and estuaries. These resources harbor
globally important biological diversity, support fisheries and tourism,
buffer coastal communities against storm damage, and are at the core of
some countries' economies. The small island nations of the Caribbean
derive thirty-one percent of their GDP from a tourism industry based on
the beauty of their marine environments. Nevertheless, the region's
reefs are being smothered and poisoned by siltation, pesticides, and
wastewater. Scientists categorize the survival of two-thirds of the
reefs as threatened or highly threatened. Other marine and coastal
resources, such as mangrove forests are faring no better.
Production of Illegal Drugs--Production of illegal drugs create
significant environmental issues. The impact on the environment of coca
production and cocaine manufacturing in Bolivia has been well-
documented. Land clearing for coca alone caused a deforestation rate
estimated at 10,000 hectares/year. Cocaine processing also has an
environmental impacts. Lime and sulfuric acid, used in the manufacture
of cocaine base and discarded afterwards, modifies the pH of soil and
water. Kerosene, used as a leaching agent, diminishes the oxygenation
capacity of rivers, killing wildlife. During peak production times in
Bolivia, annual averages of 14 million liters of kerosene were dumped
into rivers.
Urban Environment--Rapid urbanization, fueled in large part by
immigration from rural areas, is magnifying cities' already severe
environmental problems. Urban environmental services are essentially
absent. The sewage of most households goes untreated, and refuse pick
up is sporadic, inadequate, or totally lacking. Conditions are
particularly bad in the shantytowns where almost half of city residents
live and where the greatest growth is taking place. The rapid expansion
of the ``informal'' (unregulated) sector of the economy, which employs
over sixty percent of the labor force, is adding to the solid waste and
wastewater problems. Unregulated textile, leather, metal processing
shops and other small manufacturing operations dispose of their
chemical and solid wastes in the most expeditious manner possible.
Disasters--None of the numerous examples illustrates the impact of
resource mismanagement more clearly than Hurricane Mitch. To describe
Mitch as a ``natural disaster'' is a misnomer. Nature provides the
physical phenomena, people produce the vulnerability through the
resource-use decisions we make. It is the combination of the two that
leads to disasters.
Hurricane Mitch was the most destructive disaster in the
Hemisphere's recorded history. Central America reported more than nine
thousand deaths, and three million left homeless. Total direct damage
reached $8 billion, including the destruction of social and economic
infrastructure such as transportation routes, villages, schools, and
crops. Such events threaten sustainable development, by destroying
years of development progress and investments and shifting development
priorities from long-term goals to meeting relief and reconstruction
needs.
The Central American Commission on Environment and Development
(CCAD) estimated that seventy percent of the damage from Hurricane
Mitch can be attributed to poor land use decisions. The message is
clear--ignoring sound environmental practices imperils development.
Impacts on the United States--Environmental degradation in the LAC
region directly affects the United States. Some impacts are immediately
noticeable, for example, the 1998 fires in Mexico and Central America
that fouled the air of the southern United States and reached as far as
New Jersey. The impacts of habitat degradation are less immediate but
profound. As examples, nearly two-thirds of the bird species found in
the United States are migratory and depend upon LAC habitats during
winter months, and many U.S. commercial marine species depend upon
coastal nurseries throughout the region. Loss of habitat in the LAC
region has been a significant cause for the sharp reduction we have
experienced in migratory birds and the population of important marine
species in our country.
Environmental degradation can also lead to human flight. The 1999
annual report of the International Committee of the Red Cross concluded
that the number of people displaced by environmental degradation far
outstrips the number displaced by complex disasters such as political
unrest, oppression, and war. When unsustainable practices exhaust
fisheries and land, when pollution diminishes the quality of life, and
when houses, schools, and clinics disappear in a disaster, people are
compelled to move. There is no doubt that environmental degradation
contributes significantly to the immigration pressures we experience.
Businesses in the U.S. also have long-term interests in the sound
maintenance of our neighbors' resource bases. U.S. timber, fishing,
tourism, and agricultural companies have made significant investments
that require sustainable resource management.
Finally, degradation in the LAC region affects the U.S's interest
in the global issues of biodiversity conservation and climate change.
Latin American and Caribbean countries have approximately half of the
world's biological diversity. The rapid measurable rate of habitat
destruction demands our attention. The region's emission of greenhouse
gases is substantial and rapidly increasing. A significant portion of
this is due to deforestation, but the expansion of industrial output
and growing demand for energy are major and growing contributors. If
environmental practices for land-use, and energy production and use are
not improved, the region's emission of greenhouse gases will
dramatically increase.
Poverty and Population--The most grievously affected by
environmental degradation are the people of the region, particularly
the poor who have no choice but to live in the most vulnerable and
degraded environments. It is the poor who depend most directly on
natural resources to meet their basic human needs, and have limited
access to safe and productive lands. It is the poor who are forced to
squat on marginalized areas, such as floodplains, which maximizes their
exposure to the next disaster. When disaster strikes, it is the poor
who lack a safety net. The poor also lack access to clean water and
sanitation facilities, and often are forced to meet their needs through
environmentally destructive practices such as clear cutting steep
slopes for firewood and slash-and-burn hillside agriculture.
Consequently, the poor are the greatest victims of environmental
degradation, but paradoxically it is poverty that is one of the most
significant forces driving degradation.
Although alleviating poverty is the principal development and
environmental challenge, rapid population growth makes the challenge
more difficult. We are encouraged that in recent years there has been a
marked decrease in growth rates, but population growth in the region
has not yet stabilized. Due to the large percentage of young people in
LAC countries (thirty-three percent are less than fifteen years of
age), the population will double in Latin America and the Caribbean in
the next thirty-nine years. In countries with the fastest growing
populations--Guatemala, Nicaragua, and Honduras--populations will
double in twenty-five years or less. As a point of comparison, it will
take one hundred-twenty years for the population in the United States
to double.
Meeting the needs of a growing population and increasing standards
of living to reduce poverty will place greater demands on the resources
and services the environment provides. Sustainable resource management
is, therefore, not simply essential to protecting the environment but
to reducing poverty and assuring future prosperity and security in the
region.
IV. USAID PROGRAMS
Recognizing the relationship between poverty and natural resource
management, USAID follows four basic principles in the design and
implementation of our environment programs in LAC:
1. USAID develops and disseminates environmentally sound
practices that ensure economic returns competitive with or
superior to current wasteful practices, for it is essential
that people have sound resource-use alternatives available to
meet their needs;
2. USAID engages and empowers local communities and
individuals, for community action and decentralization make
government responsive to the needs of the people; and
individual ownership and tenure provide motivation for
stewardship;
3. USAID increases public awareness about the consequences of
and alternatives to degradation, for sound environmental
management requires a broad constituency; and
4. USAID promotes policy reforms that direct market forces
toward sustainable use, for without the proper incentives the
development and dissemination of best practices will be of
limited utility.
Our environment program in LAC totals approximately $65 million
each year. I would like to provide you with a few examples employing
the above principles.
Sustainable Forestry--USAID supports sustainable tropical forest
management through policy reform, capacity building, introduction of
improved technical practices, and business/market development. In
Bolivia, USAID helped develop a comprehensive forestry law that: (a)
ensures greater accountability and transparency in awarding
concessions, (b) establishes high technical standards for management,
(c) establishes appropriate market pricing that provides incentives for
sustainable management, and (d) provides a framework for local
communities and indigenous groups to obtain legal rights to forest
resources. The program successfully refines and demonstrates best
management practices, strengthens the technical and management capacity
of community and indigenous groups, and fosters partnerships with
industry to access international markets for sustainably produced
forest products.
Through the program, the area of tropical forests certified as well
managed by such groups as the Forest Stewardship Council has increased
fifteen-fold from 128,000 acres to two million acres--the most in the
LAC region--and exports of eco-certified timber have increased from
zero to nearly $8 million annually. By 2004 we expect that six million
acres of forests will be certified and exports of certified products
will surpass $20 million annually. USAID is implementing similar
programs in Brazil, Peru, Ecuador, Honduras, and Guatemala.
Hillside Agriculture--In Honduras, USAID's Land Use and
Productivity Enhancement project (LUPE) promoted improved hillside
agriculture practices that increase agricultural production with
improved management of natural resources. LUPE also assisted farmers
with crop diversification and marketing, especially of high value
vegetables. Environmental education was carried out in rural elementary
schools to enhance environmental awareness, and municipalities were
strengthened in small watershed management. As a result of the program,
approximately thirty-eight thousand hillside farm families in southern
and central Honduras adopted environmentally sustainable cultivation
practices. Soil conservation practices reduced soil erosion losses on
steep slopes from thirty-seven tons per acre to less than half a ton
per acre, saving an estimated five million tons of topsoil annually
from LUPE sites; and in the process farmers increased their income by
more than fifty percent.
The effectiveness of LUPE's conservation practices was vividly
demonstrated during Hurricane Mitch. Although many farms were destroyed
by soil erosion and landslides, adjacent LUPE sites withstood the
ravages of the storm. Central American governments and international
donors; in their commitment to ``build back better'' after Mitch, are
replicating LUPE models that protect the environment, address poverty,
and reduce downstream vulnerability of people and economic investments
to natural disasters. USAID has similar successful hillside agriculture
programs in several other Caribbean and Central America countries.
Biological Diversity--USAID is a leader in assisting LAC countries
to conserve and utilize their biological resources in a sustainable
manner. Our programs have improved protected areas management,
safeguarded key watersheds that provide drinking water for urban
populations, strengthened local NGOs and community groups, assisted
indigenous communities in securing land tenure rights, and provided
environmentally-friendly economic alternatives for local people. For
example, the Parks in Peril program--a partnership among USAID, The
Nature Conservancy, local NGOs and local governments--builds local
capacity to conserve biological diversity in protected areas throughout
Latin America and the Caribbean. During the past ten years, the program
has improved protection at thirty-seven park sites covering over
twenty-eight million acres containing globally significant
biodiversity. So far twenty parks have been transformed into fully-
functioning protected areas that require minimal donor assistance.
Equally significant, USAID has assisted twenty-seven local conservation
NGOs to become self-sufficient organizations with effective voices in
their countries for sound environmental management.
Environment Endowments--USAID has been a global leader in
establishing and strengthening locally-managed environmental
endowments. These endowments provide long-term sustainable financing to
fund the proposals of local environment NGOs and community groups.
USAID has strengthened and served on the Board of The Enterprise for
the Americas Initiative's (EAI's) seven environmental trust funds (in
Argentina, Bolivia, Chile, Colombia, El Salvador, Jamaica and Uruguay),
totaling over $175 million. USAID also led the creation and
capitalization of additional environmental trust funds in Ecuador,
Guatemala, Honduras, Jamaica, Mexico, and Panama and has leveraged
$42.8 million to support these endowments.
Industrial Pollution Prevention--Industrial pollution impairs human
health, degrades economically important ecosystems, and decreases the
competitiveness of LAC businesses in a global economy. USAID supports
pollution prevention and cleaner production activities in seven LAC
countries. These help to: (a) increase awareness of the economic and
social benefits of cleaner production, (b) develop regulatory
frameworks that favor pollution prevention over end-of-pipe pollution
control, (c) build local capacity for advancing cleaner production, and
(d) increase available investment capital by educating lenders about
the financial soundness of the pollution-prevention approach.
In our programs we have clearly demonstrated that pollution-
prevention practices are a win/win approach--reducing pollution while
enhancing business performance. Pollution is often the result of not
efficiently using and recycling resources. Pollution-prevention
technologies can reduce the consumption of water, energy, and raw
materials--improving production efficiency and reducing business costs.
In Bolivia for example, eleven plants invested $131,000 in pollution
prevention and generated annual savings of nearly $228,000, a seven
month payback on investment. In the process they reduced the amount of
pollution they produced by seventy percent. In Ecuador, sixteen plants
invested approximately $4 million and generated annual savings of more
than $5 million, a ten month payback on investment.
Water Management--LAC governments are increasingly decentralizing
the provision of water supply and sanitation as part of broader
reforms. USAID has taken the lead in developing low-cost, low-
maintenance water supply and sanitation models for small municipalities
in Central America and the Dominican Republic. In El Salvador, USAID
has helped protect watersheds to increase water supplies, reduce
surface and groundwater contamination, decentralize potable water
authorities, and create sustainable local water groups. USAID's
approach to providing rural water and sanitation services has strongly
influenced the Inter-American Development Bank (IDB) water sector loans
in El Salvador and the Dominican Republic. During the past two years in
El Salvador, nine municipalities have developed water-resource
management plans, twelve municipalities have implemented potable water
systems, sixteen have constructed or rehabilitated water systems, five
hundred households have adopted improved wastewater management, and
soil conservation practices and tree planting have stabilized nearly 12
thousand acres of land.
Urban Development--LAC is marked by a concentration of political
power, economic wealth, and opportunity in capitals and the largest
cities. USAID programs have focused on promoting decentralization of
political, administrative, and fiscal authority to local municipalities
so that local people have the authority and resources to address their
needs, including environmental services. USAID's efforts at increasing
the availability of financing for urban infrastructure provide an
example of the success of our approach. In 1993, the Municipal
Infrastructure Finance Program was launched by USAID in partnership
with the Central American Bank for Economic Integration (CABEI),
establishing a $26 million credit fund. The program started in
Guatemala and Costa Rica as a pilot. In 1999, the success of the
program attracted an additional $50 million in funding from Taiwan and
Germany, and was extended to El Salvador, Honduras and Nicaragua: CABEI
lends to public and private financial institutions, which in turn lend
to municipalities to finance infrastructure projects such as potable-
water and sewage systems, and solid-waste management. By the beginning
of this year the program had financed three hundred sixty-four
projects, benefiting over one million households.
V. PARTNERSHIP WITH OTHERS
The previous examples illustrate USAID's partnerships with other
donors, host country institutions, the private sector; NGOs,
communities, and other USG agencies. These partnerships are essential.
Our programs are successful, but the problems are beyond the resources
of any individual organization. Consequently, USAID's strategic
planning focuses on engaging the interest and resources of others,
providing guidance and leadership, and supporting innovations of
others. Collaboration is so important to overall success in promoting
sustainable development, that I would like to outline the basic
components of our approach.
1. Build local capacity and commitment--Without local
capacity the end of donor funding is the end of that activity.
With it, not only does the program continue but also has the
opportunity to expand and spread as it engages the resources
and energies, and creativity of the host country and people.
2. Develop models that can be adopted by others--Practical,
simple, and culturally appropriate models have the best
opportunity for being disseminated and adopted on their own
merit with minimal or no further external resources.
3. Form partnerships with NGOs, Universities, and other
Federal Agencies--These institutions are the source of
extensive technical expertise and commitment, which are
complemented by USAID international development experience.
USAID provides guidance based on our years of development
experience, our in-country knowledge, and the framework of U.S.
foreign-policy interests to create effective partnerships with
U.S. entities for advancing our country's development
assistance goals.
4. Encourage the ``greening'' of private investment--Private
investment in the region far outstrips donor assistance. It is
essential that these investments be environmentally
sustainable. USAID helps countries develop capacity for
evaluating investment proposals, and assists in developing and
promoting environmentally improved modifications and
alternatives.
5. Cooperate with other bi-lateral donors and the
Multilateral Development Banks--USAID's in-country presence and
knowledge places us in a position to contribute to close donor
coordination. USAID has been successful in providing the up
front grant resources that host countries and International
Financial Institutions (IFIs) frequently do not have for doing
the analyses and pilot activities needed for the design of
large loan programs. Developing a consensus among donors can
also be essential in encouraging developing countries to make
tough decisions and reforms necessary for sound development.
VI. CONCLUSIONS
In conclusion environmental degradation threatens sustained social
and economic progress in the region, including aspirations in the
region for a better life.
We will continue to maintain environment as a key element in our
development strategy, and will continue to implement and build upon the
approaches outline above. To make the most of limited resources and in
recognition of the inter-sectoral aspects of environment and its
relationship to poverty, we will continue to integrate environment
goals into our economic, health, education, and democracy, programs.
Finally, we greatly appreciate this subcommittee's interest in
environment and development issues and thank you for the opportunity to
present our views.
Senator Chafee. Thank you, Mr. Leonard, very much, for your
experience and words.
Mr. Joseph Eichenberger is the Director of the Office of
Multilateral Development Banks, and is a long-time expert in
economic affairs in Latin America. Welcome, Mr. Eichenberger.
STATEMENT OF JOSEPH E. EICHENBERGER, DIRECTOR, OFFICE OF
MULTILATERAL DEVELOPMENT BANKS, U.S. DEPARTMENT OF THE
TREASURY, WASHINGTON, DC
Mr. Eichenberger. Thank you, Mr. Chairman. On behalf of the
Treasury Department I greatly appreciate the opportunity to
discuss the role of the Multilateral Development Banks (MDB) in
addressing environmental degradation in Latin America.
I also want to take this opportunity to express our sincere
thanks to you, Mr. Chairman, for your active support and
leadership with respect to two Treasury programs of particular
significance in dealing more effectively with major
environmental challenges. Those programs are the Global
Environment Facility and the Tropical Forest Conservation Act.
Both are enormously important programs and both have benefited
greatly from your active interest and close engagement.
These institutions, the World Bank, the Inter-American
Development Bank and the Global Environment Facility, are
making important contributions, both directly and indirectly,
to efforts to deal more effectively with such key challenges as
air and water pollution, biodiversity conservation, forestry
preservation and land degradation.
Directly, the institutions are major lenders for
environmental purposes in Latin America, together providing
over $1.6 billion in loans and grants in 1999 alone.
Indirectly, each is working to promote the policy and
institutional reforms needed to create a foundation for
environmentally sound growth over the long-term.
The Treasury Department has been actively engaged for more
than a decade in helping to shape MDB policy and project
decisions related to these environmental challenges. We have
benefited greatly in these efforts from the keen ongoing
interest of Congress and civil society groups of all kind.
I also want to acknowledge USAID's expertise on
environmental issues and the very helpful collaboration it has
had with both us and the MDB's on the full range of
environmental issues.
I believe it is fair to say that these shared efforts have
produced major progress, and that the environmental efforts
within the banks have been advanced substantially.
But it is also fair to say that there have been
disappointments. There is clearly still a great deal of work to
be done, and continued strong U.S. leadership will be
essential.
My colleague, Carl Leonard, has spoken directly, and I
think effectively, about the key environmental challenges in
Latin America. I request that my complete written statement be
placed in the record and I would like to focus my oral remarks
more specifically on MDB efforts to address these challenges
and on our priorities, U.S. priorities, for the MDB's going
forward.
There is no question that the MDB's need to play a
significant role in helping Latin America deal effectively with
its urgent environmental challenges. Over the past decade, we
have worked hard to ensure that the institutions take fully
into consideration the direct impact of their projects on the
environment. We have also given high priority to their
important indirect role in helping strengthen indigenous
institutions and the basic policies that are indispensable to
achieving both environmentally sustainable development and
enduring poverty alleviation.
Last year, the World Bank, the Inter-American Bank [IDB]
and the Global Environment Facility [GEF] provided close to $4
billion in loans, grants and technical assistance for
environmental efforts worldwide. For Latin America, the IDB
provided just under $900 million for these purposes, the World
Bank, about $450 million; and the GEF about $270 million, which
includes some co-financing.
Most of the IDB and World Bank loans have been geared to
address urban environment problems, to improve the supply of
clean water and to promote pollution control. They have also
provided technical assistance in such important areas as
strengthening institutions, coastal resources management,
watershed management, and natural resources conservation.
My full written submission identifies a number of specific
projects that might be of particular interest to the
subcommittee. These projects, and many others, I think, reflect
the MDBs' efforts to find innovative approaches to
environmental challenges, including by forming public/private
sector partnerships. We have encouraged such work by the MDB's
and we will continue to do so in the future.
I would like to spend a moment on the Global Environment
Facility, which is the primary international funding mechanism
to address global environmental challenges.
Since 1991, the GEF has provided close to $570 million in
grants for operations in Latin America, leveraging an
additional $1.3 billion in co-financing for such projects as,
most recently, demonstrating economically viable renewable fuel
technologies in Brazil in cooperation with General Electric,
and a multi-country effort to reduce pesticide runoff into the
Caribbean by improving management practices.
In these and other areas, the GEF seeks to maximize its
impact by focusing on innovative solutions to cross-border
problems and by collaborating closely with other institutions,
such as the World Bank, to multiply the effect of its limited
resources.
The formula is working. In 1999, for example, every dollar
provided by the United States leveraged approximately ten
additional dollars from other donors, including recipient
governments and the private sector. What was a pilot program
just a few years ago has established a growing record of
results and has garnered growing support for its efforts. And
again, we greatly appreciate the strong support you, in
particular, have given to the GEF, Mr. Chairman.
Yet, the GEF's ability to achieve its mission is being
severely limited by the financial constraints arising largely
from our inability to deliver on U.S. financial commitments.
U.S. arrears to the GEF now total $204 million, and they will
expand further if the funding levels contained in the current
appropriation bills for fiscal year 2001 are maintained. The
impact of U.S. arrears is further magnified by the fact that
other countries are holding back their contributions until we
deliver on ours.
The bottom line, Mr. Chairman, is that the GEF may find
itself unable to make any new operational commitments beyond
the fourth quarter of this year in the absence of some
significant new U.S. funding.
With respect to the MDB's--the World Bank and the Inter-
American Bank--our efforts to promote environmental soundness
have focused on several key areas. First, integrating
environmental considerations thoroughly into project design.
Second, increasing the amount of financing for environmentally
beneficial projects. Third, implementing stronger environmental
policies fully and strengthening them where that is needed.
Finally, ensuring greater transparency and effective civil
society participation in bank operations.
We have achieved much at the World Bank. Operational
requirements for environmental analysis are now widely
considered to be among the strongest of their kind. Public
consultations are mandatory in most cases. The Bank has an
information policy based on a presumption of disclosure.
There is a centralized unit at the bank for environment and
sustainable development, as well as specialized staff located
throughout the operational units. And in the private sector
area, the Bank's investment insurance arm, Multilateral
Investment Guarantee Agency [MIGA], has formally adopted new
environmental and disclosure policies.
At the IDB, I would note, in particular, a series of
specific policies on water resource management, coastal
management, forestry and agriculture. The IDB, as has the World
Bank, has created an independent Inspection Panel to give a
voice to local people who feel that their interests have been
adversely effected by IDB projects. There is a greater
operational emphasis on energy efficiency. Environmental units
now exist throughout the organization's regional and operations
departments. Most recently the IDB has pursued what we think is
an exemplary process for consulting with civil society as it
develops a new energy policy.
I think the record is one of progress in the organizations,
but there is no question that more remains to be done. Both
institutions need to make further progress in integrating
environment more thoroughly into their operations. Information
disclosure policies and the Inspection Panels in these
institutions are being reviewed for further improvements. We
expect to be fully engaged in this exercise to achieve those
improvements.
Consistent implementation of the various safeguard policies
and enforcement of bank procedures are a key U.S. concern. The
banks are aware that they need to do more to make this a
reality.
I would point out, Mr. Chairman, that the G-7 finance
ministers, as part of the Okinawa economic summit, recently
agreed to a slate of MDB reforms which I think constitutes a
very substantial agenda for further progress. Among these is
agreement that the MDB's need to focus more resources on the
provision of global public goods, including global
environmental goods. I would be happy to share that reform
agenda with you if you are interested.
In conclusion, Mr. Chairman, the Treasury Department is
absolutely committed that U.S. support for the MDB's helps to
protect the environment and the natural resources in Latin
America and the Caribbean and beyond. We have a clear strategic
interest in helping our neighbors in the hemisphere achieve
growth that also protects the environment. And we believe that
we have a unique opportunity to do so through institutions that
we have helped shape for as much as 50 years. I would be
pleased to answer any questions that you have. Thank you.
[The prepared statement of Mr. Eichenberger follows:]
Prepared Statement of Joseph E. Eichenberger
Mr. Chairman, Ranking Member Dodd, and distinguished Members of the
Subcommittee.
Thank you for the opportunity to discuss the important role of the
multilateral development banks (MDBs) in addressing environmental
degradation in Latin America. The Inter-American Development Bank, the
World Bank, and the Global Environment Facility are playing a key role,
both directly and indirectly, in the region to address such issues as:
air and water pollution, biodiversity conservation, forestry
preservation, ozone depletion, and land degradation. Directly, the
institutions are major lenders for environmental purposes, together
financing over $1.6 billion in Latin American in FY 1999. Indirectly,
all are involved in promoting the policy and institutional reforms. The
World Bank has rightly said, ``. . . lasting poverty reduction is only
possible if the environment is able to provide the services people
depend on and if natural resource use does not undermine long-term
development.'' We can all agree on that common sense principle.
The Treasury Department is actively engaged in MDB policy and
project decisions related to environment and we have been successful in
promoting a stronger environmental agenda within the banks. We have
benefited greatly in these efforts from the keen on-going interest of
Congress and civil society groups. I also want to acknowledge USAID's
expertise on environmental issues and the very helpful collaboration it
has had with us and the MDBs on a wide range of issues. But that said,
there is clearly still a great deal of work to be done, and continued
strong U.S. leadership will be essential. Today, I will focus my
remarks on three main topics:
I. The key environmental challenges in Latin America;
II. MDB efforts to address these challenges; and
III. U.S. priorities for the MDBs going forward.
I. KEY ENVIRONMENTAL CHALLENGES IN LATIN AMERICA
In Latin America, as elsewhere, natural resources have
traditionally been viewed as a basis for revenue generation and
economic growth, with important sustainability issues typically
relegated to secondary status. Over time, this has led to over
exploitation of the natural resource base upon which many of these
economies depend. Fortunately, the view in the region is changing, as
democracy has taken stronger hold, and as the basic economic logic of
conservation and sustainable development has become better understood.
Meeting an increasing demand for energy is one of the biggest
environmental issues faced by Latin American today--be it through the
use of forests as a fuel source or emissions from power generators,
rural and urban areas suffer the associated environmental impacts of
energy production and usage. Urban air pollution remains a key human
health and environment issue, as does water pollution in densely
populated areas. Much of the region's biodiversity resources are under
threat from forest loss, soil depletion, water pollution, fisheries
exploitation, land degradation from poor agricultural practices,
unsustainable forestry practices, and overgrazing. The use of
persistent organic pollutants (e.g., DDT), with their insidious
impacts, is also another major challenge for the region.
The reasons for these problems are multiple and complex. Lack of
institutional capacity has long been a constraint to implementing
environmental policies and programs, and to managing the environmental
implications of growth and development. In many cases, government
policies in areas such as land use and energy pricing have directly
encouraged activities that are contrary to sound, long-term resource
management. Latin America's welcome efforts to build market-based
economies have in some important respects outpaced its efforts to build
capacity to regulate and monitor natural resource use and enforce
environmental laws. Poverty itself can be directly responsible for
unsustainable resources use, leading to a vicious cycle of need and
overexploitation.
II. MDB EFFORTS TO ADDRESS ENVIRONMENTAL CHALLENGES
We believe the MDBs need to play a significant and multifaceted
role in helping Latin America deal effectively with these urgent
environmental challenges. Over the past decade, we have worked hard to
ensure that the MDBs take fully into consideration the direct impact of
their projects on the environment. We have also given considerable
emphasis to the important role of the MDBs in helping strengthen
institutions across the region responsible for implementing and
developing sound environmental policies for sustainable development and
poverty alleviation.
With substantial leadership from the U.S., the Inter-American
Development Bank, the World Bank, and the Global Environment Facility
have dedicated significant amounts of resources to environmental
protection. Globally, in 1999, these MDBs have provided close to $4
billion for environmental efforts. For the region, the figures are also
impressive. Despite the appropriate priority given to managing the
financial crisis, in 1999 the IDB approved $894 million in loans for
environment and natural resources, or 9 percent of the Bank's overall
lending total. FY 1999 World Bank lending in the region for environment
totaled approximately $458 million.
Both institutions have used loans, grants, and technical assistance
to build diverse environmental portfolios in the Latin American and
Caribbean region, with some very innovative projects. Most of the IDB
and World Bank environmental loans in the region have been geared to
address urban environment problems, improve the drinking water supply,
and pollution control. They also provide technical cooperation to
countries, in such areas as pollution control, institutional
strengthening, coastal resources management, watershed management, and
natural resources conservation.
To highlight several projects in particular:
The IDB's Multilateral Investment Fund (MIF) and the Nature
Conservancy co-sponsored the EcoEmpresas Fund to invest risk
capital in NGOs, microenterprises, and small businesses that
work to preserve the environment while making a profit. The IDB
received a special recognition award from the Nature
Conservancy for its work on this project.
The IDB's Inter-American Investment Corporation (IIC) and a
U.S.-owned environmental service provider have formed a
strategic partnership to handle industrial waste and harness
the recovered energy resources from waste material.
The IDB is also supporting the Coastal Resources Management
program in Ecuador with the assistance of the University of
Rhode Island Coastal Resources Center.
A World Bank Clear Air Initiative in Latin America will
bring together city managers, development agencies, leaders
from public sectors, and NGOs to address air quality problems
in large metropolitan areas. This three-year program covers
issues of environment, urban, transport, health, energy,
industrial pollution, and global emissions, as they relate to
the quality of the air in the cities of the most urbanized
region of the developing world.
The Meso-American Biological Corridor is a multidonor
initiative which includes the World Bank and GEF investments in
Belize, Costa Rica, El Salvador, Honduras, Mexico, Nicaragua,
and Panama. This initiative is helping to protect the
countries' terrestrial and marine ecosystems through a variety
of projects, including by training indigenous peoples in
natural resource management.
In Mexico, the World Bank supported a project to test
whether small- and medium-sized enterprises can successfully
adopt environmental management systems. The project enlisted
the private sector, local academic institutions, and the
Mexican Government.
These projects, and many similar projects reflect the MDBs' efforts
to find innovative approaches to environmental challenges, including by
forming public-private sector partnerships. We have encouraged such
work by the MDBs as a concrete application of their particular assets
and capabilities.
Global Environment Facility
The Global Environment Facility (GEF) has emerged as the principal
international funding mechanism to address global environmental
challenges (e.g., international waters, biodiversity, ozone depletion,
and climate change) facing developing countries and nations
transitioning to market economies. Since its creation in 1991, the GEF
has provided close to $570 million directly in grants for operations in
Latin America, which has leveraged $1.3 billion in cofinancing.
The GEF financed $270 million, including co-financing, for Latin
American projects in FY 1999. In 1999, every dollar provided by the
U.S. has leveraged approximately $10 from recipient governments, other
bilateral donors, the private sector, and other multilateral
institutions.
Examples of GEF Projects in Latin America include:
Renewable fuel technology is being developed in Brazil. The
GEF has worked with the Brazilian Government, General Electric,
and private Brazilian companies to develop and demonstrate
generating technology that uses wood chips from plantation
forests for fuel.
GEF is working with Colombia, Costa Rica, Panama, and
Nicaragua to reduce pesticide runoff to the Caribbean Sea by
developing and implementing management practices and national
regulatory systems to control the use of pesticides and promote
the use of alternative pest control systems.
In Argentina, GEF is financing work with fisherman and tour
guides off the Patagonian coast to develop a plan enabling
profitable fishing while protecting endangered whales, elephant
seals, and penguins.
The GEF seeks to maximize its efficiency and impact by
collaborating closely with other institutions, including the World
Bank. In FY00, for example, joint World Bank-GEF projects equal to $264
million were approved. In response to a new GEF policy supported by the
United States, the regional development banks are preparing to
implement GEF projects. The IDB has already proposed its involvement in
two projects, a coastal zone management program in Jamaica and a
technical assistance project in the Gulf of Honduras.
However, the GEF's ability to achieve its mission is being severely
limited by financial constraints arising largely from the U.S.
inability to deliver on our financial commitments. U.S. arrears to the
GEF now total $204.2 million, and will expand further if the low
funding levels contained in the current Foreign Operations
Appropriations bills for FY01 are maintained. The impact of U.S.
arrears is further magnified by the fact that other countries are
holding back their contributions until the U.S. makes a substantial
contribution. The bottom line is that the GEF may find itself unable to
make any new operational commitments beyond the fourth quarter of this
year in the absence of some significant new U.S. funding.
Tropical Forest Conservation Act
Though not a part of the MDB efforts on environment, the Tropical
Forest Conservation Act (TFCA) bears mentioning. It is another priority
in our environmental agenda. The TFCA, enacted in 1998, provides
eligible countries the opportunity to reduce concessional debts owed to
the United States, and at the same time generate funds to conserve or
restore their tropical forests. While the debt reduction component of
the legislation is modest, the amounts generated for tropical forest
conservation programs are meaningful. For example, the roughly $6
million that we have already set aside for Bangladesh's participation
will leverage even more resources to conserve or restore its 1.5
million hectares of tropical forests, roughly half of which are in the
southwestern Sunderbans region and home to the world's sole genetically
viable population of 400 Bengal tigers.
Of the 10 countries that have requested participation in the TFCA,
six are from Latin America (i.e., Peru, Belize, El Salvador, Paraguay,
Ecuador, and Costa Rica). Of these, Peru and Belize, have already been
certified as eligible and are now entitled to discuss innovative debt
swap mechanisms that could generate additional funds for tropical
forest conservation programs.
III. THE U.S. ENVIRONMENTAL AGENDA IN LATIN AMERICAN AND HOW WE ARE
WORKING TO ENSURE MDB OPERATIONS REFLECT THIS
The U.S. has focused its efforts on MDB reforms in several areas to
promote the overriding principle of environmentally sustainable
development: (1) greater ``mainstreaming'' or integration of
environmental concerns into regular operations of the MDBs; (2) more
environmentally beneficial projects; (3) ongoing implementation of
existing MDB operational policies on environment; (4) improvements in
MDB policies regarding civil society participation; and (5) further
enhanced transparency of the Bank's operations. We pushed for progress
on these fronts in our negotiations to provide financial replenishment
and have been pleased with progress in some areas.
At the IDB, many of the positive developments stem from U.S.
leadership in the negotiations for the eighth replenishment of the IDB
in 1994 to press the Bank to provide greater protection for the
environment. The accomplishments are wide-ranging:
Development of new policies related to the environment, such
as water resource management, coastal management, forestry,
energy and sustainable agriculture development, including a
commitment to not finance commercial logging in moist tropical
forests;
Lending for environmentally beneficial projects. Lending for
environmentally beneficial projects has remained relatively
constant since the General Capital Increase (GCI) at around 9
percent of the Bank's portfolio. However, this figure may
actually understate the environmental work of the Bank since
many projects have positive environmental aspects even though
the primary objective of the project is not environmental;
Greater emphasis on energy efficiency. The Sustainable
Energy Markets (SMSE) program, initiated in 1996, focuses on
industrial energy efficiency, renewal and efficiency in urban
transport. The program has mobilized around $5 million in
external donor funds to prepare efficiency projects for
implementation. In addition, IIC and MIF, both members of the
IDB Group, are financing pilot projects under this program;
Consultation with affected people and inclusion of
resettlement plans as part of environmental impact assessments;
and
Development by Management of an information disclosure
policy and creation of an independent inspection mechanism that
will investigate charges by local people that the Bank has
failed to follow its own operational policies.
As a result of the negotiations for a capital increase of the
Inter-American Investment Corporation (IIC) in 1999, the IIC adopted a
new policy regarding environmental and labor review of projects. The
IIC has also adopted the IDB inspection panel function and, in January
1999, a policy regarding information disclosure was approved for the
first time.
The IDB has created environmental units within each regional
operations department to integrate environmental considerations into
project preparation and implementation. It has adopted procedures to
deal with any resettlement that might be entailed by projects. The Bank
has adopted a Strategy for Integrated Water Resources Management and an
implementation action plan that focuses on internal dissemination and
mainstreaming of environment into Bank operations. The IDB has improved
its capacity to integrate environmental considerations into its
projects and programs. We were pleased with the involvement of civil
society in the IDB's development of an energy strategy. Going forward,
we want to see the IDB put greater emphasis on lending for renewable
energy and energy efficiency projects. The IDB needs to reinforce its
program of consultation with civil society to ensure this is an
integrated element in all its operations. In this regard, we are
working closely with the Bank as it prepares a formal framework for
consultation and public participation.
During the 1998 negotiations for the twelfth replenishment for the
International Development Association (IDA-12)--the soft loan window of
the World Bank, the U.S. pushed for a deeper set of reforms than those
achieved in prior replenishments to better mainstream environmental
considerations into both IDA projects and its policy dialogue with
borrowing countries. In particular:
Adequacy of country environmental policies and regulations
as a performance criteria for allocating IDA resources;
Integration of environmental issues into all Country
Assistance Strategies (CASs);
Using National Environmental Action Plans as a key element
when designing Bank operations; and
Greater IDA collaboration with the Global Environment
Facility.
It should also be noted that other World Bank affiliated
institutions are showing progress on the environment. The Multilateral
Investment Guarantee Agency (MIGA) adopted new environmental disclosure
policies in 1999, which are being implemented. The International
Finance Corporation (IFC) is also moving forward to better incorporate
environmental concerns into its lending operations.
The World Bank has made noteworthy progress in mainstreaming
environmental issues into the Bank's operations. Serious gaps remain,
however. We do not consider the Bank to have lived up to the
expectation that it would make strong efforts to mainstream environment
throughout its regular operations, as required by the GEF's second
replenishment agreement. A progress report on the mainstreaming efforts
outlined in IDA-12 is due in December 2000, which we will be carefully
analyzing to see what areas are lacking. In addition, the Bank's
Environment Strategy, currently under preparation, provides a mechanism
for securing a better commitment from the Bank to integrate
environmental issues into all operations. As a result of strong U.S.
advocacy, an independent Inspection Panel was created in 1994 to
examine alleged violations of Bank policies in the preparation and
implementation of projects. In the policy area, we are following
closely the ongoing conversion of advisory directives into more formal
operational policies, especially in the area of resettlement and
indigenous peoples.
Enhancing the transparency of these institutions and increasing
public participation in countries' development programs are central
policy goals of the U.S., particularly in terms of the environment. We
have been at the forefront in calling upon these institutions to
increase their disclosure of information in a timely manner. Over the
last five years there have been notable successes (e.g., disclosure of
country assistance strategies by the World Bank, and public release of
environment impact assessments by both the IDB and World Bank for
projects with a significant impact on the environment before project
appraisal/analysis missions leave for the borrowing country).
We believe there is much more room for improvement in both the IDB
and the World Bank policies and practices related to environment. The
Banks' record on consistent implementation of safeguard policies and
enforcement of their own procedures is a key concern to the U.S. The
Banks, to their credit, are also aware that they need to do much more
to ensure that staff and management make this a priority. Though we
have made progress in improving the quality of loan documents related
to environment and resettlement and making them publicly available in a
timely manner, in part due to the requirements of the Pelosi Amendment,
we still find projects which do not meet the Amendment's standards. We
subsequently oppose any offending projects, sending a clear message to
Bank leadership. We will continue to use our voice and vote to urge the
Banks to meet higher environmental standards in accordance with the
provisions of the Pelosi Amendment.
In a broader context, we are calling for a reform agenda for the
MDBs to enhance their focus on the provision of global public goods,
including the global environment, as a more forwardthinking approach to
poverty reduction and the links between it and our environment and
natural resources. We believe the MDBs must move away from financing
sectors/projects that the private sector can easily do on its own and
focus more on social programs and international public goods that the
private sector will not or cannot finance, such as the environment. We
believe that the banks potentially have an enormous contribution to
make in helping to push the frontier of international efforts to
promote these kinds of goods, many of which will especially benefit
developing countries. The GEF, obviously has a key role to play, but
the World Bank and IDB also must show greater leadership in finding
ways for the international community to better protect the global
resource base we share.
IV. CONCLUSION
In concluding Mr. Chairman, I would like to emphasize the
importance that the Treasury Department places on working to ensure
that U.S. support of the MDBs helps to protect the environment and
natural resources in Latin America, the Caribbean, and beyond. The U.S.
has a strategic interest in helping our neighbors in the hemisphere
achieve growth that also protects the environment. I would be pleased
to answer any questions that you may have.
Mr. Chafee. Thank you, very much, Mr. Eichenberger, for
your testimony on behalf of the multilateral development banks
and what they can do to promote environment protection in Latin
America and the Caribbean.
My first question is for Mr. Leonard. You said that the
region is blessed with more fresh water per capita than any
other region in the world. But during the last 50 years, it is
also the region that has suffered the greatest decrease per
capita.
The principle culprits are poor watershed management,
misuse of agriculture inputs such as fertilizers and
pesticides, the overdrawing of aquifers and the lack of
wastewater treatment. These problems appear to be all things we
can solve. And in later testimony, Dr. DeWalt will say that
less than 10 percent of municipal waste water is treated.
And it seems to me that is where we should start: the very
basic of all the problems that people care about. Treating
wastewater I should think is primary.
In my city, Warwick, of course, we are upgrading our sewage
treatment plant, not the primary treatment, not the secondary,
but the tertiary treatment as clean as the stream that runs by
it. And your testimony indicates that wastewater in the region
is flowing into water bodies completely untreated. Do you agree
that that is a good place to start? And what can we do about
it?
Mr. Leonard. Absolutely, Mr. Chairman. The problems of
wastewater treatment, sanitation, portable water are serious
challenges in the region. And it is a byproduct of rapid
urbanization. But there are also issues with rural water
systems.
We are working in USAID to encourage the installation of
improved water systems, sanitation systems. A major effort is
underway now in Central America in the aftermath of Hurricane
Mitch with the supplemental resources we received from the
Congress, in Honduras and Nicaragua. That is a major focus of
attention of ours.
Similarly, we are working in our programs of local
governments, municipal development. Very frequently what
citizens most demand on their list of priorities is improved
water and sanitation.
So as we work with local government to improve their
capacity to respond to citizen needs, we have a number of
activities underway in the sector. It is a very important
sector. The needs are enormous. We are pleased that the
multilateral banks are also heavily engaged in providing
resources for this need. But the figures of 90 percent of
wastewater released untreated are staggering. We have a long
way to go.
Mr. Chafee. I would assume since you have been studying
this region since 1971 when you were a backstop officer for
Brazil, is that accurate?
Mr. Leonard. That is correct, sir.
Mr. Chafee. That you have seen over the years some changes,
as you have traveled through the region? Or is it still a tough
road ahead?
Mr. Leonard. Taking the long view, my almost 30 years with
USAID, I have seen tremendous change in the region, most of it
positive. If you look at where the region was in 1971 in terms
of democratic governance, we have come a long way. When you
look at where we have come on infant mortality rates, child
mortality rates, access to primary education, if you look at
economic growth rates, there are a number of very encouraging
developments.
But the degradation of the environment is one area where
the trends are going the other way, where we have not arrested
those declines and much more needs to be done.
But looking back over the time I have spent in Latin
America, I am certainly one that feels that tremendous progress
and achievements have been realized.
Mr. Chafee. And one last question. From your resume, it
says you have been all over the area: Brazil, Bolivia, Peru,
the Caribbean, Honduras, El Salvador, and Costa Rica. Can you
give a synthesis across the continent, who is doing well and
who is not doing well?
Mr. Leonard. Well, I think, you know, I spent a lot of time
in Central America.
Mr. Chafee. Where are the biggest challenges and who has
the will at present to address these environmental concerns?
Mr. Leonard. I think Central America has made a great deal
of progress. I think South America countries like Bolivia in
confronting narco trafficking, they have made great progress. I
think there are real challenges in places like Colombia which
you mentioned where a combination of threats and multiple
factors give rise to concern. There are certainly serious
challenges in places like Haiti. So, I guess, the places where
I worry most, where the challenge seems greatest, I would put
Haiti and Colombia in that order. But I see reason to be
optimistic throughout the region in Central America and South
America.
Mr. Chafee. Thank you. And, Mr. Eichenberger, in your
testimony, you lamented the funding situation with respect to
our foreign operations appropriations bills. If we fulfill our
commitments, do you believe that would bring greater progress
to some of the areas that we are discussing in this hearing?
Mr. Eichenberger. Yes, Mr. Chairman, I think it would for a
variety of reasons. With respect to the GEF, which I mentioned
specifically, that money goes directly to fund on grant terms a
variety of environmental investments in environmental issues
that I think, generally speaking, would not have been made
otherwise. There clearly is an important leveraging issue here
with respect to U.S. funding.
As I noted, one dollar from the United States generates,
attracts, ten additional dollars from other donors. So to the
extent that we are in substantial arrears to this organization,
there is clearly a negative ratcheting effect on the GEF's
capacity to do the kind of work that it was created to do. So,
$200 million of U.S. arrears with that degree of leveraging
translates into a great deal of work that is not being done.
With respect to the multilateral banks more broadly, we
have made substantial progress in recent years in reducing our
arrears. At one point, they were in excess of $800 million. We
reduced them last year down as low as about $350 million.
Unfortunately, we have taken a turn back in the wrong
direction and arrears have now gone up in the MDB's, including
the GEF, to about $450 million and threaten to go up further at
the of funding levels that the House and Senate are now talking
about.
The issue for us really is one of the capacity to continue
to exercise leadership in these organizations. I think it is no
stretch to say that it has been active and aggressive U.S.
advocacy in these organizations over a period of years that has
led to the greater environmental sensitivity and has led to
strong environmental policies. U.S. advocacy has led to a
change in the internal debate in these organizations about what
really matters for environmental development. Our concern is to
maintain that leadership, and we do so in part by meeting our
financial commitments. Thank you.
Mr. Chafee. Do these developing countries have the
expertise to do the right thing once they get the money, for
example, are they able to build the proper wastewater plants,
or to properly address some of the land use issues associated
with Hurricane Mitch, which caused such devastation? We have
all learned through trial and error here in this country. We
would hate to see them make the same mistakes. Common sense
will tell you it should be a natural partnership as we move
forward; to take what we have learned, the mistakes that we
have made, and helping our neighbors make sure they do not make
them. Beyond money, do they have either the will or the
capacity and know-how to address these problems?
Mr. Eichenberger. Well, I think that there is no question
that capacity is a real issue. And it is a real issue not just
with respect to environmental issues, but, for example,
education and primary health and so forth.
That is clearly recognized, both in the borrowing countries
themselves and in the institutions. It is for that reason, in
part, that the institutions are trying to shift a great deal of
their emphasis toward making investments in what they refer to
as capacity building--building the institutions and the human
capacity to implement programs in a consistent way that
produces results. There is no question that we are not there
yet.
I would point out a couple of things that I think are very
promising. Carl spoke earlier of the importance of
partnerships. One of the very important developments, I think,
over the past 5 years is the much greater willingness and
interest of the multilateral development banks to reach out to
the private sector for partnerships. Because there is a huge
amount of expertise there--American firms and in other firms--
innovative solutions are being found that are highly promising.
For example, bank research indicates that one of the most
serious obstacles to effective provision of clean water is the
fact that initial investments are allowed to go to seed because
maintenance money is not paid over a period of years. The
organizations are working with countries to essentially engage
private sector operators in doing the maintenance, doing the
metering, doing the repairs. That has had the effect of
preserving the value of the original investments. It is just
one example where those partnerships can help, and at the same
time, build the capacity to deal with problems as they arise.
Mr. Chafee. Thank you, very much. Thank you, gentlemen,
very much. We will take a short break and convene the second
panel, just a minute or two at your convenience. Thank you,
gentlemen, very much.
Mr. Leonard. Thank you, Mr. Chairman. Look forward to
working with you in the future.
[Pause.]
Mr. Chafee. Welcome once again. I would also like to ask if
everybody can hear in the back, because there is nothing worse
than being at a hearing where you cannot hear. And if anybody
cannot hear, raise their hand. I will make sure that whoever is
speaking gets closer to the microphone or speaks up. I have
been to many a hearing where you could not hear.
Welcome, Mr. Watson and Dr. DeWalt. I look forward to your
testimony. Mr. Watson is the vice president and executive
director for International Conservation at The Nature
Conservancy located here in Arlington, Virginia. And a
distinguished career. We look forward to your testimony.
Welcome.
STATEMENT OF THE HONORABLE ALEXANDER F. WATSON, VICE PRESIDENT
AND EXECUTIVE DIRECTOR FOR INTERNATIONAL CONSERVATION, THE
NATURE CONSERVANCY, ARLINGTON, VA
Mr. Watson. Thank you very much, Mr. Chairman. And thank
you very much for inviting The Nature Conservancy to present
some views before this subcommittee. I would like to commend
the subcommittee for addressing this sensitive but crucially
important relationship between economic development and
conservation of precious natural resources in Latin America and
the Caribbean. And I think Carl Leonard did a nice job of
explaining why these issues are so closely related and why we
in the United States have a responsibility to try to address
them.
With your permission, sir, I would like to summarize the
key points of my remarks and submit the balance for the record.
Mr. Chafee. No objection.
Mr. Watson. The Nature Conservancy's mission is the
protection of plants and animals that make up the natural
world, what is commonly referred to as biological diversity or
biodiversity, primarily through the protection of habitats of
those plans and animals.
And in my written statement, I touched on the enormous
biological and economic importance of biodiversity and some of
the most serious threats that biodiversity faces in Latin
America and the Caribbean. So I will not go into those here.
Rather, I will discuss very briefly how The Nature
Conservancy addresses these issues overseas. The Conservancy
works mainly domestically. And as I think you know, Mr.
Chairman, we have chapters in all 50 states in the United
States.
But we have long recognized the need to work with the
world's greatest biodiversity which is beyond our borders,
chiefly in the tropics. The Conservancy operates in 19
countries in Latin America and the Caribbean as well as others
in Asia, Oceania and in Canada. We also work indirectly in a
couple of other Western Hemisphere countries such as El
Salvador and Argentina through regional projects and liaison
relationships without having formal conservation programs in
those countries.
Since the beginning of our international program in 1981,
we have helped protect more than 74 million acres of
biologically significant land in Latin America and the
Caribbean. Funding for the Conservancy's work is 92 percent
from private sources. In fact, we are currently engaged in a
campaign to raise 1 billion private dollars for conservation.
Nevertheless, it is important to underscore that the
funding that the Conservancy receives from the Agency for
International Development is crucial to our success in Latin
America and the Caribbean. And we urge members of the committee
to support appropriations requests for international
conservation in the AID budget as well as to fund the U.S.
contribution to the Global Environment Facility mentioned by
the representative from the Department of the Treasury a minute
ago. And also to expand the excellent and growing international
programs of such U.S. agencies as the Fish and Wildlife
Service, United States Forest Service and the National Oceanic
and Atmospheric Administration as well as the Environmental
Protection Agency.
And we applaud the leadership that the Congress has
displayed in enacting the Tropical Forest Conservation Act
which is essentially a congressional initiative and
appropriating funds for its implementation. And we also welcome
the growing interest of many Senators and Representatives in
protecting coral reefs and other coastal marine environments.
Internationally, the Conservancy identifies highly
important natural areas and helps local organizations build the
capacity to protect those areas over the long term. We try to
strengthen local institutional capacities, build conservation
infrastructure, conduct scientific research and involve local
people in community based conservation.
Our goal is to foster strong and sustainable local
conservation organizations, usually private and nonprofit
organizations, that will involve local communities in enduring
protection of their country's most precious natural heritage.
These efforts, of course, also contribute to strengthening
civil society.
We seek market oriented solutions to conservation issues
involving all legitimate stakeholders in those issues. We
collaborate closely with the multilateral development banks,
including the Inter-American Development Bank, with whom we
have created a pioneering fund called the EcoEnterprises Fund
which is to support and invest in environmentally sound
enterprises in the hemisphere that will generate resources for
non-government organizations to undertake conservation work.
And we also try to take lessons we have learned from our
extensive work in the United States and apply those in Latin
America and the Caribbean.
For instance, conservation easements and tradeable
development rights are concepts that have been used for years
in the United States to protect important land and water. And
with the help of some brilliant colleagues in Costa Rica, we
are introducing some of these concepts to other countries in
the hemisphere. Their jurisprudence does not contain these
ideas at this point. And this effort has had an enormously
positive reception. It involves private sector people in
conservation directly without necessarily having to rely on the
actions of government.
But the flagship of the Conservancy's conservation program
in Latin American and the Caribbean has been the Parks in Peril
program that Carl Leonard mentioned a minute ago. It has
received important funding from AID as well as private
resources. It is important to note that the AID money through
us leverages considerable private resources for this program.
Many of the parks and nature preserves where we work were
initially created by local governments in areas that were
relatively distant from intensive settlement or development;
hence, in most cases they were largely unspoiled. But in our
work we have seen the effects of increased economic pressures
even at these protected sites. Among the greatest threats to
conservation of biodiversity, as Carl Leonard pointed out a
minute ago, are inappropriate unsustainable agriculture and
destruction of coastal marine areas.
The Parks in Peril program converts what are often in
effect only paper parks--that is to say parks that exist on
maps but not in reality--into well-managed protected areas
capable of resisting the destructive pressures they face.
Of course, the Conservancy strongly supports economic
development in Latin America and the Caribbean and other
developing regions. And we do not believe that development has
to be at the expense of conservation of countries' natural
resources.
In fact, we believe that development and conservation are
mutually dependent. Unless biological and other resources are
managed carefully and protected, development in countries
highly dependent on natural resources, as most developing
countries are, will soon run dry.
And yet, unless development provides economic alternatives
for the poor, they will be forced to consume natural resources
on an unsustainable basis and conservation efforts will be
thwarted.
So we all must strive to assure that development and
conservation are mutually supportive.
Finally, Mr. Chairman, I would like to take this occasion
to express the hope that the full committee will be able before
recessing for the year to send forward to the Senate--for its
favorable advice and consent--those conservation-related
international agreements that are pending before the committee
and which I believe are not contentious. I am referring
specifically to the Sea Turtle Convention, on which I believe
there were hearings a few days ago, and the special protected
areas and wildlife protocol to the Cartagena Convention. Thank
you, very much, Mr. Chairman, for the opportunity to be here
today.
[The prepared statement of Mr. Watson follows:]
Prepared Statement of Hon. Alexander F. Watson
Mr. Chairman, with your permission I will summarize the key points
of my remarks and submit the balance of my testimony for the written
record.
SUMMARY
The Nature Conservancy's mission is the protection of the plants
and animals that make up the natural world, what is commonly referred
to as biological diversity or biodiversity, primarily through
protection of their habitat. We work mainly domestically, but we have
long recognized the need to work where the world's greatest
biodiversity is found--beyond our borders, chiefly in the tropics. The
Conservancy operates in 19 countries in Latin America and the
Caribbean, as well as others in Asia and Oceania. We also work
indirectly in additional Western Hemisphere countries, such as El
Salvador and Argentina, through regional projects and liaison. Since
the beginning of our international program in 1981, we have helped
protect more than 74 million acres of biologically significant land in
the Western Hemisphere alone.
Funding for the Conservancy's work is 92 percent private. In fact,
we are currently engaged in a campaign to raise one billion private
dollars for conservation. Nevertheless, the funding the Conservancy
receives from the Agency for International Development (AID) is crucial
to our success in Latin America and the Caribbean. We urge Members of
the Committee to support increased appropriations for international
conservation: in the AID budget, as well as to fund the U.S.
contribution to the Global Environment Facility (GEF), and to expand
the excellent international programs of such U.S. agencies as Fish and
Wildlife Service (FWS), United States Forest Service (USFS), National
Oceanic and Atmospheric Administration (NOAA), and Environmental
Protection Agency (EPA).
Internationally, the Conservancy identifies highly important
natural areas and helps local organizations build the capacity to
protect those areas over the long term. We strengthen local
institutional capacities, build conservation infrastructure, conduct
scientific research and involve local people in community-based
conservation. Our goal is to foster strong and sustainable local
conservation organizations--usually private and non-profit--that will
involve local communities in enduring protection of their countries'
most precious natural heritage. These efforts also contribute to
strengthening civil society.
The flagship of the Conservancy's conservation program in Latin
America and the Caribbean has been the Parks in Peril (PiP) program,
which has received important funding from AID and private sources. Many
of the parks and nature preserves where we work were initially created
by the local governments because they were relatively distant from
intensive settlement or development, hence in most cases largely
unspoiled. But in our work we have seen the effects of rapid economic
pressures even at these protected sites. Among the greatest threats to
conservation of biodiversity are inappropriate, unsustainable
agriculture and the destruction of coastal marine areas.
Of course, the Conservancy supports economic development and we
believe development does not have to be at the expense of conservation
of countries' natural resources. In fact, we believe that development
and conservation are mutually dependent. Unless biological and other
natural resources are managed carefully and protected, development will
soon run dry. Yet, unless development provides economic alternatives
for the poor, they will be forced to consume natural resources on an
unsustainable basis.
Finally, Mr. Chairman, I take this occasion to express the hope
that the full Committee will be able before recessing for the year to
send forward to the Senate--for its favorable advice and consent--those
conservation-related international agreements that are pending before
the Committee and uncontentious.
THE IMPORTANCE OF INTERNATIONAL BIODIVERSITY
People in developing countries rely on living natural resources for
a multitude of economic and social benefits, and the rest of the world,
including the United States, also receives benefits from them.
Biological diversity is critical for the pharmaceutical industry,
agriculture and a wide variety of other industrial activities.
According to a study by the World Resources Institute, 4.5% of the U.S.
Gross Domestic Product is due to economic benefits from wild species.
Genetic diversity used in plant breeding accounted for about one-half
of all the gains in agricultural yields in the U.S. between 1930 and
1980. Major U.S. crops now depend on infusions of new genes from plants
found in nature. One quarter to one third of all the prescriptions
drugs in the U.S. contain compounds derived from wild species. 120
prescription drugs currently come from about 95 species of plants; of
these, 39 grow in tropical forests. Botanists believe that more than
35,000 plant species (mostly drawn from tropical forests) provide
traditional medicines to local peoples and, hence, are good candidates
for future pharmaceutical research. Only about 2 percent of plants have
been examined for medicinal properties. There is no way to know what
new cures we may be losing with each species that goes extinct or what
the health care costs can be of remedies never developed.
These biological resources are increasingly imperiled. Even here in
the rich nations of the North, where parks and nature preserves are
generally well protected, pressure on many forms of biodiversity is
rising. In the United States, on which the Conservancy recently
completed an unprecedented study of national biodiversity status and
published the results in the book Precious Heritage, about 14 percent
of bird species are at risk, 16 percent of mammals, 37 percent of
freshwater fish, and 69 percent of freshwater clams and mussels
(Precious Heritage, p. 102). In the poorer countries of the developing
world, the situation is worse. Biodiversity decline, often caused by
migrating populations with no economic alternatives to living off the
land, increases rapidly once the frontier of development reaches areas
formerly isolated by distance, lack of roads, difficult climate and
poor soil. All too often, the destruction of natural resources,
including biological resources, does not even bring local people the
benefit they hope for--sustained economic development. Instead, the
land is ravaged for a quick return, and the survivors must either move
on or face a grimmer poverty than before.
The Western Hemisphere tropics are particularly notable for their
forests. Such forests are at the heart of world biodiversity. There may
be 10 million species in the world. Tropical forests house between 50
and 90 percent of the total. About 17 million hectares of tropical
forests--an area four times the size of Switzerland--are being cleared
annually. E. O. Wilson, the great Harvard biologist, has estimated that
at current rates of forest destruction one-tenth to one-quarter of all
tropical rain forest species may disappear within 30 years.
Tropical forests are by no means the only threatened Western
Hemisphere ecosystem. For instance, freshwater ecosystems are often the
hardest hit of all, as they battle long-term water shortages and
pollution caused by population growth, expansion of settled areas,
increased irrigation, and economic development without needed
environmental protections.
Coastal and marine systems face serious loss and degradation in the
continental and insular territories of the United States, as well as
many countries in the Caribbean, Asia and Oceania. Coral reefs are
facing threats never faced before. Coral reefs are so rich in
biological diversity that they are often referred to as the ``rain
forests of the sea.'' Irresponsible extraction and trade of both
seafood and decorative marine life, deforestation and inadequate
construction and industrialization, together with global climate
changes not well understood, are putting many coral reefs at the brink
of extinction for the first time in human history. We welcome the
interest shown in protecting coral reefs by many Senators and
Congressmen. and the Administration's commitment to do more to protect
marine systems, especially coral reefs, as shown by the work of the
Coral Reef Task Force and the programs of NOAA.
The true economic value of biological, and other ``renewable''
resources such as water are certainly immense. Credible estimates of
the annual economic contributions of ``environmental services'' run
into multiple trillions of dollars. But such resources are only truly
renewable if properly treated. Not if species are driven to extinction,
or if they become so scarce as to make them commercially useless and
incapable of recovery in a lifetime. Certainly not if watersheds are
destroyed. Not if coral reefs are killed. Not if topsoil is blown or
washed away. Not if complex interlocking communities of living
organisms are disrupted.
The developing world's economic progress is unquestionably tied to
the careful management and protection of its natural resources. Coastal
wetlands, mangrove forests and offshore reefs, for example, are
essential for healthy fish populations (sometimes far away from the
source of impact)--and fish is currently the leading source of animal
protein in the human diet worldwide. Forests serve as ``carbon sinks''
to help control carbon dioxide buildup in the atmosphere. Forests also
promote the retention of water and prevent soil from blowing away and
eroding into critical waterways--waterways that provide drinking water,
hydropower, irrigation and transportation to millions of people, as
well as essential nutrients and water of adequate quality to coastal
resources. Biodiversity provides pollination, pest control, and the
recycling of essential elements, such as carbon, oxygen and nitrogen.
Parks and protected areas are critical to conserving biodiversity, and
they have the added benefit of attracting tourists who generate income
and employment. Nature tourism alone already generates $12 billion
annually.
By contrast, the degradation of biological resources leads to
poverty, hunger, disease and civil unrest. Massive shifts in population
may occur when affected peoples migrate from areas that once were
productive but now cannot support them. The linkages between natural
resource depletion in developing countries, and the national security
of the United States, are real and growing in this age of economic
globalization.
The Conservancy does not see this situation as necessarily
development versus conservation. In most situations, indeed in
virtually all, it is possible to achieve both. In fact, in the long run
there can be no development, especially in countries that depend
heavily on natural resources as most poor countries do, without careful
management (including conservation) of the countries' natural heritage.
Conversely, there cannot be effective conservation if the people living
in or near areas that should be protected have no economic alternatives
to consuming the natural resources of those areas simply to survive.
The answer is thoughtful economic development that recognizes the
importance, limitations and fragility of natural biological systems.
There is a growing recognition of these facts in Latin America and the
Caribbean. But, unless countries act effectively on this understanding
before careless development devours biological resources once and for
all, they will lose the race--to the severe detriment of future
generations and the planet.
WESTERN HEMISPHERE COUNTRIES INCREASINGLY REALIZE THE VALUE OF
CONSERVATION
Over the course of recent decades, many nations of Latin America
and the Caribbean recognized that natural resources that seemed
abundant were, in fact, limited and had to be managed thoughtfully.
Many took important initial steps to conserve their living resources by
establishing systems of protected areas, to safeguard critical forests,
watersheds, coastal and marine ecosystems, wildlife habitat, scenic
attractions, and other areas of significance. Often, however, these
nations had not succeeded in effectively managing these areas so as to
truly protect them--they remained ``paper parks.''
To address this serious problem, in Fiscal Year 1990 the Agency for
International Development (AID) began supporting the Conservancy's
``Parks in Peril'' (PiP) program, a public-private partnership that
seeks to protect the most important and threatened national parks and
reserves in this hemisphere.
Parks in Peril was designed to secure minimum critical management
for a series of natural sites, transforming them into functional
protected areas. The program builds collaborative partnerships among
national, international, public and private organizations. It has
become the largest in-situ biodiversity conservation project in the
tropical world and has drawn wide support from other governmental and
non-governmental constituencies in the region and around the globe, as
well as from private firms and individuals.
Parks in Peril works to achieve four objective goals:
(1) To build on-site protection and management
infrastructure;
(2) To integrate the protected areas with the human societies
inhabiting their surrounding regions;
(3) To create long-term funding and policy mechanisms to
sustain the local management of the Parks in Peril sites; and
(4) To influence conservation in other sites in the region's
most imperiled ecosystems.
AID and the Conservancy have designed an innovative scorecard to
measure how well particular sites meet these goals. As they do so, the
sites are ``consolidated''--having achieved the program's original
goals, they are phased out from receiving direct assistance from AID.
This transition to long-term sustainability has been from the outset a
fundamental goal of the program.
CONCLUSIONS AND RECOMMENDATIONS
Mr. Chairman, Members of the Committee, our experience of
international conservation has convinced the Nature Conservancy of the
urgent need to do more to protect these precious biological resources.
We are currently in the midst of the largest-ever private fund-raising
effort for conservation. We have set a goal of $1 billion in private
funds for conservation, of which we have earmarked $100 million for our
international conservation programs. I am proud to say that we are
halfway there--we have raised $500 million toward our goal. But the
technical and financial contributions of U.S. Government agencies will
remain essential to this great effort, including in our work overseas.
I urge the Members, both in the Committee and in their other activities
as Senators, to support increased efforts by the United States
Government to protect global biodiversity through increased funding to
the biodiversity conservation programs of AID, to the Global
Environment Facility (40 percent of whose budget goes for biodiversity
conservation), and to the under-funded but immensely useful
international programs of the U.S. Forest Service and the Fish and
Wildlife Service, and as well as those of NOAA and the EPA.
Finally, Mr. Chairman, I take this occasion to express the hope
that the full Committee will be able before recessing for the year to
take up those conservation-related international agreements that are
pending before the Committee and uncontentious. The Sea Turtle
Convention, which received a hearing last week, is one such. Another
worthy of action is the Caribbean ``SPAW'' (Specially Protected Areas
and Wildlife) Protocol to the Cartagena Convention. We have worked with
this Protocol and know its value, and hope that the Senate is able to
provide its advice and consent this year.
I thank you once again for this opportunity to share with you and
the Committee the Nature Conservancy's views on these important
international conservation issues.
Mr. Chafee. Thank you, very much for your time and your
testimony. Good luck in raising the billion dollars.
Mr. Watson. We are working on it.
Mr. Chafee. And we will work here on the congressional side
on the funding that you care about, the Global Environmental
Facility and others.
Mr. Watson. Thank you.
Mr. Chafee. And as you said about your work, these efforts
also contribute to strengthening civil society, noble goals.
Dr. Billie R. DeWalt is the director of the Center for
Latin American Studies and distinguished service professor of
Public and International Affairs and Latin American Studies at
the University of Pittsburgh, Pittsburgh, Pennsylvania. Did you
get in this morning or last night?
Dr. DeWalt. Last night.
Mr. Chafee. Last night. Easy flight?
Dr. DeWalt. Yes.
Mr. Chafee. Good. Welcome. And when do you go back?
Dr. DeWalt. Today.
Mr. Chafee. Today. Great. Thank you for taking the time.
Dr. DeWalt. Sure.
Mr. Chafee. Welcome.
STATEMENT OF THE DR. BILLIE R. DE WALT, DIRECTOR, CENTER FOR
LATIN AMERICAN STUDIES, DISTINGUISHED SERVICE PROFESSOR OF
PUBLIC AND INTERNATIONAL AFFAIRS AND LATIN AMERICAN STUDIES,
UNIVERSITY OF PITTSBURGH, PITTSBURGH, PA
Dr. DeWalt. Well, it is a pleasure to be here. And I really
appreciate the opportunity to address the subcommittee about my
perspective on growth and the environment in Latin America. My
remarks are based on three decades of research in Latin America
and I have consulted with a lot of the organizations that have
been mentioned here today, including the Inter-American
Development Bank, the World Bank, Global Environment Facility,
World Wildlife Fund, USAID and so on.
I will briefly summarize my remarks and then submit the
balance of my testimony for the written record.
There are several main points that I wish to make in my
statement to the subcommittee. And I would like to emphasize
first that Latin America is quite rich in its resource
endowments compared to its population. With only 8 percent of
the world's population, it contains rich mineral and fossil
fuel deposits, 25 percent of the world's potentially cultivable
land, 30 percent of the annual freshwater runoff, and 25
percent of forest and more than 50 percent of tropical forests
in the world.
And because of the economic reforms that have taken place
in the region, several of the countries are now growing quite
rapidly. But with economic growth, the already stark
socioeconomic inequalities in the region are being exacerbated.
In my written testimony, I just refer to a couple of the recent
studies that have been done.
The extremes of wealth and poverty in the region are both
implicated in continuing conservation degradation. We often
blame the poor because they mine resources in order to survive.
But I have also seen many cases in which the rich, because they
act with impunity regarding environmental laws, regulations and
norms, are also significant causes of environmental
degradation.
The poor, of course, are often also the victims of
environmental destruction. They have the least access to decent
habitats, clean water and air, suffering infectious diseases,
the effects of natural disasters like Hurricane Mitch and
malnutrition.
From my perspective, conserving and improving natural
resources will require interventions that directly provide
economic incentives to people and to industry to maintain and
enhance their natural resources. I can provide a lot of
examples in data on these issues from my own work over the last
30 years. But I would like to do is to mainly focus on what I
see as some of the important policy solutions that are
required.
Major steps, of course, I think have to occur within Latin
America countries to reduce inequalities. And this is a task
that I think very few governments have been willing to tackle.
For the United States, we have relatively blunt edged
policy instruments. But there are some things that I think can
be very useful.
In terms of policy solutions, one thing I would like to
emphasize, and I think it reinforces what some of my colleagues
here have said today, is that it is really important to
continue foreign assistance to Latin America, honoring our
international commitments to the multilateral development
banks, to the global environment facility. I know that USAID
funding for the Latin American, Caribbean region has been
shrinking over the last several decades.
But this foreign assistance to Latin America ought to be
really targeted specifically on social and environmental
policies.
As a result of a lot of the forms that have been undertaken
in the last several years, foreign directed investment to the
region now is huge and growing. And it is really taking care, I
think, of many of the private development needs of the region.
This means that U.S. foreign and multi-lateral development bank
assistance should address the issues that are not likely to be
effected by foreign direct investment.
This, of course, includes a focus on environmental laws,
regulations, particularly strengthening enforcement. We have,
as I mention in my written testimony, quite a number of Latin
America countries that have adopted environmental ministries,
have put in place very fine sounding environmental laws and
regulations. But what is really lacking is enforcement of these
regulations. The main environmental protection organization in
Mexico, for example, has 150 agents to cover the whole country.
Obviously, this is a prime area in which investment ought to be
allocated.
And, of course, U.S. foreign assistance should also be
targeting health and education programs to alleviate some of
the poverty in the region.
The second thing that I stress in my written testimony is
that we need to determine how to create structures to
compensate rural people for the environmental services that
they provide. That is we need to attach a value to the
production of clean water and air, soil conservation and carbon
sequestration.
As Ambassador Watson has mentioned, using mechanisms like
easements to protect forest and watersheds, determining how we
can use certification schemes for things like organic coffee
and wood that is produced in a sustainable manner and then
creating market mechanisms that actually work to get consumers
to purchase these goods that are certified as being eco-
friendly. I think that Mr. Leonard mentioned there is a lot of
certification efforts going on in Latin America. I have seen in
Mexico there is very substantial certification, smart wood
certification of forests. Unfortunately, this kind of
certification has not yet led to people being able to market
the timber that they produce at a reasonable price. In other
words, they are getting the same amount of money for eco-
friendly wood as any other producer.
A third mechanism here in terms of structures I think is to
look at carbon credit markets as proposed in the Kyoto protocol
to reduce greenhouse gas emissions. This is something that
would allow industries in the industrialized world to
essentially purchase carbon credits in developing countries
that agree to maintain forests.
The third area I would like to emphasize is the need for
greater research collaboration. USAID has quite a number of
collaborative programs in agriculture that have been operating
for approximately 20 years. To my knowledge, there is only one
that really focuses on the environment which is the Sustainable
Agricultural Natural Resource Management collaborative research
support program. And I think we need to have additional
programs that USAID creates to link U.S. universities with
universities in Latin America that focus on the inter-related
biological and social issues.
As the National Science Foundation expands its
environmental science program, I think one of the things that I
have seen missing in much of what NSF has been proposing is any
mention of cross border collaboration.
Again, there is the necessity to develop linkages between
U.S. universities and universities in Latin America and in
other parts of the world.
A particular interest of mine in terms of a third policy
recommendation is that I think the United States ought to
instruct its representatives to the multilateral development
banks to push for social analysis of projects.
That is I think we need to complement the existing analyses
that are carried out within the development banks that focus on
financial, economic, technical, institutional and environmental
analysis to also include social analysis. World Bank, Inter-
American Development Bank, should be investing in projects that
privilege resource poor people in the Latin American region.
And I think that if we had social analysis of programs to
really determine what the effects of those programs are, who
wins and who loses, that they would be both more socially as
well as environmentally sustainable.
So the bottom line is, from my perspective, unless we
address the issues of social inequality and poverty in Latin
America more directly, then environmental degradation is going
to continue. And many of the results of that degradation will
be exported to the United States through illegal migration,
production of drug crops and political turmoil near our
borders. Thank you, very much.
[The prepared statement of Dr. DeWalt follows:]
Prepared Statement of Dr. Billie R. DeWalt
INTRODUCTION
The tragedy that Hurricane Mitch caused in Honduras, Nicaragua and
El Salvador in November of 1998 should teach us an important lesson
concerning the linkages between poverty, wealth and environmental
degradation in Latin America. Although the hurricane bit the Caribbean,
most of the damage occurred on the Pacific coast of Central America.
There, the drenching rains fell on deforested hillsides resulting in
landslides that blocked rivers and buried shanty towns, flooding that
destroyed bridges, roads, power lines, crops, and aquaculture farms
(DeWalt 1998). That death and devastation were exacerbated by the
deforestation and degraded watersheds of the region.
The main point of my presentation is to stress that many of the
most important environmental problems and challenges for Latin America
are directly or indirectly linked to inequality and poverty. To be
sure, the increasing adoption of a market economy by most Latin
American countries has reversed the effects of the debt crisis in the
1980s and brought positive growth rates to many countries. But positive
economic growth has not reduced poverty in the region, and indeed in
several countries has exacerbated the already large inequalities
between the rich and the poor (Berry 1997). Real wages in Mexico, for
example, are more than 25% lower than they were in 1980 (Economist,
June 24th 2000:26).\1\ Progress in addressing issues like
deforestation, biodiversity loss, water and air contamination, and
watershed deterioration in Latin America can be made, but only if
countries and donors promote programs that directly address the
linkages between inequality and environmental degradation.
---------------------------------------------------------------------------
\1\ For example, between 1996 and 1998, social inequality in Mexico
increased with the poorest 60% of households in Mexico seeing their
income share fall from 26.9 to 25.5%, while the share held by the
wealthiest 10% rose from 36.6 to 38.1% (Economist 2000:25).
---------------------------------------------------------------------------
THE CURRENT SITUATION
Latin America is a region with considerable resources and a
relatively sparse population so achieving sustainable development there
ought to be easier than in other parts of the developing world.
Consider that although the region has only about 8% of the world's
population, it contains:
rich mineral and fossil fuel deposits as well as coastal and
marine resources
25% of the world's potentially cultivable land (Reca and
Echevarria 1998:xiii)
25% of forests and more than 50% of the tropical forests
(http://www.iadb.org/sds/document.cfm/45/ENGLISH)
about 30% of annual freshwater runoff (IDB 1998:5)
Despite this, estimates are that:
45% of the population is poor, the absolute number of poor
have increased by 80 million in the last 25 years, and 60
million people in the region are malnourished (Reca and
Echevarria 1998:xiii)
84 million had no access to clean drinking water
over 165 million had no adequate sewer service and less than
10% of municipal wastewater is treated (Inter-American
Development Bank 1998:5)
the region has the highest rates of deforestation in the
world, losing 7.4 million hectares per year (Dourojeanni
1999:1)
POSITIVE STEPS
Although it is easy to be pessimistic about environmental trends in
the region, there are a number of positive signs of progress. Relating
to forests and watersheds, for example:
Most countries no longer promote colonization schemes in tropical
forests. Inequality in access to land in Latin America has been a
continuing source of social conflict, fuelling many of the revolutions
and civil wars that plagued the region. Although this led to attempts
at agrarian reform particularly beginning in the 1960s, more often than
not colonization of tropical areas was promoted to relieve pressures on
land. In Mexico and Central America, this meant resettling people from
highland areas to coastal and/or tropical areas. In South America, it
resulted in colonization of the Amazon basin. Most of these schemes did
not result in viable agriculture and were failures, though they caused
considerable deforestation. Although schemes like Mexico's ``March to
the Sea'' and National Commission for Forest Clearing from the 1960s
and 1970s have disappeared, road building into tropical areas continues
to lead to settlement and deforestation.\2\
---------------------------------------------------------------------------
\2\ One particular project that is currently of great concern is
the proposed $100 billion Avanca Brasil infrastructure program to
expand soy production and exports that may result in an additional 18
million hectares of deforestation (Bonnie et. al. 2000:1763).
---------------------------------------------------------------------------
Legal Changes Improved Incentives for Forest Conservation.
Colonization efforts were often accompanied by laws denying ownership
titles to settlers until they had put at least 50% of their land into
cultivation. This resulted in substantial deforestation and in most
cases planting of pasture for cattle. Such incentives for deforestation
have been removed in most countries. Property rights regimes are also
being reformed to encourage conservation. For example, resin-tappers in
Honduras who worked the pine forests had little incentive to care for
the trees because all trees were owned by the state. In Mexico, timber
companies were given concessions to cut timber on the lands of
indigenous communities; neither the communities or the companies had
incentives to insure that sustainable forest practices were followed.
Indigenous communities in the poor southern state of Oaxaca struggled
for years to have the right to work their own forests, and succeeded in
having forestry laws changed in the early 1990s. With forests now under
their own control, management has improved significantly, some
communities have created their own forest reserves, and many are
developing ecotourism projects with the assistance of a World Bank
program.
Requirements for Environmental Impact Assessments Are Now Common.
In the late 1980s and early 1990s, the World Bank, Inter-American
Development Bank, and USAID began requiring that environmental impact
assessments be done for projects they sponsored. This has helped to
insure that donor projects do not have negative impacts on the
environment. Spurred by these models and concerns about environmental
degradation, several countries in the region (e.g. Mexico, Argentina)
are now beginning to require environmental impact assessments of major
projects within their borders.
Countries Have Established Ministries Focused on Environmental
Concerns. Of the countries in the region, 16 out of 22 now have a
cabinet post that focuses on environmental concerns. Most of these have
been established within the last several years. Legal frameworks for
environmental protection are being established in most countries and
the Inter-American Development Bank has been supporting these efforts.
It is critical to get such legal frameworks in place as a means of
eventually regulating private sector development within countries.\3\
---------------------------------------------------------------------------
\3\ Even where an adequate legal framework is in place, enforcement
is still problematical. For example, the Attorney General's Office for
Environmental Protection (PROFEPA) in Mexico has fewer than 150 agents
for the whole country.
---------------------------------------------------------------------------
International and National NGOs Are Intensely Involved. Led by such
international organizations like the World Wildlife Fund, Nature
Conservancy, Conservation International, and others, the non-
governmental sector has been intensely involved in efforts to create
and manage parks, reserves, protected areas, and to encourage natural
resource management. These organizations understand that communities
must be involved and be able to generate income if resource
conservation is to be successful. Greenpeace and others have adopted a
watchdog role and are activists in opposing projects that may lead to
resource degradation (e.g. successfully opposing the salt works
proposed for San Ignacio Lagoon on the Gulf of California in Mexico).
Local nonprofit organizations with an environmental focus are being
established in all countries reflecting increased public concern about
the environment (e.g. about 700 environmental NGOs are registered in
Mexico).
CONTINUING PROBLEMS
Despite these signs of progress, environmental degradation
continues unabated in Latin America. Among the most vexing problems are
the following:
Transparency and Fairness in the Application of Laws and
Regulations Are Often Lacking. Major corporations and wealthy private
investors often play by different rules than everyone else in Latin
America. Abuses of power and authority, unfortunately, are all too
common when it comes to environmental requirements. In Mexico recently,
a peasant told me that the laws are only applied to the poor. He and
those in his community are fined for extracting timber from forests if
all of their permits are not done exactly right. At the same time,
illegal timbering goes on all around their community and the sawmill
industry is not required to document from where they receive their
logs. Local people have learned not to press charges against the
illegal timbering because the culprits are released almost immediately,
and retaliate against their accusers. Inequality means that the rich
and powerful are able to engage in practices that cause environmental
degradation.
Poverty Continues to Cause Environmental Degradation. Inequality
and poverty in places like the Pacific Coast of Central America.
Deforestation there is caused by the poor who plant subsistence crops
on steep hillsides. Their poverty, however, coexists alongside wealth
created by melon-growers producing for the export market, shrimp
producers who now cultivate this commodity in ponds along the coast,
and especially cattle producers who have appropriated much of the best
land for their ranches. The Pacific Coast of El Salvador, Honduras, and
Nicaragua has long been characterized by vast differences between the
wealthy few who have appropriated the best, flat lands, often for
commodities like cattle that require little labor to produce. The
Honduran Central Bank estimated in 1988 that 48% of the valley lands in
the country were sown in pasture for cattle. The poor majority is left
with the alternatives of deforesting the steep slopes for a patch of
land to cultivate, migrating to the cities where they create squatter
settlements, or invading the protected areas of Honduras' rainforest
(DeWalt et. al. 1993). Poverty, infectious diseases, environmental
degradation, illegal migration, cultivation of drug crops, and other
ills are all common problems affecting the poor regions of most Latin
American countries.
POLICY SOLUTIONS
Attacking the linked problems of inequality and environmental
degradation must be made a priority. The solutions that are required
will require public policy efforts primarily within the countries of
the region. The United States and other donors, however, can take steps
that can help. Our country's efforts to promote democracy, free trade,
and stability in the Americas are unlikely to be successful unless
people have a livable environment (State Department 1997). Priority
must be given to investments in Latin American regions that both
provide economic opportunities to reduce inequalities and conserve the
environment.
U.S. Assistance Targeted at Poverty and the Environment to the
Region Should Be Increased and Made More Effective. In the face of the
dire needs of Africa and parts of Asia, U.S. assistance to Latin
America has diminished at the same time that we have focused efforts on
the North American Free Trade Agreement and potentially a Free Trade
Agreement of the Americas. Building more sustainable relationships with
Latin America cannot occur when environments are degraded because those
who live in these areas will migrate internally and/or internationally
to seek a better life. Investing in programs run by reputable
Nongovernmental Organizations like WWF, Conservation International,
Nature Conservancy, and others that try to work with various
stakeholder groups and that work with local NGOs ought to be a
priority.
We Need to Determine Ways to Compensate Rural People in Latin
America for the Environmental Services They Provide. Clean water and
air have always been thought of as free public goods. Increasingly, as
part of the strategies we use to address rural poverty, we should
determine ways to compensate people for the production of ``ecosystem
services'' they provide. For example, the soil erosion from degraded
watersheds of southern Honduras means that shrimp farms along the coast
must spend an estimated five cents a pound of shrimp tail produced just
to manage sediments in ponds (Samayoa, Thurow and Thurow 2000:16). If
government were to begin programs to ``tax'' downstream users for
environmental services, it could make significant investments in
assisting upstream farmers. An example of where this is working now is
that the water management agency in Quito, Ecuador is now allocating a
percentage of user fees collected to help conservation efforts in a
national park in the mountains where the water is produced. Similar
kinds of programs can be established to provide rural people with
income and/or investments to maintain forests that would help provide
clean water and air to Mexico City and other large urban metropolises,
to maintain forests in watersheds to prevent the siltation that reduces
the life of hydropower dams, and to improve watersheds that provide
irrigation water to downstream users.\4\
---------------------------------------------------------------------------
\4\ The World Resources Institute has recently released a report
indicating that, at least in the U.S., marketbased approaches to water
quality management can be more effective than regulatory approaches
alone (Faeth 2000).
---------------------------------------------------------------------------
On a global scale, tradable permits are one mechanism for doing
this. There is considerable interest in using forest conservation for
carbon sequestration to help address global climate change. The
``adoption of forest carbon markets (as proposed under the Kyoto
Protocol) . . . could dramatically increase incentives for developing
nations to protect forests'' (Bonnie et. al. 2000:1763). The Clean
Development Mechanism of the Kyoto Protocol could allow industrialized
nations to purchase carbon credits to meet overall goals of reducing
greenhouse gas emissions.
Consumers also have a role to play by rewarding producers who use
sustainable practices. For example, about 90,000 hectares of pine/oak
forests in Oaxaca, Mexico have received SMARTWOOD certification, yet
thus far producers have not received any market benefits from this. To
guide consumers, we need to devote more resources to establishing
verifiable, simple certification systems to encourage consumers to
purchase products that are environmentally friendly. Organic, shade-
grown coffee is an example; another is dolphin-friendly tuna.
The main point here is that unless there are economic rewards and
returns that will go to directly helping poor people, it is unlikely
that they will engage in behaviors to protect natural resources. Right
now, too many people in Latin America see conservation as
``prohibition'' and contrary to their own interests. As one peasant
leader in the Monarch Butterfly Reserve in central Mexico told me just
last week: ``If you tell me that each year I can harvest one of every
ten trees on my land, I will be happy to cooperate. If you tell me that
I can't cut any trees, then I can assure you all ten trees will
disappear immediately.''
The U.S. Should Ask Our Representatives to Multilateral Development
Banks to Require Social Analysis of Projects. The assessment of
projects in institutions such as the World Bank and Inter-American
Development Bank currently require only financial, economic, technical,
and institutional analysis, with environmental analysis now required in
most cases. There are ``social safeguard policies'' on indigenous
peoples, involuntary resettlement, and women in development that are
applied to some projects, yet social analysis of projects is not
required. This means that we have no comprehensive mechanism for
determining how projects might affect important issues like poverty or
social inequality. Given that multilateral development bank loans are
now only a small percentage of foreign investment in Latin America,
such loans ought to be targeted in ways that can directly affect
poverty and its accompanying maladies.
Invest in University Linkages Focused on Social and Environmental
Research. International NGOs have done a relatively good job of
establishing linkages with local NGOs. Although there are exceptions,
U.S. universities have not developed the same sorts of collaborative
research and development linkages for environmental research and
policy-making with counterparts in Latin America. The kinds of
partnerships developed for agricultural research by programs like
USAID's Collaborative Research Support Projects (CRSP) need to be
expanded for work on environmental and social research. As the National
Science Foundation expands its role in addressing environmental
problems (NSF 2000), it ought to provide more emphasis to supporting
international research collaborations.
SUMMARY
The goal of this presentation was to emphasize the link between
inequality and environmental degradation in Latin America. Despite many
positive steps that have been taken by Latin American countries in the
last several years, the continuing disparities between rich and poor
hold threats for the environment. Degradation results from the rich who
consider themselves to be above the law, and from the poor who have no
alternative but to mine natural resources for current survival. Policy
makers must look for means to reduce inequalities and to directly
channel resources so that those in control of natural resources have
incentives to conserve and improve them.
BIBLIOGRAPHY
Bonnie, Robert, Stephan Schwartzman, Michael Oppenheimer, and Janine
Bloomfield, 2000 Counting the Cost of Deforestation. Science 9
June: 1763-1764.
Berry, Albert, 1997, The Income Distribution Threat in Latin America.
Latin American Research Review 32(2):3-40.
DeWalt, Billie, 1997, The Human Causes of a Natural Catastrophe (on the
effects of Hurricane Mitch on Central America). Pittsburgh
Post-Gazette Forum Sunday, Nov. 22 (Op-ed).
DeWalt, Billie R., Susan C. Stonich and Sarah Hamilton, 1993, Honduras:
Population, Inequality and Resource Destruction, In Carole L.
Jolly and Barbara Boyle Torrey, eds. Population and Land Use in
Developing Countries, National Academy Press: Washington, D.C.,
pp. 106-123.
Dourojeanni, Marc J., 1999, The Future of Latin American Natural
Forests. Environment Division Working Paper, Interamerican
Development Bank: Washington, D.C.
Economist, 2000, The Beginning of the End of the Longest-Ruling Party.
June 24:25-27.
Faeth, Paul, 2000, Fertile Ground: Nutrient Trading's Potential to
Cost-Effectively Improve Water Ouality. WRI: Washington, D.C.
Interamerican Development Bank (IDB), 1998, Integrated Water Resources
Management in Latin America and the Caribbean. Technical Study
ENV-123, Interamerican Development Bank: Washington, D.C.
National Science Foundation, 2000, Environmental Science and
Engineering for the 21st Century: The Role of the National
Science Foundation. NSF: Washington, D.C. (February).
Reca, Lucio G. and Ruben G. Echeverria, 1998, Agricultura, Medio
Ambiente y Pobreza Rural en America Latina: Situacion Actual y
Propuestas. In Lucio G. Reca and Ruben G. Echeverria, eds.
Agricultura, Medio Ambiente y Pobreza Rural en America Latina.
Instituto Internacional deInvestigaciones sobre Politicas
Alimentarias: Washington, D.C.
Revenga, Carmen, Siobhan Murray, Janet Abramovitz, and Allen Hammond,
1998, Watersheds of the World: Ecological Value and
Vulnerability. World Resources Institute: Washington, D.C.
Samayoa, Ma Marcela, Amy P. Thurow, and Thomas L. Thurow, 2000, A
Watershed-Level Economic Assessment of the Downstream Effects
of Steepland Erosion on Shrimp Production, Honduras. Soil
Management Collaborative Research Support Program, Texas A & M
University Technical Bulletin 2000-01.
State Department, 1997, Environmental Diplomacy: The Environment and
U.S. Foreign Policy. Washington, D.C.
Mr. Chafee. Thank you, very much for your time and your
testimony. I especially like when you say it is easy to
pessimistic, but here are some of the positive things that are
happening. Here are some possible solutions. And let us move
forward. So, thank you very much. You really are strong on the
linkage of the inequities and progress on environmental
concerns and how some of the corporations do not abide by the
same laws that everybody else is required to abide by. I am
sure that is a problem. The powerful can get away with more
than the regular citizens.
Mr. Watson, you have been all over the region as
Ambassador, Peru, Colombia, Bolivia, Brazil, Santo Domingo. And
in your experience, your rich experience, in traveling the area
during the past few decades, how are we doing? How is change
coming both on the emergence of democracy, the growing middle
class, and addressing some of the basic environmental concerns,
proper land use, wastewater treatment?
Mr. Watson. Well, Mr. Chairman, the broad experience that
you mentioned in many countries, looking at a broad variety of
issues, I think there has been enormous progress in two or
three of the most important issues. And also there are setbacks
every now and then, there is no doubt that the countries of
Latin America and the Caribbean are essentially committed to
democracy even though it needs to be deepened and strengthened
in a great variety of ways, especially judicial systems and
things like that and greater participation by some of the less
fortunate people in the countries. But still, compared to what
it was a while ago, it has been enormous progress.
Second, I think that most of the countries in the region
have gotten the macroeconomic policies right now to all sorts
of experiments, most of which failed. And every failure, of
course, hurts the poorest people more than anybody else. And I
think basically the macroeconomic policies are essentially in
place if you understand what they are.
Third, I am encouraged that there is a greater awareness on
the part of the leadership in most countries that natural
resources are not free goods as they might have been considered
before. In other words, they are not limitless goods, that they
have to manage them carefully or they are not going to have any
in the future. That does not mean have I got the right policies
in place all the time. But at least there is an awareness which
is essential to start to formulate the right policies which
sets a context for people like ourselves, and like the AID
programs that Carl Leonard was talking about, much more likely
to succeed.
Areas where I think there has still been enormous failure
is in the distribution of income. In most of the countries,
Latin America and the Caribbean, the economic growth has been
terrific but has not benefited everybody even close to equally.
This I think has been compounded to a certain extent, to a
great extent, by failure of education systems to really be
equal, to really bring people who are, let us say, outside the
modern sector of the economy into the economy, be able to give
them the skills to do that. And I have been worried for a long
time that the revolution in communications that is taking place
now will widen this gap. We will just have two classes, those
who are on the Internet if you will and those who have no idea
what it is.
And I think that another area that is relevant in this
respect is public health. There has been a lot of improvement
in a lot of places, but there is still a long way to go. And it
is profoundly in the interest of all the countries of the
hemisphere. Even if all you are concerned about is having an
adequate labor force to be able to keep your economy booming,
to have well-educated and healthy citizens, irrespective of the
ethical and moral considerations that I think are important to
many of us.
I think that we are now, at least my perspective now in The
Nature Conservancy--I just spent a week in Guatemala. I came
back last night. You are beginning to see much more creative
approaches to reconciling the differences or the potential
tensions between development and management of natural
resources or conservation of resources. And I think there is a
greater awareness of the need to involve the local people in
positively constructed and long-term engagement in the
solution, designing the solutions and implementing the
solutions of those problems.
So obviously, if one has spent a long time in the
hemisphere like I have thinking about a lot of these things, I
could go on forever and bore everybody in this room. But those
would be some of the highlights, at least from my experience.
Mr. Chafee. Thank you, very much. I suppose it all does
start with education and public health. And those are the
building blocks. Gentlemen, I do not have any other questions.
I look forward to working with you in the future as we go
forward.
I think there is a tremendous opportunity for our country
to be involved across our borders in a positive way, and I hope
you can share with us any other ideas you have as we go
forward. And we appreciate your taking the time to come all the
way from Pittsburgh and back from Guatemala. We are very
indebted to sharing your wisdom with us here this morning and
wish you the very best. And thank you again.
Mr. Watson. Thank you, very much, sir.
Dr. DeWalt. Thank you.
Mr. Chafee. The hearing is concluded.
[Whereupon, at 10:38 a.m. the hearing was adjourned.]
----------
Additional Questions Submitted for the Record
Response of Carl H. Leonard to Additional Questions for the Record
Submitted by Senator Chafee
PRIORITIZATION OF ENVIRONMENTAL ISSUES
Question. This hearing covered a great many environmental issues
and problems in Latin America/Caribbean that need to be addressed. It
appears that USAID, the multilateral development banks (MDBs), and NGOs
are working on all of them.
Would you find it useful to prioritize these problems so that our
resources are allocated appropriately? Which problems pose the greatest
threat to human health over the long-term?
Answer. There is a broad array of environmental issues in the Latin
America and Caribbean region. In this regard, USAID brought up a subset
of what we feel are some of the most pressing and where we believe we
can have an impact: deforestation, water mismanagement, coastal
degradation, absence of urban environmental services, and vulnerability
to natural disasters. Within this subset, it would be difficult to
prioritize because each poses a significant threat to the region's
future prosperity and stability, and to United States interests.
With regard to human health, of the myriad of environmental
problems facing the region, water scarcity and water pollution may pose
the greatest direct threat. Roughly 25 percent of the population in
Latin America and the Caribbean lacks access to safe drinking water and
almost 60 percent do not have adequate sanitation facilities. Moreover,
it is estimated that only 5-10 percent of all municipal wastewater
receives any sort of treatment before being discharged. The results are
not unexpected: heavily contaminated receiving waters, unhealthy living
conditions, and high levels of mortality and morbidity from waterborne
diseases, especially among children.
In fact, The World Bank estimates that roughly 60 percent of
mortality in children under five years of age is attributable to
waterborne diseases. These problems are most acute in pen-urban and
rural areas.
USAID and the multilateral development banks (MDB) do have distinct
primary areas of focus based on our respective and complementary
capacities. In general, USAID focuses on natural resource management
issues where the development and dissemination of best practices can be
effective, including watershed management and rural water supply and
sanitation. The MDBs focus on urban and energy issues that require
large capital investments. In the urban and energy sectors, USAID does
coordinate with the MDBs by providing grant assistance for the
technical analyses and the piloting of promising approaches that can
become the basis for MDB loans.
URBAN ENVIRONMENTAL INFRASTRUCTURE
Question. What are the major impediments to providing basic
environmental infrastructure in urban areas?
Answer. Historically, central governments have been unable to
adequately finance, deliver and maintain roads, sewage, water systems,
and solid waste collection for their countries' exploding urban
populations. Now, as a result of the recent wave of decentralization
throughout Latin America, many of these challenges still exist, albeit
at the city level. While decentralization ushered in legal reform which
gave cities the authority to make decisions on service delivery, many
new city governments, especially smaller municipalities, remain ill-
equipped to respond. Capacity building is needed to help cities learn
to plan, finance and deliver infrastructure and environmental services.
In addition, further reform at the policy level is required to ensure
that cities are granted the authority to access the needed financing--
either from capital markets or from local revenue collection--to carry
out this new function. In fact, access to capital markets is a major
impediment to providing environmental services in the larger urban
centers which are home to a growing percentage of the Latin America and
the Caribbean population and which require large capital investments.
This is a primary focus of the multilateral development banks (MDB).
The recent natural disasters in Latin America, especially Central
America and the Caribbean, highlighted the need to build capacity in
city governments for responding to the destruction left by floods,
earthquakes, and hurricanes. In 1998, for example, Hurricanes Georges
and Mitch left millions homeless and without potable water and
sanitation services. In such situations, city governments act as
primary agents, not only in responding to the disaster themselves, but
also in directing the influx of resources from international aid
agencies. Under the new framework of decentralization, strong city
government capacity in physical and financial management is crucial to
rebuilding urban environmental infrastructure and planning for future
disasters.
LATIN AMERICAN EQUIVALENT OF U.S.-AEP
Question. The U.S.-Asia Environmental Partnership [U.S.-AEP]
program is a USAID program that brings U.S. firms together with Asian
governments and businesses to find solutions to Asian environmental
programs, leveraging private sector cooperation and funds to increase
the relatively low levels of U.S. government funds. Do you believe that
a Latin American equivalent would be equally successful? Should this be
considered for Latin America? Are U.S. efforts to promote
environmentally preferable technologies leading to real market
advantages for U.S. firms?
Answer. The concept of bringing United States firms together with
Latin America and Caribbean (LAC) governments and businesses to help
solve environmental problems is an excellent one and one which USAID
has been actively pursuing for several years through programs such as
the Environmental Initiative for the Americas (EIA), the Hemispheric
Free Trade Expansion (HFTE) Program, and the Environmental Pollution
Prevention Program (EP3).
Most recently, the USAID's LAC Bureau launched the U.S.-LAC
Environmental Partnership (LACEP) program with the principal purpose of
forging lasting partnerships between the U.S. and LAC public and
private sectors to address the region's severe environmental
degradation problems. LACEP embraces many of the U.S.-AEP principles
and makes use of similar implementation mechanisms. For instance, LACEP
seeks to enhance the performance of targeted LAC business by supporting
U.S. and LAC private sector engagement in the application of
innovative, market-based solutions to environment problems. LACEP also
will strive to leverage the resources of other donors. In addition to
introducing appropriate technologies such as industrial clean
production, LACEP will work to identify and overcome the numerous
institutional and financial barriers that hinder implementation and
dissemination of sound technical solutions.
According to the World Bank, during the last five years, the rate
of increase for the demand of environmental goods and services for
Latin America and the Caribbean (LAC) exceeded all regions of the
world, including Asia and Japan. The annual growth rate for the region
is 12 percent as compared to 2 percent for Japan and 10 percent for the
rest of Asia. For instance, in the next decade, the demand for
environmental goods and services in the water sector alone is expected
to be about $220 billion. Additionally the amount of private investment
capital flowing into LAC last year has, for the first time, exceeded
that of Asia. USAID, through various mechanisms such as the Latin
American Initiative for Environmental Technology (LA-IET) implemented
in partnership with the Environmental Export Council (EEC) and our work
with regional trade and environment committees, has been successful in
introducing U.S. private sector ``know-how'' and expertise to this
growing market and in identifying strategic opportunities for U.S.
firms to capitalize on this demand.
ECO-REGIONAL APPROACHES
Question. I understand that USAID's Center for Environment is
working with NGO partners on conservation programs on an eco-regional
scale in selected regions around the world. Does this mean that the
agency intends to expand eco-regional-based conservation in other
regions and cross border areas in other parts of the world where USAID
is present, as well as more broadly in Latin America and the Caribbean?
If so, can you identify the areas in the Latin American/Caribbean
region that USAID has targeted for large scale conservation action at
the eco-region scale?
Answer. USAID feels that conservation planning at the eco-regional
scale is critical to conservation success. USAID's Center for
Environment, as well as the Agency's regional bureaus, have been
incorporating this approach into conservation efforts for the past
decade, and are increasingly identifying opportunities to expand the
tool where appropriate. Focusing on the sites, populations, ecological
processes and threats that are relevant to an eco-region as a whole
allows for an integrated approach to conserving biodiversity that
transcends political boundaries. Eco-regional approaches use a number
of priority criteria and include relevant stakeholders in the planning
process, while considering the broader social, economic and political
factors that are critical to long-term success.
Specifically, in the Latin America and Caribbean (LAC) region,
USAID has been working in partnership with NGOs in several sites to
conserve biodiversity, several of these on an eco-regional or
transboundary scale. USAID is currently working in the Southwest Amazon
Ecological Corridor, the Atlantic Rainforest, the Guyanan Rainforest
Corridor, the Cerrado and Pantanal eco-regions, the Yasuni-Napo Forest,
a portion of the Northwestern Andes, and the Chaco eco-region.
USAID has also targeted additional areas in the LAC region for eco-
regional conservation efforts, for example, the Central America
Regional Program (PROARCA) is expanding efforts in the MesoAmerican
Biological Corridor, including portions of the MesoAmerican Coral Reef.
An eco-regional planning approach is underway in Paraguay, Brazil and
Bolivia, which will expand the conservation efforts in the Pantanal
eco-region. In addition, discussions are underway concerning the
applicability of an eco-regional approach for the eastern slope of the
Andes, a region that USAID has targeted for possible, large scale
conservation efforts. USAID, in partnership with several NGOs, has also
funded a number of eco-regional priority setting projects in the LLAC
region, for example, ``A Regional Analysis of Geographic Priorities for
Biodiversity Conservation in Latin America and the Caribbean'' and
``Freshwater Biodiversity of Latin America and the Caribbean: A
Conservation Assessment.''
Although USAID is increasingly identifying opportunities to use
eco-regional approaches to target threats to biodiversity and work
across national boundaries, there are many cases where a site-by-site
or policy specific approach is still the most effective conservation
tool. For example, working with the local municipality in Quito,
Ecuador, USAID supported a market-based, water-use fee pilot project
for Cayambe-Coca Reserve, the watershed serving as the source of the
city's potable water supply. The lessons learned and documented at this
site will allow the user-fee model of watershed protection to be
replicated in other areas containing critical watersheds.
______
Response of Joseph E. Eichenberger to Additional Questions for the
Record from Senator Chafee
Question 1. What is the status of the World Bank-sponsored Clean
Air Initiative? What results have been achieved to date, and what
achievements are ultimately expected?
Answer. The World Bank Institute in partnership with the Bank's
Environmentally and Socially Sustainable Development unit in the Latin
America and Caribbean (LAC) region and a number of other agencies and
companies, launched the Clean Air Initiative in Latin American Cities
in December 1998, as a three-year program. The Initiative covers issues
of environment, urban, transport, health, energy, industrial pollution,
and global emissions, as they relate to the quality of the air in the
cities of the most urbanized region of the developing world. Its three
goals are: (a) to promote the integrated development or enhancement of
city clean air action plans based on the participation of all relevant
stakeholders; (b) to advance the exchange of knowledge and experience
among all partners; and (c) to foster public participation and the
active involvement of the private sector in implementing innovations in
the use of low-emissions, low-carbon technologies.
The $1 million budget for calendar year 2000 includes funding from
the World Bank, bilateral donor funds and contributions from the
private sector Steering Committee members of the Initiative
(DaimlerChrysler, Volvo, Renault, Shell). In addition, recipient cities
also contribute. Activities being funded include:
City Specific Workshops (Buenos Aires, Santiago) $190,000
City Action Plans (Buenos Aires, Lima, Rio, Santiago,
Mexico) $450,000
Distance Learning Course $80,000
Web-site Update $70,000
Other Communication Tools (brochure, progress report)
$80,000
Information Pool for Clean Technologies $40,000
Clean Air Toolkit $45,000
Program Management $90,000
With respect to operational investments, World Bank projects are
either under preparation or implementation in most of the cities
currently involved in the Clean Air Initiative (e.g., Mexico City Air
Quality II, Buenos Aires Urban Transport, Lima Urban Transport, and Rio
de Janeiro Mass Transit). Through the development or enhancement of the
city action plans, which account for approximately half the
Initiative's budget, cities will identify further areas requiring
investment. This additional investment may come from a vanety of
sources, including local, private sector, bilateral or multilateral
financing.
Question 2. A review of the Inter-American Development Bank (IDB)
environmental programs shows a great deal of emphasis on wastewater
treatment projects. Is this emphasis advisable, given the magnitude of
other problems?
More than 50% of Latin Americas poor live in urban areas and lack
access to clean water and basic sanitation. Consequently, emphasis on
water and sanitation generally reflects both borrower priorities and
borrower needs. In 1999, IDB lending for water and sanitation accounted
for 73% of environmental lending. In 1998 and 1999, the region,
especially Central America, was struck by natural disasters that killed
thousands and destroyed property and infrastructure. The IDB responded
with natural disaster funding for rehabilitation and reconstruction of
basic infrastructure that included funding for environmental mitigation
measures to reduce vulnerability to future disasters, solid waste
management, and water, and for strengthening emergency response
capacity. Natural disaster loans accounted for around 21% of the
environmental portfolio for 1999. The remainder of the environmental
portfolio consists of support for natural resource conservation and
environmental management.
Other pressing environmental issues require attention by the IDB
and its borrowers. For example, we have encouraged the Bank to do more
in the field of energy efficiency and global public goods related to
the environment. The IDB is in the process of establishing a Trust Fund
with the U.S. Department of Energy to identify and prepare IDB projects
that can benefit from U.S. energy efficiency technologies. It has also
established a sustainable energy markets program, focussed on energy
efficiency, which mobilized $5 million to prepare energy efficiency
projects last year. The IDB recently signed an agreement with the
Global Environmental Facility that will permit the Bank to access
funding for activities related to global environmental issues. These
activities relate to climate change, biodiversity, international
waters, depletion of the ozone layer, and degradation of lands, mainly
through desertification and deforestation.
Question 3. A World Bank analysis for Santiago found that reducing
air pollution from cars, trucks, and buses, and converting wood burning
industrial sources to other fuel would generate benefits that
outweighed pollution control costs by at least a factor of 1.7. Even
with a positive benefit-cost ratio, are such investments feasible in
the region?
Answer. The World Bank's cost benefit-analysis of an air pollution
control scenario for Santiago, Chile, focused on: (a) fixed sources;
(b) gasoline vehicles; (c) buses; and (d) trucks, resulted in a
benefit/cost ratio of 1.7 and indicated that investments in these areas
are highly economically justified. In fact, a number of these measures
have been carried out in Santiago and other Latin American cities and
have proven the high feasibility of such investments.
The analysis for Santiago focuses on putting in place the
appropriate emission standards for vehicles, fuels and stationary
sources. To overcome obstacles to the successful implementation of
these measures in the region, it is important to: (i) include all
relevant stakeholders in the design and implementation of these
activities (i.e., energy, transport and environment sectors, NGOs,
civil society, etc.); (ii) strengthen compliance and enforcement
capacity; (iii) raise public awareness through health studies; (iv)
establish the necessary institutional coordination arrangements; and
(v) complement these efforts through the use of economic incentives.
The World Bank has worked with its clients in the region in the
design and implementation of these measures. For instance, through the
Transport Air Quality Management Project in Mexico City, the Bank
supported the: (a) development and enforcement of emission standards;
(b) implementation of an inspection and maintenance system for
vehicles; (c) carrying out of health studies; (d) development of
economic incentives (such as fuel pricing and vehicle taxation); (e)
strengthening of institutional capabilities to implement air quality
measures; and (f) establishment of an environmental coordination
commission.
Question 4. What are the major impediments to providing basic
environmental infrastructure in urban areas?
Answer. The impediments to providing basic environmental
infrastructure in urban areas are complex and multiple. The expense of
infrastructure is enormous making it very difficult for developing
countries to finance the level of infrastructure needed to serve ever-
growing populations. Many developing countries lack the capital markets
necessary to finance expensive infrastructure projects such as
wastewater treatment facilities and urban sanitation. In addition,
environmental infrastructure investments do not easily attract private
sector finance, particularly in secondary cities. Many of these
countries also maintain investment policies or have investment climates
that severely impede private sector investment.
Unlike the energy sector in Latin America, infrastructure is not
considered by the private sector to be sufficiently profitable. In the
case of a wastewater treatment plant, profits are relatively low and
the consumers are generally quite poor. To have a positive profit
margin, a company would need to set the tariff at a profitable level.
This is difficult due to the limited incomes of consumers. In the U.S.,
such services may be priced at a reasonable level given the average
income of its customers. In many of these countries, even small tariffs
can surpass the level customers can pay, with one-quarter of the
world's population earning less than one dollar a day.
Beyond the financing obstacles, the lack of institutional capacity
among municipalities is also a serious impediment to project
implementation and successful operation in some cases. Cities must have
the capacity to train workers. They must also have knowledge about
project design, planning, construction, facility operations, and
mechanisms to collect tariffs.
______
Response of The Nature Conservancy to Additional Questions for the
Record Submitted by Senator Chafee
Question 1. Given that, ``Integrated coastal zone management (ICZM)
and marine ecosystem management are recognized as urgent needs to deal
with the off coastal resources in the LAC region.'' What do you believe
would be needed to bring about more widespread integrated management in
the Latin America and Caribbean (LAC) region?
Answer. To bring about more widespread integrated management in the
LAC region there is a need for financial resources to be invested in:
educational initiatives to build awareness of the important
and basic role of marine resources, their economic value, and
their nearly ubiquitous state of degradation;
building the local capacity to manage these resources, as
many LAC nations lack the technical expertise for taking on
these complex management challenges;
beginning and improving collaboration among the governmental
and nongovernmental entities in the LAC countries that have a
vested interest in marine resource management;
initiating cross-border international collaboration, as the
marine ecosystems being managed are fluid in nature and cannot
be managed properly in isolation; and
supporting U.S. Government initiatives, such as those
envisioned by USAID Caribbean Region Regional Office in
Jamaica, to improve coastal zone management.
We have been working to support the objectives and provisions of
the Cartagena Convention Protocol (1983) on Specially Protected Areas
and Wildlife in the Wider Caribbean Region (SPAW). This has been
accomplished in partnership with the United Nations Environmental
Program (UNEP) Caribbean Regional Seas Program to implement training
programs for coastal zone managers.
Question 2. Are there successful models that can be replicated?
At a multinational level, the USAID funded PROARCA project is a
good place to begin. With The Nature Conservancy, World Wildlife Fund
and the University of Rhode Island Coastal Resource Center leading a
team of in-country partners, PROARCA has attempted to bring the
government and non-government communities together to set common goals
for ICZM. There has been work at the local level but also with a
Central American Commission for the Environment, which has touched on
regional issues including the harmonization of policies for marine
resource management. A basic step here is seeing that all countries
have similar calendars for closed fishing seasons, so fishermen don't
just jump across borders from month to month (in which case the target
species never get any relief to reproduce).
As basic building blocks of ICZM, national parks should be
established and managed for the protection value they present to many
living and non-living marine resources. Our Parks in Peril program
(PiP) demonstrates how progress can be made in this regard. Through the
implementation of PiP in Parque del Este (PDE), Dominican Republic,
many advances have been made toward achieving the balance between
conservation and economic development. For example:
there is now a vibrant constituency focused on protecting
the marine resources of the park, spearheaded by local
(Dominican) environmental NGO's, and regional organizations
like CAST, the Caribbean Alliance for Sustainable Tourism;
large quantities of important ecological and resource
utilization information have been compiled and used in the
development of terrestrial and marine habitat maps and
recommendations for improving park management;
local communities surrounding the park are much more engaged
in park management and resource-use issues, and work closely
with local partners;
significant strides have been made in improving critical
park infrastructure to accommodate the thousands of tourists
visiting PDE on a monthly basis.
The Nature Conservancy has contributed to the well being of marine
natural resources by developing publications that document successful
work. An examples is the ``Rapid Ecological Assessment Series: Parque
Nacional del Este,'' that provides critical and new information on
marine biodiversity conservation planing and management. Through the
use of such documents, we are able to use our specific site-based work
to leverage conservation training and education across the region.
Question 3. Is the relative lack of Integrated CZM a question of
financial resources alone, or are major changes in attitudes and
approach needed by government and private sector interests in the
region?
Answer. It is not just a financial issue. The awareness of the
public must be increased. The public needs to understand and appreciate
that ICZM is important because coastal zones harbor flora and fauna
important to countries' natural heritage, provide food, contain
resources (that can be managed sustainably) used locally or exported,
and attract tourists. At the end of the day, it is a quality of life
issue. Life for the human population will be improved if the coastal
zone is managed well.
Government and private sector interests in the region need to set
mutual long-term goals and work together to see the resources managed
sustainably, not in short-term actions that degrade the resource base.
The biggest change in attitude needed is a commitment to protect
the resources for long term sustainability. Establishment of a series
of marine parks in high priority coastal systems around the region
would demonstrate a major positive change in attitudes. These parks
would serve as places for general marine biodiversity protection, but
would also serve to protect fishery resources. If these areas were
chosen carefully, they would help significantly in both species
conservation and fisheries. The fish would spill out of these habitat
refuges and provide local fishermen with a resource and would be a
highly prized resource by not only the local populations but also the
growing tourism sector.
Question 4. What do you believe are the coastal and marine areas
and resources most at risk today?
Answer. Coastal wetlands (marshes and mangrove forests) and shallow
water marine ecosystems (like seagrass beds and coral reefs) are very
sensitive to disturbance and over-fishing. They are at risk wherever
they occur in Latin America and the Caribbean. Every country should
have a strategy for protecting a significant percentage of them, as
they form the basis of many food resources. Many of these areas are
destroyed slowly through pollution and other go directly under the plow
as coastal areas are developed rapidly.
All the common fishery targets (finfish and invertebrates) in the
region have been dramatically overfished and should be protected, as
most populations are perilously close to crashing.