PART IV

PATTERNS OF BILATERAL AND MULTILATERAL ASSISTANCE

- Volume, and quality of different types of financial flows and assistance programmes, including multilateral and bilateral sources, debt repayments and rescheduling, regional and functional breakdowns and the role of special funding mechanisms such as the Global Environment Facility
Presented by : Mrs. Marilyn Yakowitz, Special Advisor, Organization for Economic Co-operation and Development (OECD)

- Programmes of Non-Governmental Organizations : NGO programmes in Peru, India and Senegal
Presented by : Mr. Juan Paloa Iturregui, Consejo Andino de Manejo Ecológico (CAME), Ms. Vanaja Ramprasad, Third World Network & Mr. Mamdou Lamine Thian, Forum for African Voluntary Development Organizations (FAVDO)

VOLUME, AND QUALITY OF DIFFERENT TYPES OF FINANCIAL FLOWS AND ASSISTANCE PROGRAMMES, INCLUDING MULTILATERAL AND BILATERAL SOURCES, DEBT REPAYMENTS AND RESCHEDULING, REGIONAL AND FUNCTIONAL BREAKDOWNS AND THE ROLE OF SPECIAL FUNDING MECHANISMS SUCH AS THE GLOBAL ENVIRONMENT FACILITY

Presented by : Mrs. Marilyn Yakowitz, Special Advisor, Organization for Economic Co-operation and Development (OECD)

INTRODUCTION AND SUMMARY

The Organisation for Economic Co-operation and Development (OECD) is an official observer accredited to the INCD. The information and analysis herein represent the work of the OECD Secretariat and do not necessarily represent the official views of the Organisation or of its Member governments.

This paper attempts to put into perspective financial resources flows to developing countries, with emphasis on regions most affected by desertification. How to collect or prepare financial data which relate to desertification, drylands degradation and drought is a sensitive, and potentially controversial issue. This is inherent in the nature of the problem, which encompasses many economic, social, political and scientific activities, and the likely expense involved in seeking such information, beyond what currently exists.

The objectives of this paper are, therefore:

i. to explore what exists in terms of data concerning financial flows related to combatting desertification;

ii. to examine possible costs and benefits of accumulating additional data; and;

iii. to suggest some ways in which information about financial flows might be used for decision making.

This paper is organised into four main sections:

i. Total financial resource inflows to developing countries - to provide general background information concerning what is happening world-wide on both a year to year and longer-term basis;

ii. Regional inflows - to take a look at areas particularly affected by desertification, where possible;

iii. The sectoral situation with respect to desertification, including the methodological problem; and,

iv. Conclusions concentrate on the costs and benefits of seeking more data, potential issues and possible approaches.

The principle sources on which this paper is based are: 1) published data by the OECD Development Assistance Committee (DAC) which is the major repository and center of analysis for donor/creditor statistics, including comprehensive data available through 1991 and provisional data for 1992 which has just been released; 2) the Club du Sahel of the OECD, in conjunction with CILSS (Permanent Inter-State Committee for Drought Control in the Sahel); 3) the Centre d'Observation des Economies Africaines, Université de Paris, Orsay (COBEA); 4) other sources include materials from and consultations with the UN Development Programme, the World Bank, other organisations and selected countries.

Quantification of Financial Resource Flows Aimed at Combatting Desertification - A Dilemma

There is considerable data concerning total regional and individual developing country inflows, as well as information about flows to specific economic sectors. However, combatting desertification, drylands degradation and drought do not constitute an economic sector, such as agriculture or extractive industries. Rather, elements which may contribute to combatting desertification can be found in many and diverse categories of activity. But, an accurate measure of development assistance aimed at combatting desertification cannot be derived from an aggregation of the expenditures in all relevant aid programmes and projects. Expenditures which contribute to combatting desertification are often also attributable to other activities, and thus, any accounting procedure risks double counting of flows for specific purposes. A related difficultly for quantification is that there are no particularly useful surrogates for anti-desertification measures. As a result, quantification, even on a case-by-case basis poses a thorny dilemma.

Main findings:

There are considerable financial resource flows for which we have data. In almost every case, these flows have been increasing every year, at rates comparable to or exceeding gross domestic product (GDP) in donor countries. Arid, semi-arid and dry lands areas are receiving a major portion of these flows.

With respect to combatting desertification - financial flows are unquestionably targeted to activities which contribute to this effort, for example, natural resources management, agriculture, environment, women in development, energy, etc. Flows towards many economic sectors pertain to efforts to help desertification; but there is considerable overlap since efforts to combat desertification and dry lands management cut across many sectors. Quantification, therefore, is problematic. Thus, there are important issues that the INCD may wish to consider with respect to the costs and benefits of seeking more data and its potential use or utility.

TOTAL FINANCIAL RESOURCE INFLOWS TO DEVELOPING COUNTRIES - THE TRENDS

Net total resource flows (official development assistance, other official flows and private resources) rose spectacularly in the early 1980s, and then fell sharply due to curtailment of export credits, bank loans and foreign direct investment. But flows recovered steadily from the mid-1980s through 1991. [Table 1] This steady progress has resulted in real increases (in constant 1991 prices and exchange rates) on average of over $6 billion (US) each year during the period 1986 through 1991, amounting to annual increases of about five percent for total flows. However, in 1992, latest estimates indicate that total flows jumped to record levels, i.e. 23 per cent in real terms.

From 1986 through 1992, total net resource inflows to developing countries increased from $82.2 to $176 billion (in current US dollars). ODF (official development finance - defined as official development assistance plus less concessional multilateral flows) grew from $50.9 billion to $72.3 billion. Approximately one-third of ODF are multilateral flows. In contrast, private flows more than quadrupled, growing from $23.4 to 99.8 million. In real terms, ODF has hovered around $70 billion, thus remaining relatively large but essentially unchanged since 1988. [Table 2] Growth since the mid-1980s mainly has been due to changes in private flows. For example, bond lending jumped from $4.5 billion in 1990 to $14 billion in 1992 and international bank lending rose to record levels in 1992, following a drop in 1991 attributed to the Gulf War. International bank lending comprised 40 per cent of total private flows in 1992 compared with 31 per cent for foreign direct investment.

Table 1 : Total Net Resource Inflows to Developing Countries
(Billions of current US dollars)

The implications of increasing private flows, as compared to slower growth in the level of ODF, depends on the country and the region concerned. ODF remains the predominant resource flow for the many developing countries which are combatting desertification and seeking to improve dry lands management, especially in Africa. [1] Much of the increased bank lending has been going to those credit-worthy countries which have continued to be able or are recently in a position to finance the borrowing. [2] Only a relatively small number of countries have benefitted from the growth of private flows -particularly, Mexico, Brazil and Argentina in Latin America, India, China and Indonesia in Asia, and Kuwait and Saudi Arabia in the Middle East; most of these nations are affected by desertification.

For the International Negotiation Committee responsible for elaborating a Convention to Combat Desertification (INCD), these figures imply a potential for proposed actions and commitments for the Convention to be related to the development of private flows, particularly in countries able to attract such flows. For areas still largely dependent on ODF, forward planning needs to take into account the lack of private inflows; these can probably depend on, with some degree of certainty, the trend towards slight nominal increases in ODF and little real fluctuation. It remains to be seen if the small downturn in 1992, in real terms, is the beginning of a new trend. Table 3 indicates the percentage of total flows accounted for by ODF and private flows since 1970, reflecting volatility in net private flows. INCD needs to be realistic about this volatility when proposing actions for inclusion in the Convention.

Developing countries will increasingly have to rely on attracting private flows (internal and external) to meet their growing resource needs. [3] The challenge posed by the need to attract private flows without compromising sustainability is a critical element, particularly with respect to actions to be proposed for consideration by the INCD.

Development Assistance Flows from Non-OECD Sources

Non-OECD as well as OECD countries have been important sources of financial flows. However, total aid flows from several non-OECD sources to developing countries, including those experiencing desertification, have undergone major declines in recent years. This is one reason that real aid growth has not increased at a faster rate recently, relative to previous years. Total aid from non-OECD sources has dropped from over 13 billion (current dollars) in 1980 to about $4 billion in 1991. While data from 1992 are still incomplete, there is no doubt that it fell further to the lowest levels ever recorded. [4]

The main non-OECD donor groups are: the former USSR and Central and Eastern European countries, the Arab countries and a small number of other developing countries.

Table 2 : Total Net Resource Inflows to Developing Countries
(Billions of US dollars at 1991 prices and exchange rates)

Table 3 : Total Net Resource Inflows to Developing Countries
(Percentage of Flows)

Aid from Arab donors dropped sharply in 1991 as compared to 1990 as a direct consequence of the Gulf war; this aid did not rebound in 1992. Flows from the countries of Central and Eastern Europe have virtually come to a halt. What little is known about aid from Russia suggests that Russian aid in 1992 was very small compared with Soviet aid in earlier years. [5] These declines affect several countries having dry lands, such as Ethiopia, Yemen and Mongolia.

Among the other developing countries, China and India have long-standing aid programmes. Chinese aid could well be a factor in dry lands management since it is extended to Sub-Saharan Africa and recently to Mongolia; China recently began negotiations with Kazakhstan and other Central Asian republics. Aid from the Republic of Korea increased in recent years, reaching its highest level in 1992. Technical assistance from Israel is directed towards sectors which could be associated with dry lands management. [6]

Non-governmental organisations (NGOs)

Grants by NGOs rose steadily from 1970 through 1992. These resource inflows to developing countries account for an estimated 5.5 per cent of the total net resource inflows in 1992. A number of donor agencies channel funds through NGOs who are frequently effective intermediaries between government and local communities.

Capital Exports, debt and debt relief, debt-for-nature, capital flight

Capital exports constrain investment capacities and therefore should probably be considered a factor retarding sustainable development in all areas, including those affected by desertification. There has been significant expansion in the volume of capital exports since 1989 relative to the resources going into developing countries.

External debt, like other forms of financial problems, have an impact on sustainable development. Agenda 21 stressed that:

"It is important to achieve durable solutions to the debt problems of low and middle income developing countries in order to provide them with the needed means for sustainable development." [7]

The aggregate debt of developing countries has been growing, but at a slower pace than previously. Nevertheless, debt remains a heavy burden on developing countries. High external debt is likely to exacerbate problems caused by desertification and drought.

Significant progress has been made with official and commercial debt reorganisation for the poorest countries. The shift towards more concessional debt has also continued and there have been important bilateral debt cancellations.

Aggregate debt service payments fell by over $8 billion, to $141 billion in 1991, the largest annual drop since 1987. Table 4 shows the pattern of declining debt service ratios in all regions since the mid-1980s through 1990. In 1992, there were declines in financial market and export credit debt service payments. Nevertheless, multilateral debt service payments have been growing in importance and impact. Thus, the external debt service of

the poorest countries (the LLDCs - least developed countries) which had been falling since 1989, rose in 1992 as a result of expanding multilateral service payments. [8] Frequently countries experiencing desertification have debt service ratios higher than the average in specific regions. [9]

Table 4 : Debt Service Ratios (a) by Region

Countries that have avoided debt-servicing problems have generally maintained access to capital markets but others have not, given that the credit rating and economic structure of countries affect their access to credit. Among Latin American countries experiencing desertification, there is a growing market perception that Chile and Mexico and to a lesser extent, Brazil and Argentina, have made great progress with respect to their debt problems and so have been able in varying degrees depending on their recovery, to re-enter international financial markets. Commenting on access to financial markets, the Chairman of the Development Assistance Committee (DAC) of the OECD has stated that "for the poorest developing countries, the situation is not encouraging; prospects for a significant increase in resource flows remain limited and there is no sign that their debt situation is materially improving." [10]

Debt-for-nature swaps have not involved particularly large amounts, compared to debt totals, nor have many swaps been directly linked to anti-desertification activities, per se. Between 1987 and 1990, about twenty projects at a total value of approximately $100 million had begun. Two years later the cumulative total had risen to about $150 million. While most of these swaps are arranged by non-governmental organisations, a number of donor countries indicate interest in using them. [11]

Capital flight remains a serious problem in certain countries affected by desertification, depriving them of needed investment capital.

REGIONAL TRENDS

Regions strongly affected by desertification are receiving substantial ODA flows. Clearly, not all of these funds go toward combatting desertification, but many of the projects and programmes funded by ODA contribute to efforts to reduce the effects of desertification.An Overview of principal regions affected

An Overview of principal regions affected

For all developing country regions, Table 5 compares total net receipts of ODA by region and selected countries for 1980/81, 1985/86 and 1990/91. Clearly Sub-Saharan Africa, which is particularly hard hit by desertification, is the sub-region receiving the largest share of ODA - 36.8 per cent in 1990/91, up from 30.8 per cent in 1980/81. Other regions having areas affected by desertification include: Asia, which attracted 29.6 per cent of total ODA in 1990/91, North Africa and the Middle East, which obtained 17.1 per cent, and Latin America which received 11.0 per cent.

ODA to Sub-Saharan Africa represents nearly 11 per cent of its GNP, but for most other regions ODA averages between 0.5 to 1.0 per cent of GNP.

The data indicate that Asia, with nearly 70 per cent of all developing country population receives 29.6 per cent of total ODA. Sub-Saharan Africa, with about a 12 per cent share of developing country population, receives 36.8 per cent of ODA flows. Other areas of the world, such as North Africa and the Middle East, having about 6 per cent of developing country population, obtained a 17.1 per cent share of ODA in 90/91. Thus,regions most deeply affected by desertification are receiving - on a per capita basis - a major share of all ODA flows.

Table 5 : Total Net Receipts of ODA by Region and Selected Developing Countries
(Percentage of total ODA)

Regarding the former Soviet Union (including the New Central Asian Republics): Five Central Asian Republics have recently been added to the DAC list of developing countries. Among these are Uzbekistan and Kazakhstan, whose environment ministers recently declared that desiccation of the Aral Sea is the most serious ecological threat facing their countries. " ... Like an atomic bomb in Central Asia, it has not exploded yet, but it will", said Kazakhstan Minister of Ecology and Bioresources. [12]

In Latin America: Chile, Mexico, Paraguay, Argentina, Peru and Brazil are among those affected by desertification and problems arising from dry lands in this region. From 1981- 1991, ODA grew in real terms by 8.3 percent per annum, representing between 10-12 percent of ODA distributed to all recipient countries in the entire region. Following the debt crisis in the early 1980s international direct investment inflows diminished and ODF became the most important component of resource flows. Private flows, particularly foreign direct investment, have now picked up as a result of stronger economic performance in the main countries of the region coupled with improved investor and lender confidence. [13] Private flows in 1991 constituted a larger portion of overall flows to Latin America (18%) as compared with Sub-Saharan Africa (7%) or North Africa and the Middle East

(-13%), where there has been net disinvestment. However, they do not approach the magnitude of private flows in Asia (62%).

Asia has been attracting a growing share of resources, with private flows playing a particularly important role in recent years.

Africa's dependence on ODF as a source of external finance has increased strongly over the last decade and is now near total. [14] Sub-Saharan Africa has for a long time been a priority area for many DAC and other donors, including China and the Middle East. The Sahel has received a significant proportion of these funds. A number of DAC donors contribute the majority of their ODA budgets to Sub-Saharan Africa. Flows have increased since the 1970s. Since 1981, there has been a steady increase, on average, in ODA on the order of $400 million per annum, in real terms. About three-quarters of the OECD Member country donors have increased their disbursements to this region during the period 1980-1991.

THE SECTORAL SITUATION

Combatting desertification and drought is not by itself an economic sector, such as agriculture or extractive industries. Rather elements contributing to combatting desertification can be found in a number of activities. Many programmes and projects, in diverse sectors, have direct or indirect linkages to combatting desertification, dry lands degradation and drought. Calculating the magnitude of these financial flows therefore, is not only complex and problematic, but likely to be expensive. The cost and benefits involved warrant serious consideration prior to any recommendation of information collection and analysis in this area.

Data collection

So far as sectoral issues are concerned, the OECD DAC Creditor Reporting System (CRS) is the source of the most comprehensive data available. It consists of nine major reporting categories each having dozens of sub-categories. This data collection system is based upon the International Standard Industrial Classification System, modified to identify development-oriented activities, rather than industrial activities. The CRS contains few specific references to desertification as such, and not surprisingly, desertification is not a major category. The same is true for the World Bank and the United Nations Development Programme databases. (Although desertification appears as a sub-category, countries tend to use it very little for reporting flows.) Therefore, precise data for financial flows directed at drylands management/desertification cannot be obtained directly from the CRS reports. Nevertheless, many CRS categories pertain to combatting desertification, directly and indirectly. There are literally dozens of categories and sub-categories that might be associated with combatting desertification, but it is probably impossible to isolate the proportion, in terms of dollar amounts, subsumed by each of these.

Development Assistance aimed at specific objectives

Using the CRS as a basis, the DAC compiles and publishes annually a summary of official development finance by major aid purpose. (The World Bank uses a similar typology for its reporting system. [15]) Examination of these data illustrates the linkages between combatting desertification and many economic, social and scientific endeavors benefitting from aid flows.

Table 6 shows aid from DAC donors as distributed by major aid purpose. The first section, entitled social and administrative infrastructure, accounts for about one-fourth of total flows by sector. In dry lands or desertified areas a certain share of the funds included in this section under the headings of education, health and population, planning/public administration and water supply probably also contributes to efforts aimed at combatting desertification. The second section - economic infrastructure - is also pertinent; for example, the linkage between energy supply, deforestation and desertification is critical is certain regions. In the third section, production is broken down into agriculture, industry (including mining and construction) and trade, banking and tourism. Clearly many agriculture expenditures also apply to combatting dry lands degradation. Less obvious, but equally important are banking and tourism. Credit system improvement is, of course, crucial to the development of investment opportunities. Tourism is the largest economic sector in terms of resource flows, worldwide. However, there is a growing concern about the sustainability of certain tourism, which has been found to seriously degrade certain areas from the point of view of environmental amenities. Programme assistance, debt relief and food aid are other endeavors which in part may contribute to combatting desertification. Funds to NGOs may also support such efforts.

Table 7 shows the same breakdown of aid by major purposes, but for disbursements by the EEC, World Bank and the UN. A comparison, between the data from these organisations and those from DAC donors shows, (despite the limitations of the data, since for 1990 only World Bank figures are included), greater emphasis by multilaterals on economic infrastructure and production. While DAC countries are active in programme assistance and debt relief, multilaterals are little, if at all, involved in these areas.

Table 6 : Aid by Major Purpose
(Total commitments by DAC Donors in percentages)

Table 7 : Aid by Major Purpose
(Multilateral Flows, Percentage of Total)

The methodological problem

Combatting desertification and drought clearly cuts across many sectors. Moreover, certain major economic sectors are more pertinent than others. But, an aggregation of the expenditures in all of these relevant categories cannot provide an accurate measure of funds directed at the problem. A weighting of the components of such aggregate data would not help much either.

Another difficultly in determining what to count as financial flows towards desertification is associated with the problem of double counting of resources. Expenditures in the various categories that contribute to combatting desertification are also attributable to other activities. This overlap makes unambiguous accounting for expenditures directed at combatting desertification probably quantitatively impossible within any comprehensive system that deals with sectoral flows.

Environmental expenditures are not a particularly good surrogate for flows directed towards combatting desertification. Nevertheless, some significant portion of environmental expenditures in areas affected by desertification can be said to apply. Similarly, natural resources management expenditures in drylands areas also apply, probably in significant proportions. Such data alone, were they available, would still not give an unambiguous view. While these categories are major contributors to combatting desertification, so is a proportion of certain sectoral categories including, inter alia: agriculture, energy, water management, demographics, financial and business services, training, afforestation, rural infrastructure, decentralisation, micro, small and medium-size enterprise development. Note that this is by no means a complete listing.

Recent approaches by donors to analyse aid by sector

A number of OECD country donors are attempting to develop supplemental approaches to analyse their development assistance flows. This effort comes in the wake of changes in how donors characterise their overall development assistance policies. Donors' policy objectives are moving from sectoral approaches to broader, cross-cutting approaches.

Countries are increasingly reporting - informally or within their own budget systems, but not within the DAC system - that a significant proportion of their financial resource flows are going towards environmental purposes. For example, the US Agency for International Development, Development Fund for Africa, in its financial reporting, distinguishes the environmental component of natural resources management and agriculture obligations. [Table 8 shows figures for a sample group of countries in fiscal year 1993.] For each allocation toward natural resources management and agriculture, the Agency determines what fraction can be considered applicable to the category of environment. A large proportion of such flows probably contribute to combatting desertification, as well. Indeed, the flows for combatting desertification probably consist of some fraction of the environment flows, plus some of the remaining agriculture and natural resource management flows. A methodological question would involve what percentage or co-efficient would apply. Certainly not the same co-efficient for each project or each country. Hence the difficulty in weighting components.

In Germany, Environment Department of the Federal Ministry for Economic Co-operation and Development recently analysed the amount of flows aimed at combatting desertification and improving dry land management in Africa.

Currently, the Netherlands is conducting an exercise which will include an effort to more closely comprehend and account for their aid flows targeted to specific sectors.

Table 8 : Environment Component of Natural Resources Management and Agriculture Obligations, 199 (in millions US dollars)]

Theoretically every project or programme could be analysed to determine what percentage aims at combatting desertification, regardless of the overlap with other sectors or categories of effort. If this were attempted, many scientific, economic, social and political activities might have to be evaluated to determine which were also contributing to combatting desertification in affected areas. This would risk double counting, but some measure of expenditures could be obtained. A far more unreliable measure would involve counting a certain fixed proportion of various categories of activities in drylands areas as contributing to combatting desertification.

Large expenditures are likely to be involved in gathering and analysing such information. Thus, donor and recipient countries may wish to examine whether the benefits of having this information are worth the costs and what additional information will truly contribute to the fight against desertification.

CONCLUSION: POTENTIAL ISSUES FOR THE INCD AND POSSIBLE APPROACHES

Costs and benefits

Given that the effort involved in making the estimate of these flows towards combatting desertification is likely to be time consuming and therefore very costly (and the outcome very approximate), countries would probably want to consider whether the potential benefits of this data collection and analysis are worth the costs.

The Intergovernmental Negotiating Committee may wish to consider whether and to what extent the proposed Convention will require reporting of flows. Among the questions to ask which can contribute to the decision might be:

i. What could we learn were we to try to pinpoint more closely the development assistance flows attributable to desertification?

ii. Who would collect the data? How would data on national efforts and sub-regional efforts be collected?

iii. If the information were available, how could it be used effectively?

iv. What would such data contribute to the efforts to combat desertification?

v. What are the costs associated with collecting the data and analysing it?

vi. What are the opportunity costs - what is foregone if funds go towards this information collection exercise and not elsewhere?

vii. Where would this effort figure among a list of priorities?

Another tack to consider would be less of an accounting approach and more of a programmatic effort. Projects and programmes which might contribute to drylands management and combatting desertification could be considered in light of improving the efficient and effective deployment of flows for achieving objectives. Such analysis or evaluation could be performed by using a checklist approach or by incorporation of combatting desertification as an element for consideration in environmental impact analyses in affected areas. Analysis of the potential contribution of ongoing and future projects and programmes to combatting desertification, and the development of priorities for them, could be performed jointly by recipients and donors during various development, implementation and review stages. If any net figure for flows were to be selected, such a figure might be estimated within the course of the work to develop and implement programmes and projects, and could thus be used as a management and decision making tool, rather than as an accounting measure, after the fact.

Possible next steps

The Intergovernmental Negotiating Committee may wish to consider several possible next steps in relation to utilising financial resource flows information and methodologies in the course of the work for the preparation of the International Convention to Combat Desertification. Some of these might include, inter alia:

i. Consideration of whether additional information concerning financial resources flows already exists;

ii. Determination of what additional resources information might be useful to have and whether it can be expeditiously generated;

iii. Reflection on other qualitative and quantitative issues linked with an evaluation of financial resources trends for combatting desertification, for example:

iv. Domestic resources, which are the major source of financial resources for affected countries, are far more important for combatting desertification than flows from donors. In this regard, what measures might be relevant for the draft Convention to make them as effective as possible for combatting desertification?

v. The relative importance of remittances from migration and whether these flows are linked in any way to combatting desertification;

vi. Efficiency and effectiveness of flows use;

vii. Priority setting and co-ordination;

viii. Getting funds intended for the local level to the local level;

ix. Policy coherence, for example the effect of subsidies or land tenure policies on efforts to combat land degradation;

x. Criteria for programme and project selection and transparent assessment for all development assistance activities in affected areas: these could usefully include consideration of whether proposals add to the problem or combat it; these could also involve evaluation of short- term and long-term consequences of activities;

xi. For the national and sub-regional case studies, the implications of financial resource flows trends, particularly for specific regions and countries, might usefully be considered;

xii. Synthesis of lessons learned compiled by donors and host countries: what lessons have been learned about financial resources flows can contribute to the negotiation process?

xiii. Should the processes in which donors engage to analyse the results of projects and programmes incorporate concerns about combatting desertification, and if so what and how can such analyses be made to consistently take into account objectives aimed at combatting desertification? Do negotiators wish to propose monitoring practices of financial resource flows directed towards combatting desertification and the benefits of such flows to related objectives (e.g. natural resources management, agriculture)? What form might these take?

If the Intergovernmental Negotiating Committee decides to recommend any next steps with respect to the collection and use of financial resource flows information, it would be useful to consider precisely what special efforts are involved, how the work could be carried out, and by whom.

In summary:

Total financial resource flows are large and increasing, but very gradually from the mid- 1980s through 1991. However, in 1992, when there was a large increase due to changes in private flows.

It appears that flows to regions especially hard hit by desertification receive a large proportion of total financial resource flows, and flows to many of these regions are increasing. But there are considerable variations in regions with respect to whether ODA or private flows predominate.

In terms of flows to combatting desertification and drylands management, as a sectoral issue:

i. Flows to many economic sectors contribute to combatting desertification; and

ii. The Intergovernmental Negotiation Committee may wish to consider the cost/benefit of quantifying flows.

Finally, the utility of any financial resources flows data collection and analysis, may be best directed to or interwoven with planning, development and implementation - as a management tool, rather than having quantification as an accounting exercise alone.

Annex I

TERMS AND DEFINITIONS USED

DEVELOPMENT ASSISTANCE COMMITTEE (DAC): Members: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States and the Commission of the European Communities. Observers: The IMF and the World Bank. In addition Greece, Iceland and Turkey are associated with DAC meetings in areas of mutual interest.

OFFICIAL DEVELOPMENT ASSISTANCE (ODA): Refers to flows which are grants or loans undertaken by the official sector, with promotion of economic development or welfare as main objectives, at concessional financial terms (if a loan, at least 25 per cent grant element). In addition to financial flows, technical co-operation is included in aid. It consists almost entirely of grants to nationals of developing countries receiving education or training at home or abroad, and payments to defray the costs of teachers, administrators, advisers and similar personnel serving in developing countries.

OFFICIAL DEVELOPMENT FINANCE (ODF): Used in measuring the inflow of resources to developing countries, includes grants and development lending by multilateral financial institutions both concessional and non-concessional, bilateral ODA and other official flows for development purposes, but with too low a grant element to qualify as ODA. Certain refinancing loans which do not qualify as ODA are also included.

DEVELOPING COUNTRIES AND TERRITORIES: The list used by the DAC includes: all countries and territories in Africa except South Africa; in America all countries except the United States and Canada; in Asia all except, on the one hand, Japan and, on the other hand, the Asian republics that were previously part of the former Soviet Union other than Kazakhstan, Kyrghyzstan, Tajikistan, Turkmenistan and Uzbekistan which were added to the list with effect from 1 January 1993; in Oceania all except Australia and New Zealand; and the following in Europe: Albania, Cyprus, Gibraltar, Greece, Malta, Turkey and ex-Yugoslavia.

End Notes

[1] Organisation for Economic Co-operation and Development (OECD), Development Co- operation, 1992 Report, Efforts and Policies of the Members of the Development Assistance Committee, Paris, 1992. p. 82.

[2] OECD, Financial Resources for Developing Countries: 1992 and Recent Trends, 6 July 1993, Press Release, SG/PRESS(93)41, p. 18.

[3] OECD, SG/PRESS(93)41, p. 1.

[4] OECD, SG/PRESS(93)41, p. 14.

[5] OECD, SG/PRESS(93)41, p. 14.

[6] OECD, Development Co-operation, 1992 Report, p. 115-118; and, OECD, SG/PRESS(93)41, p. 14.

[7] United Nations Conference on Environment and Development (UNCED), Report of the UNCED, Rio de Janeiro, 3-14 June 1992, Resolutions Adopted by the Conference, A/Conf. 151/26/Rev.1(vol 1), p. 416.

[8] OECD, SG/PRESS(93)41, p. 8.

[9] OECD, Development Co-operation, 1992 Report, p. A-26; and Centre d'Observation des Economies Africaines, L'aide dans le cadre de la désertification, manuscript.

[10] OECD, Development Co-operation, 1992 Report, p. 95.

[11] A. Bauer and G. Illing, "Echanges dette-environnement: comment financer la protection de la forêt", Problèmes économiques, no. 2292, 23 September 1992; T. Amelung. Debt-for-nature swaps, Kiel Institute for World Economics, Working paper no. 476, 1991; A. Comolet, et al., L'échange dette-nature: bilan et perspectives d'évolution", 23 October 1992.

[12] World Environment Report, 2 March 1993, vol. 19, no. 5, p. 36.

[13] OECD, Development Co-operation, 1992 Report, p. 80.

[14] OECD, Development Co-operation, 1992 Report, p. 82.

[15] World Bank, The World Bank Annual Report, Washington, D.C., 1992.

BIBLIOGRAPHY OF MAIN SOURCES

OECD, Development Assistance Manual: DAC Principles for Effective Aid, Paris, 1992.

OECD, Development Co-operation, 1992 Report: Efforts and Policies of the Members of the Development Assistance Committee, Paris, 1992.

OECD, Development Co-operation, 1991 Report: Efforts and Policies of the Members of the Development Assistance Committee, Paris, 1991.

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OECD, External Debt Statistics 1989-1990, Paris, 1991.

OECD, The State of the Environment, with Supplement: Environmental Indicators, Paris, 1991.

OECD, OECD Environmental Data Compendium 1991, Paris, 1991.

OECD, Geographical Distribution of Financial Flows to Developing Countries: Disbursements, Commitments, Economic Indicators 1987-1990, Paris, 1992.

OECD, Club du Sahel/CILSS (Permanent Inter-State Committee for Drought Control in the Sahel), Aid Policies in the CILSS Countries: Synthesis Report by COBEA (Centre d'Observation des Economies Africaines, Paris, 1992.

OECD, Club du Sahel/CILSS (Permanent Inter-State Committee for Drought Control in the Sahel), L'aide dans le cadre de la lutte contre la désertification, by COBEA (Centre d'Observation des Economies Africaines, Paris, 1993 (manuscript).

OECD, Club du Sahel/CILSS (Permanent Inter-State Committee for Drought Control in the Sahel), Official Development Assistance to CILSS Countries, 1980- 1990: Provisional Report, Group Donors Meeting, Berlin, April 1993 by COBEA (Centre d'Observation des Economies Africaines, Paris, 1993 [SAH/D(93)399.

Love, A. "Donner sa chance au développement", in Le Courrier no. 137, janvier- fevrier 1993.

World Bank, The World Bank Annual Report, Washington, D.C., 1992.

World Bank, The World Bank Development Report 1992: Development and Environment, Washington, D.C., 1992.

PROGRAMMES OF NON-GOVERNMENTAL ORGANIZATIONS

NGO PROGRAMMES IN PERU

Presented by : Mr. Juan Paloa Iturregui, Consejo Andino de Manejo Ecológico (CAME)

Peru, wich currently has 21 million inhabitants, has been characterized as being a country in a continuous search for development. During this process in its Republican state, periods of five years governance have been alternated between liberalism and nationalism. This phenomena named "The Peruvian Pendulum", has made Peru an almost ungovernable country. In this search, our country has experienced two hypothesis that can be synthesized in the following manner:

In the first view, the Peruvian nation should rescue, revalue and develop the principles of life, knowledge and know-how of its heritage, among them, those of the Incas. All this would bring integrated management of its resources as well as qualitative human development, as it had been centuries before.

The alternative view that of liberalism, makes us search for well-being through, of course, the development of efficiency int he management of our resources and the efficacy to solve our problems by increasing production and productivity through market mechanisms.

Currently, we learn on the side of the pendulum which brings neoliberal policies again. Facing this process, the conclusions and lessons learned by the Peruvian people can be summarized as follows:

i. One of the main achievements of the pendulum model is that the two last generations, that of my parents and mine have survived, although the survival of the next generation is not secure yet.

ii. On the other hand, several drawbacks and hindrances have occurred. Slowly but permanently, we see how each day the potential productive capacity of our land is being lost, due to the back and forth of Agrarian policies and Structural Adjustment Programmes.

In other instances when the pendulum has been on the neoliberal side, enormous irrigation systems were built. A few examples, such as Chari-Mochic, Gallito Ciego and Majes, should be enough to exemplify the case. Their main aims were to increase cash crop products such as sugarcane and rice, for the export market. The trouble was that besides being crops which depended on scarce water resource, they were not competitive enough in the world market. The government decided to buy them instead from other countries which had developed better production rates. The Peruvian production had to remain in country. It even had problems in national markets because of its higher prices. The consequences are not only desertifying valleys and sub-valleys in the Peruvian coast but also extensive degraded areas in the actiplano region of the Peruvian Andes. Both, the coast and the high plateaus of the Andes mountain are areas prone to desertification. The former an arid and semi-arid region with only 3 mm of annual rainfall and the other is noted for its fragility and marginality.

What happens is that, taking into account the promises and hopes of economic growth through market mechanisms, our governments, anywhere the pendulum has been set, have forgotten completely the mountain regions where in spite of a mean from 300 to 670 mm, annual rainfall very poorly distributed. Climate change is a possible cause for these irregularities. Sometimes rains fall when they are not required; sometimes they never arrive at all, causing long drought periods with loss of seeds, and the hunger in grassroots communities. Had it not rained at least 400 mm, this year could have become the third consecutive drought year in the Peruvian-Bolivian high plateaus.

The Andes mountains in general, and particularly the southern Andes, brings migration with a subsequent abandonment of fragile ecosystems in the mountain plains. As a consequence, land degradation comes along with; losses of soil fertility. Also, built infrastructure deteriorates slowly but permanently; small irrigation systems collapse and the "waru-warus" are left aside. Large sectors of the population, which basically is multilingual and multicultural, are confused by this pendulum effect. Which is the way to take?

The CAME Network (Consejo Andino de Manejo Ecologico) from Puno-Peru is putting in place several programmes. In its first Regional Meeting held in April this year, it agreed to give priority to the high plateaus of the altiplano bioregion where frontiers have been limited by nature and by ecological lands. NGO efforts in this area cover in Peru the departments of Puno, and the high parts of Moquegue, Tacna, Arequipa and Cusco; and the Bolivian side the departments of La Paz, Oruro, Cochabambta and Posti. In both countries, the general trend is to look for common strategies for the improvement of productive systems. Some of the most relevant strategies used by the NGO's within CAME, as networks implementing an institutional program, are the following:

i. The planning, execution and evaluation of small productive projects with the population are being used as a means of learning in daily life. In this way, small projects promote andean crops (potatoes, quinua, carrihua, oca), livestock raising, productive agricultural infrastructure and micro- irrigation systems. This brings both short-term production and, what is most important, long-term experience in areas like management, decision-making and know-how. This knowledge helps grassroots communities to articulate their models using major societal paradigms through improved negotiating capacities and a better understanding of the context.

ii. In parallel, processes of systematization or experiences provide a feed-back to multidisciplinary teams in the promotion of development. Currently, CAME can offer methodological approaches for the implementation of small projects with rural communities addressing both conservation and production practices, global and specific, in the use and management of water, land and environment in Andean agriculture and high altitude pastoralism. The network proposes to share this knowledge through policies which are being developed at regional level but with a national perspective.

Finally, there is still, within the local conscience of grassroots communities, the sense of a basic life principle and it can be stated in the following manner: "We should be able to nourish and respect life". Referring to the fact that the Andean settler has a very respectful attitude towards nature and his own environment. In other words, knowing how to nourish and repect life means that, in order to make life more sustainable, we must strike a balance between what we take and what we give back to nature and our fellow neighbours. It is like saying "live and let live".

However, there is always another life objective, the one which tells us in a loud voice "We must live the best we can". It seems to us that the secret to coming up with an equitable convention lies in choosing the correct statement. Whether we learn to nourish and respect life or we prefer the best possible in life. In both cases, we need to be the best; the only difference is that one alternative is more sustainable than the other and only with the sustainable one will be possible to secure life for the generations to come.

NGO PROGRAMMES IN INDIA

Presented by : Ms. Vanaja Ramprasad, Third World Network

Irrigation that violates essential ecological processes can itself become the cause for water scarcity and desertificastion. The hydrological cycle is an essential ecological process which recycle and regenerates water resources. This case study illustrates the fact that exploitation of natural resources for profit can render valuable land unfit for subsistence.

Kerala is a classic example of a state in India that has experienced dessertification and drought. The state of Kerala is a narrow strip of land extending north-south between the Arabian Sea on one side and the main peninsular hill range, the western ghats on the other. Annual rainfall in the state is about 3200mm. There are more than 44 rivers originating in the hills and flowing into the sea. A famous writer described Kerala as a glorious land once upon a time, where there was abundance of everything. But now, with soil and vegetation system changes, because natural surface run off is extremely fast and atmospheric conditions congenial for rapid evaporation, the chances of desertification and floods have become high.

The changes in the ecosystem that have exaccebrated desertification are:

i. Once perennial rivers do not have enough dry season flow, as storage reservoirs behind dams retain and divert the water elsewhere. On the other hand rapid filling up and overflow of the reservoirs, and excessive run off from catchment hills results in an abrupt rise in river discharge, creating flood situations causing damage to agriculture.

ii. The coastal sandy, or muddy alluvial, zone normally has a near surface fresh water film overlying the deeper saline waters. This fresh water table is annually replenished by the normal floods. As normal floods have been controlled through embankements and upstream storage reservoirs, and with natural water being reclaimed for human settlements and agriculture, the recharge of fresh water tables is curtailed, causing the upward movement of saline water from the deeper strata, causing salination of soil and ground water and rendering the area unfit for cultivation.

iii. Despite the fact that Kerala has 50 medium and large river valley projects for irrigation and hydro-electric power generation, due to the drastic reduction of storage caused by siltation and reduced inflow the reservoirs have failed to serve their purpose. In 1987 and 1988 more than 75% of Kerala was officially declared as drought prone although total average rainfall was not much below normal.

iv. Besides disturbing the morphology of perenial rivers, destruction of forests has led to soil erosion. Prime forests have been cleared and converted to tea plantations. Illegal logging has further destroyed tree cover. Lack of understanding of tropical forest ecology has thus contributed to desertified mountain slopes.

v. While the mountain and coastal areas were rendered deserts, remaining fertile lands were also subjected to changing land use. Kerala was known for its complex agro-system with multitiered vegetation that included tall canopy trees, understory plants, small trees, bushes of a variety of uses and tuber crops and climbers. This has unfortunately been taken over by cash crops for export and monoculture. Cassava, coconut, banana and rubber are all examples of such monoculture. All these factors have been found to have retrogressive effects on ecosystems leading to water scarcity.

This case study of Kerala is an example of the direct consequence of the unbridled pursuit of "Development" by humankind.

India's recent choice of structural adjustment and economic liberalisation has further put the country in a vulnerable situation. Land use patterns are fast changing to promote export crops. Technical and scientific explanations of desertification cannot be delt with in isolation from the political aspects of changing land use patterns, deforestation or lack of tree cover.

Green revolution agriculture and intensive irrigation have resulted in large scale water logging and wet deserts on agricultural lands. Valuable diversity in crops has been lost to high yielding monoculture. Hybrid varieties do not give the necessary vegetative cover for the dry lands. As an NGO, our focus has been in the area of biodiversity conservation. In situ conservation of genetic resources of native varieties in agriculture contributes towards reversing the trend in land degradation caused by over exploitation of surface ground water. Our efforts towards this continue in the wake of the threat to enforce intellectual property rights and patenting of life forms as part of the GATT negotiations. The emergence of patents and IPRs for seed and plant materials creates new vulnerabilities and risks for Third World countries.

NGO PROGRAMMES IN SENEGAL

Presented by: Mr. Mamdou Lamine Thian, Forum for African Voluntary Development Organizations (FAVDO)

INTRODUCTION

Before the colonial era, rural activity was based on traditional subsistence agriculture. The farmer or herder knew how to exploit nature while preserving it and bringing it essential nutritional elements. Soils were not overexploited thanks to a system of fallow periods.

The colonial period introduced market based production, first by means of obligatory taxes in kind and then by developing peanut cultivation for export. The Senegalese farmer was thus forced to use practices which used land too extensively.

After independence, national agricultural policy continued in the same vein by encouraging peasants to cultivate more peanuts. Mechanization was also introduced in rural areas. Its application required complete utilisation of fields, which contributed substantially to degradation of vegetation cover in the central region of the country since called the peanut basin. By the years 1968-1969 peanut production totalled a million tons per year.

At the same time, pastoral activity became increasingly difficult because of reduced cattle trails and the use of late-maturing species such as peanuts and cotton. This resulted in overgrazing whose result could be only the degradation of the vegetable cover on rangelands and at water points.

In the Sahel, drought came to Senegal in the 1970s. The normal climate, as defined by thirty-year precipitation averages, declined 25 to 50 percent. The long years of drought considerably impoverished soils and decimated a good part of the livestock population.

CONSEQUENCES

The consequences of these developments were multiple:

i. In economic terms, peanut production declined by almost a half from 1,000,000 tons per year to 500,000/600.000 tons, and there were significant livestock losses, especially in the Northern and Ferlo pastoral regions.

ii. On the sociological side, there was substantial emigration of the productive labor force to northern countries (France, Germany, Italy, USA). This exodus was strongly felt in the North of Senegal where in many villages only children, women and old men remained. This resulted in deterioration of family structures and made it more difficult for populations to cope with accelerating desertification.

iii. Environmentally, there was notable degradation of vegetation cover, transforming forests into savannahs and savannahs into steppes, with wind erosion and the like.

MEASURE TO COMBAT DESERTIFICATION

Actions to combat desertification occurred on two levels:

i. Government actions such as hydro-agricultural and forest projects, wind breaks, green belts, revision of the forest code toward greater local community involvement in management of forest resources, desalinization in the South of the country, a national reforestation day, and the provision of rural district centers with viable wells.

ii. Actions of NGOs and local populations to reduce deforestation, common in Senegal, such as: energy/environment programmes (ENDA), construction of minidams (GADEC), rural irrigated perimeters, cereal banks, literacy campaigns (PIP); reforestation, soil conservation and fruit production (RADI Senegal).

AN EXAMPLE OF COMBATTING DESERTIFICATION: THE DIEGUEME REFORESTATION AND SOIL CONSERVATION PROJECT

A good example of NGO activities is a project for reforestation, soil conservation and fruit production mounted by RADI Senegal in the community of Diegueme situated in the region of Thies in the center-west part of Senegal.

Justification of the project

The principal justification of the project was environmental protection which utilized the long experience of local populations in planting trees, as well as their social customs and traditional land- use patterns.

Impact of the project on the environment

In 1991/1992, the project nursery produced 157,100 seedlings to support local populations in land rehabilitation. These seedlings were used to plant trees for both woodlots and windbreaks.

In 1992, 15,860 seedlings were planted in an area of 3,312 square meters in order to utilize agrarian space for village wood production. This was particularly important to women's groups. Another 3,700 seedlings, planted in lines totaling 3,700 meters, began to form perimeter breaks against the strong winds damaging crops.

All in all, the types and species selected, principally eucalyptus and prosopices leceuena, adapted well to local conditions. They both proved drought resistant and met the objectives of local populations in the production of wood for heating and in the protection of crops.

Impact of the project on human activities

Thanks to the project, local populations, both individuals and communities, planted new trees, notably eucalyptus, throughout the area, thus finding a solution to their wood shortages. In comparison with previous tree-planting activities, they took advantage of all uses of the trees. In the process, they developed a capacity for self-reliance, dynamism and the motivation for careful observation and maintenance of their tree plantations. Most important perhaps, they themselves were the direct owners and beneficiaries of their land.

Difficulties encountered

Project implementation necessitated well drilling at the site. The current problem is that the water basin no longer provides a satisfactory volume of water for the plantations and their maintenance. A second basin is therefore necessary.

In addition, periodic breakdowns of motorpumps especially slowed the development of fruit trees. Planting of 22,000 seedlings to produce mangos, mandarins, oranges and guava had to be postponed to the 1992/1993 season.

Future perspectives

RADI counted on animating and implementing village mini-nursery programmes with maximum participation of local populations in searching for solutions to problems of local environmental degradation. An implementation committee was therefore created in each village to follow the progress of the mini-nurseries.

CONCLUSION

In sum, this was an excellent example of peasants utilizing tree nurseries for needed products of direct benefit. The beneficial impact of an operation that makes reforestation an activity of interest to the peasants themselves is indisputable.

In order that peasants change their behavior vis-a-vis the environment and take action, it is necessary for them to be sensitive to their indirect and direct interest in a project such as the village mini-nurseries.

In this way, central nurseries for reforestation and soil conservation, such as those of RADI, can play an important demonstration role, since they give value to trees by sale to individuals and train peasants in techniques of tree plantation agriculture utilizing the best management of trees and village nurseries.