Distinguished Co-Chairs, Members of the Council, of the Working Groups, Guests, Ladies and Gentlemen

　　It's a pleasure to be here today with all of you particularly with Minister Xia Zhenhua with whom I co-chaired this Council for three years when I was president of CIDA. I was part of the process that has moved you into the Council's third phase and I'm delighted to be here to see it unfolding, so thank you for the invitation.

　　Given that environment and development are built into the Council's name, and given that environment and development are the fundamental building blocks of sustainable development, I thought I would make them the subject of my comments to you today.

　　In the last couple of decades, I have moved between international and national institutions. I was the Deputy Minister of Canada's Department of Environment - twice – I was a recycled Deputy Minister; I was Head of Canada's International Development Agency (CIDA), I was Canada's Executive Director on the Board of the World Bank, and currently I'm the CEO/Chairman of the Global Environment Facility (GEF).

　　These are all institutions, which focus on either development or environment as their mandate. But for sustainable development to be a reality, environment and development can't be seen as separate domains. They have to come together in a coherent way and so today I wanted to give you some impressions about the extent to which I think this is happening.

　　All of this, of course, from my own perspective, that of someone who has worked primarily in international and developed country institutions, probably a different perspective from that of someone in a developing country.

　　With the above caveat, let me say something about each of: the evolving approach to development; the evolving approach to environment; the current role of the GEF: its mandate, its portfolio, its work here in China; and something about the GEF in the years ahead. All of this with a view to demonstrating: one, that there has historically been a significant gap between our thinking on development and our thinking on the environment; secondly, that this gap, while still very real, is beginning to close; and thirdly, that the GEF will do its part in supporting an integrated approach to environmental management and in strengthening the link with development.

　　Let me begin with a few words about the development model as it has evolved in the last 50 years and as it has been reflected in the practices of multilateral and bilateral institutions. Post World War II, with the beginning of the end of colonialism, there was an assumption that developing countries needed foreign aid basically for infrastructure. There was a view that developing countries were much like post-war Germany and France and that they could be developed by building infrastructure: roads, schools, hospitals and so on. Not surprisingly that approach to development in the 50's proved quite wrong.

　　I think with Robert McNamara at the helm of the World Bank in the 1970's, we saw a more sophisticated approach: more focus on poverty, agriculture and rural livelihoods. But that approach, potentially quite successful, was thrown off track by the oil crises of 1973 and 1979 and the subsequent debt crisis in the 1980's. Developing countries needed cash and the World Bank and the IMF found themselves in a strong enough position to go down a quite different track based on the Reagan/Thatcher market economics driven approach which has come to be called the Washington consensus model, in its early form a very simple economic model, full of macro and micro conditionalities imposed on countries, dollars basically in exchange for policy and programming commitments. But it was at odds with national politics, with culture, with history. It was not a comprehensive approach, and put simply, it didn't work.

　　But as the aid distorting Cold War ended, I think the World Bank, the International Monetary Fund and bilateral agencies developed a much better and more sophisticated approach to development: comprehensive, certainly with economic foundations, but in addition a focus on social issues, on health, on education, on the environment, on the importance of a country's institutional foundations: a good public service, legal and regulatory frameworks, community and public participation. A more country driven approach to development, more partnership based, with donors working together in support of country driven programs, with more realistic time frames, and much more sensitive to a country's history, ethnicity, politics, and culture. I think all of this came together in a very symbolic way with the Monterrey consensus in Mexico in March 2002. That consensus tried to reflect all of the above and I think in general put the approach to development through the international financial institutions and bilateral donors on a much better track.

　　But having paid this compliment to the development side, I'd add that with respect to environmental issues, especially global ones, my view is that they are not yet mainstreamed in the development model in many developing countries or in the IFI's and bilateral development agencies. Many developing countries are still overwhelmed with problems of poverty, health and education. Their resource base continues to degrade. Their interest, capacity, and resources to focus on global environmental issues like climate change, deforestation, biodiversity loss, are limited. And in the IFI's and bilateral aid agencies, environment is still on the margins of their primary interests. So I think we have a way to go with respect to building environment more fully into the development model.

　　Let me look at it from the other perspective, that of the environment. With respect to the environment and evolution of thinking on it, there are two issues, one being the coherence with which we think about the spectrum of environmental issues. And secondly, the way in which environment as a whole, and the people that focus on environment, think about development, about people and livelihoods.

　　Let me start first with the issue of coherence within the domain of environmental thinking. Probably because of the breadth of the environmental domain, we have over time disaggregated our environmental thinking and policy into ever smaller components. The global components we have dealt with through multilateral environmental agreements (MEA's), each with its own Conference of the Parties (COP) and subsidiary working bodies. We now have literally hundreds of global multilateral environmental agreements, each with its own individual process and institutional support. This is a disaggregation of environmental issues which is completely at odds with the world's physical reality and hardly a good basis for environmental coherence.

　　My stylized synopsis of how we got to that point is more or less as follows. This is from a Canadian perspective but it generalizes. In the 1950's we were focused on essentially local issues: solid waste management, agricultural and industrial chemicals.

　　By the 1960's, we began to realize that environment was more than a local issue and, in Canada at least, our horizons started to broaden to bi-national issues particularly those with the US. We focused on acid rain from power plants in the USA which were killing Canadian lakes. We recognized that we had to work with USA on joint management of the Great Lakes.

　　And then in the 1970's, for the first time, we began to focus on global environmental problems, problems that would require the cooperation of all countries to resolve. The ozone hole problem caused by man-made CFC's is perhaps the best example. It was a wonderful process which went in a very reasonable time frame from the science of ozone, to policy, to regulation, a global agreement with its own special fund under the Montreal Protocol, all with a view to phasing out ozone destroying CFC's, and it seems to be working, a great example of multilateral environmental agreement. But there were many, many other multilateral environmental agreements which were negotiated in the 1980's, none as successful, all of which suffered from a lack of financial resources to support them.

　　With the Rio Earth Summit in 1992, a small number of major global conventions emerged: Climate Change, Biodiversity, the Desertification Convention a little later, and very recently the Convention on Persistent Organic Pollutants or POPs. And this time, they were all funded by the newly created Global Environment Facility (GEF) which became the financial mechanism for all of them. I think the GEF, the common financial mechanism, can be helpful in stimulating coherence across the range of environmental issues represented by those conventions. But it is not sufficient. The fact is the big multilateral environment agreements that got started in 1992 have focused largely on their individual evolution. The Climate Change Convention, with the Kyoto Protocol dynamic, is probably the best example. For years now its focus has been a concern that the Protocol might not get ratified. Now with Russia about to ratify, the COP can breathe a sigh of relief after a long and stressful period, but as I said for many years now the focus has been very much internal to the future of the convention and its protocol. As well, the Convention on Biological Diversity, and POPs for that matter, have also had their own quite unique and internally focused processes and dynamic which for most of the past decade has kept them from looking much beyond their own boundaries.

　　And when the major protocols did start to look beyond their own processes and their own evolution, the natural and legitimate tendency was to look first to related conventions, to create a cluster of conventions with a more or less common theme. I think that's very helpful and I think that with respect to the Convention on Biological Diversity you now see a clustering of it with RAMSAR, with CITES, with the World Heritage Convention, and with the Convention on Migratory Species.

　　In a different domain, chemicals, I think you see a clustering of the POPs Convention with the Basel Convention on Hazardous Waste and the Rotterdam Convention on Prior Informed Consent, and a very helpful process that UNEP is sponsoring called the Strategic Approach to Integrated Chemicals Management or SAICM.

　　And increasingly there are workshops and talk about synergies among the Conventions. It's all very embryonic but very hopeful. Just the other day, I had in my office two very eminent international biodiversity specialists who were talking to us about a project which would assess the impacts of climate change on protected areas, to determine the way in which we should locate and manage protected areas differently because of the impact of climate change now and in the years ahead, a wonderful example of the extent to which we are seeing coherence and synergy across conventions which as I say historically have pretty much kept to themselves.

　　So, coherence within the world of global environmental thinking, processes, and institutions is emerging, even if a little slowly. This is important in its own right, but also because it is a prerequisite for creating stronger links to development: to people and their livelihoods. As important as these MEAs are, their links to development were initially weak despite the repeated admonitions from developing countries that failure to consider development dimensions would significantly diminish developing country participation. I think there are several reasons for this poor linkage between environment and development.

　　For one, Northern Conference of the Parties (COP) representatives tend to be from Departments of the Environment. Their background flows out of the history I mentioned, which originally was a local or bi-national focus. Their background tends not to be in development. Second, as noted earlier, the MEAs have focused largely on their internal evolution. I mentioned climate change with the focus on mitigation and ratification, biodiversity which was initially focused on conservation and protected areas, where in fact people and livelihoods were actually considered a negative. For those of you that were in Durban at the Parks Congress a year or so ago, you may recall the expectation of a debate there about the extent to which protected area advocates should start to engage in a more pro-active and positive way on development issues, and I think the outcome of that thinking was that the answer had to be yes. But the fact that there was a discussion, a debate, with people on the other side shows that this was not always the view. I think biodiversity is very much now on the right track in terms of its focus on people and development. But it's something that has taken some time to recognize.

　　So it is only recently that these multilateral environmental agreements have started to focus on development dimensions, but they are now doing so in a very real way.

　　In climate change, the discussion is moving beyond mitigation and now focusing significantly on adaptation to climate change which is a fundamental development issue. It's about the impact the climate has on agriculture, on fishing, on people's livelihoods. It's particularly important for small island developing states and for Less Developed Countries (LDCs) generally. In the GEF, we're doing a lot of fund raising and programming on adaptation and it will be something that we'll give considerable emphasis to in the years ahead.

　　In biodiversity, we're moving from that initial focus on conservation and protected areas to other objectives which take the Convention fully into the development world. The second objective of the CBD is what's called biodiversity in production landscapes, that is to say biodiversity outside of protected areas, biodiversity as it is affected by agriculture, by fishing, by energy developments. Again, we are still struggling with how to do this but clearly the environment /development linkage is getting stronger. And of course, with respect to genetic resources, which is the third objective of the CBD, the COP is starting to tackle the issue of access and benefit sharing, again an issue of fundamental importance to developing countries. So from the environmental side, the links with development are emerging and getting stronger, a welcome development for sure.

　　Let me say a word about the role of the GEF in promoting environmental synergies and environment- development linkages. Historically, the GEF has supported the major Rio conventions, CBD and UNFCC and, though there is no particular convention, International Waters. Recently, we have become the financial mechanism as well in support of POPs and the Desertification Convention.

　　We take guidance from the Conferences of the Parties and fund projects in support of these conventions in developing countries. Our focus has been on the multilateral environmental agreements individually, that's our obligation, but clearly we have to go beyond this in the future.

　　For the record, what kind of support have we provided: over $5 billion in grants for over 1,500 projects in over 160 countries, projects that have received over $17 billion in co-financing. The areas in which we have spent that money: about 35% of the total in each of biodiversity and climate change, almost 15% in international waters, the remaining 15% in areas, such as ozone depletion, and in the newly emerging areas of persistent organic pollutants and land degradation.

　　We provide grant financing and that comes from a fund which is replenished every four years. The GEF is now in the third year of a four-year replenishment, $3 billion which runs from 2002-2006. So that next year, 2005, we'll be turning our minds to the replenishment process for the GEF4 which starts in July 2006.

　　Within the GEF portfolio, China is our biggest partner, with GEF grants of about $467 million, supporting projects worth about $21.8 billion in total. In China, we have participated in 42 projects, most of which, about 23, have been in climate change - energy efficiency , renewable energy projects, wind, solar, biogas, and in transportation where we are supporting an important demonstration of fuel-cell buses in Beijing and Shanghai. We have a number of projects, about 11 in biodiversity, in the areas of sustainable forestry, wetlands, biodiversity, nature reserves and in addition we have several projects in international waters and persistent organic pollutants.

　　And currently I would like to highlight a major project in land degradation. With the Chinese Ministry of Finance and the Asian Development Bank as the key executing agencies, but with many partners World Bank, International Fund for Agricultural Development (IFAD), the World Food Programme (WFP). It's a 10-year program with $70 million of GEF grants and a total project cost of about $700 million. It's a comprehensive land degradation project which encompasses policy and legislative frameworks, capacity building, participatory approaches, monitoring and evaluation and seven demonstration projects in six Western provinces. There's a formal opening of the project here in Beijing on Monday.

　　This project is of particular importance for us at the GEF and let me explain why. I said earlier that the environment and development worlds have to come closer together if we are to make sustainable development a reality. We want to support that process at the GEF but in fact historically we've been as much a part of the problem as part of the solution. We work in support of individual MEAs and have done little to bridge the gaps between them. But we are starting to change. We now have resources devoted to integrated ecosystem projects and with new responsibility in the land degradation area, we will, going forward, devote more time and effort to integrated resource management (IRM). The project that I just described is an important first step for the GEF in moving towards a greater focus on integrated resource management. And we are using the project as a model in building resource management partnerships in a number of other countries, in Cuba, Namibia, Burkina Faso, Ethiopia, and Vietnam.

　　And for the GEF going forward our more coherent approach on environment will be matched by a much greater emphasis on development: on people and livelihooods. We are just now completing a study on the local benefits of GEF projects, which will be a baseline of sorts, but our increasing focus on climate change adaptation will take us closer to people, our focus on biodiversity in productive landscapes will take us directly to people's livelihoods, and our embryonic work on land degradation and integrated resource management is fundamentally about the balance between the needs of people to live and work on the one hand and, on the other, the needs of a country's ecosystems and resource base to survive.

　　So I'm optimistic about what I see as greater coherence in the fields of environment and development and strengthening of the links between them. I know that this is the mission of the China Council. I wish you continued success in pursuit of that mission. And in terms of linkages, let me say that China and the GEF have a strong and longstanding relationship, and I hope I can consider the GEF-China Council relationship an important part. Thank you.