Contributions to the Post-Rio Review
Symposium Chairman, and Associate Director,
Technology and Development Program, MIT
On behalf of the collaborating institutions and the co-sponsors of this Symposium, I would like to welcome you here and to thank you for joining us in this initiative.
And it is on your behalf that I would like to thank the collaborating institutions for their participation and the co-sponsors for their support.
We are making every effort to be as representative as possible and to reflect the views of business and industry, the scientific community, and governments. Two issues need to be addressed in this Introduction. One is on substance; the second is on procedure.
The focus in the next two days is on enabling technologies and implications for finance and for legal institutions. The output of this Symposium will serve as an input into the post-Rio Review process that is mandated by the UN General Assembly for June 1997. So, let me review briefly the five questions which are the focus of this Symposium:
1. What has happened since UNCED, if anything?
2. What are the enabling innovations, the technological innovations? The key word of here is "enabling."
3. What could or should the next steps be with respect to the Rio agenda, or with respect to extension or modifications of the Rio agenda?
4. What can be done to manage obstacles? and
5. How can this be done?
Our task today and tomorrow is to help address those five questions, particularly the question of "how." Now let me turn to matters of procedure.
Operationally, it is your views that we hope to represent. So the content of your evaluation of the post-Rio period is important. Equally but perhaps more important is for us to focus on the products and the outcomes of the Review Process itself as we move into the next century.
We must also ask what is (a) your "wish list" and preference for future actions, and (b) what are the practical possibilities associated with preferences and wish lists.
We are planning a major global initiative to establish a partnership on cyberspace for sustainability. Our goal is to expand uses of cyberspace in order to facilitate the development and exchange of information on sustainability issues and to help us address the "critical gaps."
The international community is currently confronting three major gaps. These are (i) gaps in technology, (ii) gaps related to critical preferences and policies, and (iii) gaps in level of economic development.
The question here is: Does the judicious use of advanced information technologies facilitate strategies towards gap reduction? Related to this is: Can the use of information technology for purposes of gap reduction be in itself sustainable?
Returning now to matters of formal process:
The Symposium is a collaborative venture among seventeen institutions. It is now formally part of the post-Rio Evaluation Review. For this reason I would like to convey to you the regrets of the Secretary General of the United Nations for not being with you today. He asks that you accept his apologies. He also transmitted a brief written statement.
The welcoming remarks for this morning, for the symposium, will be given by Maurice Strong, who has most kindly and most graciously agreed to give us of his time and his perspective to be with us today. It would be highly presumptuous of me to introduce Maurice Strong. I will just share with you some basic facts.
We all know it was Maurice Strong's vision that led us from Stockholm in 1972 to UNCED in 1992. It was his perseverance that produced outcomes beyond UNCED. Mr. Strong is the holder of 37 honorary degrees, which we at MIT think is a remarkable feat in itself.
Maurice F. Strong
Senior Advisor to the President, The World Bank
Chairman, Earth Council
This is a very important moment for me, Nazli, because it's the closest I will ever come to replacing our good friend and UN leader, the Secretary General. So it gives me a brief moment of trepidation combined with the novelty of thinking that I could replace him in his remarks. But I will simply join in expressing my trepidation at speaking before such a very distinguished group. Also, I would like to congratulate you, Nazli. You have assembled -- at times when it's not easy to get people -- a remarkable group, which is a real tribute to your persistence: the fact is that people just cannot say "no" to you, and I am one of those people.
I am also pleased that Earth Council is listed as one of your collaborators. But I want to explain that our collaboration has been more symbolic and that you as a person -- you and your colleagues -- have actually done the work. We have simply demonstrated the importance of support. And we are very pleased to have the honor of doing that.
The Post-Rio Review
A little more than three years has passed since Rio, and next year we will be joining in the fifth anniversary Review of Rio -- what has happened; what has not happened. That review will, of course, culminate in a Special Session of the UN General Assembly, preceded by a meeting of the UN Commission on Sustainable Development and also preceded by a major civil society event, assembled in Rio itself, in March 1997, in which many of you are collaborating and will be participating. And all of you will provide, hopefully, new energy and new emphasis to following up and implementing the results of Rio as well as an input into the official process.
Now, Nazli has asked if anything has happened since Rio. Let me only say, I think a great deal less than any of us would want or would feel adequate; and yet a great deal more than most people realized. Most of the action has taken place in communities, in sectors, in businesses, in non-governmental organizations, and in initiatives that are proliferating all over the world -- and not at the stratospheric level of governments.
Just to mention one example: sixteen hundred cities and towns have adopted their local Agendas 21 based on the Rio agenda. So, yes, not nearly enough; but an encouraging amount of activity has taken place on which we now want to build an accelerated process in the future, and this seminar will help us do that.
Finance, of course, is a very, very key issue. We should not despair when we think of financing. It is true that government financing has actually diminished since Rio, but it is also true that vast amounts of money -- literally billions of dollars, hundreds of billions -- are being used in the existing fiscal system through subsidies and incentives in various ways for activities that run counter to sustainability. The redeployment of these funds alone would more than provide the financial resources. So, let us not despair even with diminishing financial resources.
Redeployment and better use would result in major economic savings as well as environmental improvements. So, the challenge now is to get out there and stop wringing our hands, and develop the new and innovative approaches that can provide the resources needed.
Private investment has overtaken public official development assistance, and the greening of private investment is a new trend of major importance. Making private investment a vehicle for sustainability is a very important and indeed necessary challenge.
As we begin this meeting, I simply want to say how hopeful I am -- given the quality of the program, the very fine orchestration that Nazli is providing, the nature of the agenda -- that this meeting will make an extremely important contribution to revitalizing and re-energizing the process of implementing and building on the vision of Rio and its Agenda 21.
I am very happy and proud to be with you.
The Challenges of Innovation and Adjustment
Charles M. Vest
Thank you very much, Maurice. You and Nazli are both inspirations to all of us, and we appreciate very much your dedication to this important cause.
Distinguished guests, MIT colleagues, ladies and gentlemen, I am delighted to welcome you here to this Symposium on Global Accords for Sustainable Development.
We are honored that such an exceptional group has come together for this meeting. I want to welcome in particular Ms. Elizabeth Dowdeswell, the Undersecretary General of the United Nations and Executive Director of UNEP; Ambassador Razali, the Malaysian Ambassador to the UN and Chairman of the forthcoming General Assembly; Mr. Jonathan Lash, whom you will hear from soon, Co-chairman of the President's Council on Sustainable Development and President of the World Resources Institute; Ambassador Abraham Katz, President, United States Council for International Business; and of course, Mr. Maurice Strong, Special Advisor to the President of the World Bank.
I want to thank all of you for being here to participate in our meeting today. I think it is particularly fitting that a meeting of this type take place on a campus such as ours.
MIT, after all, is not only a national institution, it is in fact a global institution. Many of our faculty and students, of course, come to us from all over the world. The diversity of perspectives and knowledge embodied in such an international culture and tradition is especially valuable at a time when research universities have an increasingly critical role to play in promoting sustainability.
The current wide-spread use of the term sustainable development or sustainability reflects growing international concern about prevailing patterns of industrial and economic development.
Our increasing awareness of environmental decline and persistent economic inequalities gives credibility to these concerns; in a world of limited capital resources, burgeoning populations, and increasingly intense energy consumption, rapid development poses formidable challenges for both developed and developing areas of the world.
We have come to see that economic patterns have profound consequences for the global environment and for human health. One of our featured speakers this morning will address just these points, and that is MIT professor Mario Molina, who was co-recipient last fall of the Nobel Prize in Chemistry.
As we all know, Professor Molina and his colleagues were awarded the Nobel Prize for identifying the chemical reactions initiated by CFCs that can ultimately damage the ozone layer of the earth, which filters out ultraviolet rays from the sun and thus protects life. This work, again as you know, led ultimately to a landmark international agreement to phase out this entire class of chemicals, but it was not scientific knowledge alone that led to this global accord.
The agreement grew out of a concerted cooperative effort among the scientific, industrial, and governmental communities to understand the full complexity and the consequences of this problem and then to develop an orderly and equitable approach to its solution.
The ozone issue is representative of the challenges of sustainability and, I think, gives us faith that working together we can solve even the most daunting of problems. Problems facing us today share certain characteristics. On the whole they are very large. They are complex. They lie at the intersection of economic and environmental goals. They certainly transcend the borders of institutions, of intellectual disciplines, and of nations.
If we look at the issues central to the sustainability dilemmas before us, we can easily be overwhelmed by our own ignorance, by what we do not know -- the earth and its climate; human systems and organizations; learning in the use of information, energy, and the efficient use of resources; key aspects of human health. All of these are areas where we know much less than we wish that we could. All of these are areas where universities have a crucial role to play.
Some Scientific Questions
Last year I asked the MIT faculty and their researchers to identify some of the key open issues of their disciplines that they hoped they would be able to help answer during their careers. Some of these issues -- things that we do not know -- remind us of how much our scientists and engineers, social scientists, and others have yet to learn.
In areas that are crucial to developing economic and developmental policies for sustainable development, we do not know, for example even in principle, what aspects of climate are predictable. We know that earthquakes can cause immense damage, but we do not know which classes of earthquakes are predictable.
We do not know why national economies grow at such differing rates. We have some good hunches, but no solid knowledge. We do not know what the successful organization in the coming decades will look like. Professor Glenn Urban, the dean of our Sloan School, will share with you some of his views on this question tomorrow morning.
We do not know what consequences the explosive growth of network communication will ultimately have for the nation-state.
We do not know how to transform materials without creating waste byproducts, though we are getting closer in some classes. We do not know yet how to extract the maximum possible energy from existing fuel sources at a reasonable cost. Or, how to convert solar energy into practical cost-efficient fuels.
Importance of Partnerships
These are just a few of the scientific and technical questions that spark the imagination and drive the work of our faculty and our students. Such questions of course encourage us to stay focused on the future. They are motivated by a desire to make a difference in the world, a difference for the better. And, while we do not have the answers to these questions, we certainly do know that we are not going to find them by ourselves.
No single country can address the problems of sustainability successfully within its own borders alone. No institution, whether industrial, public, or academic, can provide complete solutions. Yet, the strength of each must be enhanced by working together.
Partnership, sharing of information, and synergy are the order of our age.
In this context, the modern research university has a unique and important role to play. This role is rooted in three of its most basic characteristics. First is our commitment to intellectual objectivity. Second is our emphasis on the discovery and development of new scientific knowledge and new technology. Third is our dedication above all to educating the next generation, scientists, engineers, policy-makers, and others, to serve in government and industry. It is through these three roles that we can make our most important contributions.
First we must stress the role of intellectual objectivity, particularly in the context of environmental issues. Ideology has often pitted people and institutions against each other in very unproductive ways.
We must put, in my view, sophisticated scientific experimentation, thorough analysis, and technologically sound solutions behind environmental policy. Research universities can and indeed must play an important role in this pursuit. Emotion, of course, does have a very legitimate role in human affairs, so I do not want to be misunderstood on this point.
It is our inner experience, our vision of the pleasures of a healthy environment, that signals to us the human importance of environmental stewardship. It is our ability to envision potential degradation and its effects that leads us to understand the critical necessity of preemptive action. Rational policy analysis, objective science, and sound technology, however, I believe are extensions of human thought and physical capability that will enable us collectively to both establish and accomplish our goals.
Pursuit of Knowledge
The university's second major role is the pursuit of new knowledge. Universities are in the business of learning and discovering, and it is through these pursuits that our greatest contributions to global sustainability will be made.
Expertise from many different fields -- natural science, social science, engineering, management, and others -- must be brought to bear on the issues to be discussed here during these two days. Natural scientists, for example, are needed to help us increase our fundamental understanding of the environment. Only science can tell us how alterations to the planet affect the ecological balance and human health. Engineering and technology are also critical.
We are all aware that some technological developments do contribute to environmental damage, but technology also can provide solutions to some of these problems. It can lead us to a better understanding of other problems through improved tools for measurement, monitoring, and discovery.
Engineers can help us to understand the impact of older technologies and then examine pathways to new, better, and more appropriate technologies for the future. They will provide much of what is needed to assess risk and to evaluate the tradeoffs that we inevitably must make in our affairs.
Within the social sciences, the link between environmental health and economic strength is well established, but the complex interplay between them is far from understood. Economists have much to contribute to our understanding of the correlation between these two.
Management experts and political scientists can bring their knowledge of organizational and social systems to bear on the problems of sustainability. They can increase their understanding of the institutions and policies that are needed to facilitate protection of the public good.
The challenges of sustainability require interaction among all of these intellectual disciplines. Scientific and technological knowledge must be harnessed to effective policy discourse if we are to understand the issues and ultimately to be able to resolve them.
The Next Generation
Finally, the university must uphold its most central responsibility, and that is to teach the next generation. We must educate our students to understand both the importance and the complexity of environmental issues. Beyond that, we must provide them with the technical understanding, political awareness, and managerial acumen needed to deal with these issues in ways that are substantive.
In particular, we must educate our engineers and our managers to consider environmental effectiveness to be an integral part, and not a peripheral part, for the process of design of industrial products and processes.
Sustainability is not a job for environmental experts or corporate health and safety officers alone. It is a consciousness that all leaders, designers, planners, and workers must bring to their work.
Committing our institutions to the goals of global sustainability means that we should add environmental literacy to the educational goals of the young people that we prepare for careers in industry, government, and business. Such a commitment also means that we will contribute to the larger issue of public awareness and understanding of environmental issues.
One continuing challenge for universities then is to continue the research and teaching that will provide us with new knowledge, new tools, and ultimately, new leaders. In working to promote sustainability, we also must face a second, related challenge. As I have already noted, none of us can make our best contributions in isolation.
We cannot, by ourselves, define the global research agenda or build the educational resources and programs necessary for educating our own students and contributing to the education of the larger public. In order to be most effective, industry, government, universities, and other institutions of research and policy must increasingly work cooperatively.
Fortunately, many of our research universities are well positioned to develop such partnerships. Indeed, many such universities, like MIT, are intimately connected to worldwide domains of industry and professional practice as well as to the worlds of governments. As you know, in its 1995 session the United Nations Commission on Sustainable Development formally adopted the concept of the "Technology Triangle," which has its origin in MIT research and collaborative strategies.
The Technology Triangle
Technology Triangle is a key strategy for facilitating technology development worldwide. The Commission on Sustainable Development (UN-CSD) called for targeted and strategic collaboration among institutions of science and technology, policy and governance, and the business and industry.
MIT's own experience demonstrates the power of such creative alliances. Many of our programs already are built on partnerships among these three partners: government, industry, and other research institutions. These interactions, as well as the attendant financial support, help to insure that our programs continue to be relevant and forward-looking in a world that is characterized by change and complexity on a global scale.
If we are to create a truly meaningful agenda for research activities, education and outreach as we approach the 21st Century, we will need to continue to work effectively with industry, government, and NGOs and with representatives from the developing as well as the developed nations of our world. The fact is, we are all in the same boat.
The three technology domains considered in this Symposium are critical to the world as we approach the new century. Advances in information and communication technologies are so rapid as to be truly daunting in both scale and scope. The challenges of better energy for development clearly remains critical, and the demands of rapid population growth and expanded urbanization will continue to strain existing infrastructures, requiring new and innovative technological strategies.
This afternoon, Professor Joel Moses, MIT's Provost, will chair a session that addresses the ways in which technology can contribute to sustainable development in these three areas.
In closing, let me say that this Symposium addresses issues that are at the very heart of a university dedicated to advancing science and technology and committed to trying to shape a better future.
We know that in order to meet the powerful challenges ahead, we need to develop collaborations with industry, government, and other academic institutions.
We need to work together to develop the enabling technologies, the underlying institutional requirements and the organizational frameworks that are critical to achieving a more sustainable environment and economy, which is just another way in my view of saying a more livable world.
Thank you very much.
It is now my privilege and pleasure to introduce to you the Keynote Speaker, Mr. Jonathan Lash, Co-chairman of our President's Council on Sustainable Development and President of the World Resources Institute.
Public-Private Collaboration Since Rio
President, World Resources Institute
Co-chair, President's Council on Sustainable Development
Dr. Vest, Madame Chair, my good friend and mentor, Maurice Strong, my friend Liz Dowdeswell, many, many colleagues and friends, and an extraordinary list of distinguished speakers, good morning to you all. I have to say, Madame Chair, looking through today's and tomorrow's agenda and at the list of people who will address this assembly, the stacked traffic of distinguished experts makes me think of the traffic approaching Logan Airport last night, stacked up almost all the way back down to Washington, and I feel a bit like a little commuter plane in among the jumbo jets on this program.
The question that the Chair addressed to me for this morning was to look at progress on Agenda 21 and to consider the future. It should be something briefly taken care of.
I thought one way that one might gauge our progress was to look at the content and nature of the political debate in the United States. So I hunted through the two parties' platforms and found the word sustainability used exactly once, and in a context in which I did not understand it. I did, also, pass a number of dreary hours (only on your behalf, Nazli) watching those two marvelous staged-for-television, designed-by-the-polling-numbers events. I never heard the words "sustainable development" at all. Not even when environmental and social issues came up in the context of those speeches did there ever seem to be a glimmer of an understanding of how they are integrated and interact with one another. So, perhaps that particular means of gauging our progress not the best way to start this morning.
Progress Since Rio
There are three other ways that we can look at progress since Rio. One is to examine policies and measures -- what governments have done to implement Agenda 21. A second is to look at indicators of actual social and physical change in our world. And a third is to take a more anecdotal approach.
Considering those individual events which we see happening around us which may give us some sense of the direction and impact of social change, let me briefly look at each of those means of examining progress.
Beginning with policies, what have governments done, either on a multilateral basis or within national borders? There are a few encouraging developments, several nations have attempted to use Agenda 21 as a structural framework for policy planning.
The most notable example is China, but Finland as well and several other nations. In addition, there are nascent regional efforts to use Agenda 21 as a structure for planning and assessment. One I learned about only last night among the Baltic states; another is an ongoing effort in central America; and several others are under discussion.
The Conventions, as you will surely hear in considerably more detail later in the program, are at least addressing the central issues of implementation of the purposes agreed to at Rio. I do not think one could yet argue that action has arisen from those discussions that would actually change physical conditions, but certainly the parties to the Biodiversity Convention have begun, in fact, some quite innovative discussions of means of addressing the question of protection of biological diversity. And the most recent meeting of the Conference of Parties in Geneva to the Climate Change Convention gave some hope of a growing understanding that there is a central issue to be addressed. This issue is whether or not we will agree to an overall limit on greenhouse gas concentrations in the atmosphere.
Those are the real issues, and they are under discussion. That is perhaps better than we might have hoped four years ago. If one examines the reports submitted by governments to the UN Commission on Sustainable Development.
There are certainly examples of actions that are consistent with Agenda 21, although I have to admit to being less than persuaded by some of those accounts. I think, all in all, if one steps back and considers whether the sum of those national actions makes a persuasive case for official implementation of the commitments at Rio -- implementation not only in the form of declarations of policy, but application of that policy to practice in the real world -- it is less than persuasive that there has been significant progress.
Another approach is to look at the physical and social world -- at those measures of physical and social conditions over time which we think might be legitimate indicators of progress on sustainable development. Of course, that's difficult because we do not as yet have any agreement as to what those indicators are.
One of the most interesting aspects of the work of the President's Council on Sustainable Development over the last three years was the extent to which we came to understand that the elaboration of a set of concrete goals, and indicators of performance under each of those goals, was an absolutely essential part of that discussion and completely unique within the United States policy process where we tend to jump right past the question of goals and begin an immediate discussion of means to achieve goals which are not yet defined.
In the process of attempting to define indicators of sustainability, we were forced to recognize that it is impossible to define those indicators until you've defined goals. Even when you have defined goals, our understanding is not complete enough to allow us to develop specific quantitative indicators that are represent a clear consensus that they show the progress or lack of progress. Even when you can agree on those, there's not always reliable data.
All these things make it very difficult to calculate progress.
Nevertheless, if you look at that report, you will find that there are some proposed indicators. There is really quite good work going on within the US government, in the Netherlands, and in many other places on this issue. It has generated considerable excitement.
I will offer you a few, not because I think they are definitive indicators of sustainability, but because they are certainly related to all of our concepts of sustainability, and they give some sense of whether the physical and social worlds are changing in directions that are consistent with the goals articulated in Agenda 21.
As the most recent human development report published by the United Nations Development Program makes absolutely clear, in any way that you measure equity trends, they are negative.
Equity is diminishing among nations, and within nations. It is doing so despite encouraging trends in economic development in many regions of the world. It is doing so in the United States. It is doing so in Africa, and it is doing so at a rapid pace between the richest countries and the poorest countries. And, when you think of the consequences of negative equity trends over the long term, in a world that is increasingly connected by networks of information in which images flow freely and immediately across borders, in which trade is essentially already globalized, the implications are quite powerful. There is no way to interpret those trends as other than inconsistent with the social aspects of Agenda 21.
Or, consider investment in social and human capital. Again, by almost any measure that you can construct, the trends are negative. And, surely investment in social and human capital is an absolutely essential element of any way we might construe Agenda 21.
Or, consider some of the environmental measures that we might see as of the most important greenhouse gas emissions, brave declarations in 1992 and little progress since.
A rapid global increase persists, despite an increasing recognition by industry that this issue is an important one and in many places encouraging voluntary action to limit releases.
In a number of places in the world there are efforts to develop good measures of materials efficiency. That is certainly at the base of any effort to change the nature of our industrial economies to be consistent with sustainability, and by any means materials efficiency is not improving significantly and globally as one would wish.
Consider the health of forest systems, or the health of oceans in any way you might choose to measure it, or the pace of soil loss globally, or the pace of habitat and species loss globally.
Although one can point to specific places in which progress has been made, one can point to encouraging local trends in a few places.
Globally, with respect to all of those indicators, the direction remains negative. So if one were to take that approach to measuring progress since Rio -- and perhaps four years is much too soon to try to measure progress on that scale -- it would be extraordinarily discouraging.
There is work being conducted by the United Nations Environment Program for this evaluation that will examine some of those trends much more thoughtfully and in very interesting ways for the upcoming evaluation. It is not a comforting recital, yet I would guess -- at least among those of you whom I know -- that many of you here, like me, are essentially optimistic about the possibility of change in those trends. This is a curious result, since the people in this room are probably more knowledgeable than any other collection of one or two hundred people in the world on these trends. Why is that?
How can we remain essentially optimistic and dedicated to the idea that change is not only possible, but inevitable in this process, and something that we can influence. I see a few cynical looks; I guess we're not all optimists here, but I certainly am, and I think it has a great deal to do with the third way of looking at progress -- i.e., the anecdotal evidence which Maurice Strong alluded to in his brief and elegant opening.
This evidence has to do with the places and institutions where you find discussion of these issues going on. It has to do with discussion of these issues from the point of view of the development of solutions and of change. It has to do with (and this is not withstanding the nature of the current political debate in the United States) the remarkable awareness of some of these issues that one finds in the most surprising places. It has to do with the fact, as Maurice says, that it is when you look at communities that you find the most interesting things going on.
Constituency for Change
The President's Council on Sustainable Development, which was made up of ten chief executives of major industrial corporations and leaders of civil society from environment, labor, religion, and so forth and five members of the President's Cabinet, has met regularly. Six of our meetings were outside of Washington -- with a great deal of grumbling and having to travel and how long it took, and how difficult it would be -- and we always extended the meetings in order to hear from people about what was going on in the communities. At the end of each meeting there was this tremendous jolt of energy as the members of the Council recognized that what we were discussing was what people cared about and were doing.
There was something going on; there was a constituency for this change. They did care what we did outside of Washington. If there is any single reason why this Council decided to reach agreement, it was because of what they saw happening around the country in scores of places, and these are far more profound than the addition of scrubbers to a power plant or the requirement that super-tankers have double bottoms.
This is a different kind of change, and we are struggling to understand what the right tools are, and as we conduct that debate, sometimes when we come upon tools, we are not sure if they are real and useful.
Values and Principles
The most difficult, but in the end the most persuasive, part of the debate conducted by these members of the President's Council on Sustainable Development was the debate over values and principles and long-term goals. It also relates to the implications of integrating policies.
It was not the debate over specific policies although the report is full of policies: 59 major policy recommendation and some 140 implementation suggestions. But the important debate was won over principle. It was won over how we formulate agreements of common purpose about these fundamental changes to society. And, there was the beginning of the recognition that there is a whole range of options between laissez faire and command. And then there are a range of options that we are unfamiliar working with as tools for social change.
We do not really know how to instigate them. We do not know how to count them or their results. We certainly do not know how to enforce them. We do not even know if we can rely on them. There is no 2000-year history of statecraft from Plato to Locke to Jefferson to rely on to articulate the basic principles and shape of these institutions, the risks, the problems, the goals.
We are inventing it now. I think it is likely that we will look back and Plato and Locke will be Choucri and Strong in this debate. This is a very remarkable set of changes that are underway right around us.
We are sitting here inventing the experimental institutions. And it is not surprising that we are uncertain about how to evaluate them, or what they mean, or how to manage them.
I do not want to give a mistaken impression here. Policy matters. Governmental action is an essential part of the process of change. One only need think about the nature of change. We will not arrive at a set of solutions to protect global climate without an intergovernmental agreement on an overall limit to concentration of greenhouse gases in the atmosphere. This is not going to rise voluntarily from civil society.
Governments play a crucial role. One need only think about what it is that generates investments in human capital to recognize that policy plays a crucial roles. And, indeed, governance itself plays a crucial role, and failures of governments can create insurmountable obstacles to civil change.
I only mean to say that we recognize that the tools of implementation that are available to us are far wider. The toolbox is far bigger than we have thought about in the past, and that is creating huge uncertainties which I think this conference is essentially designed to address.
I envision a future that recognizes the unwieldiness of national interest as a basic principle in resolving questions that observe no boundaries.
There are no boundaries when responding to an economy that is global. There are no boundaries in considering how to deal with ideas and information that flow instantly across nations, and in considering the management of ecosystems for which nations are irrelevant.
Nations do not suffer environmental damages. People and ecosystems do. Nations do not compete economically. Enterprises do. It is not nations who are creating and implementing the new tools that would be discussed today and tomorrow. Think only of the Internet.
We have a tremendous variety of institutions. There is a great opportunity for us if only we could figure out how to take advantage of it.
I see an increasingly goal-focused debate that is capable of being adaptive, of changing rapidly as we change our understanding. It is a debate that understands we can change behavior not only by command, but by realignment of incentives, by the use of information and communication, by the creation of values out of human interactions.
It is a debate that has tremendous respect for institutional experimentation rather than regarding it as dangerous, uncertain, and chaotic, and one, above all, that understands that the central material for resolving this sort of question is human ingenuity. And we need to construct institutions that will increase and encourage it.
Perspectives from Business and Industry
United States Council for International Business
It is good to be back in Cambridge. I have had two tours here, at the other end of the city. But walking over from the Marriott, I was struck by the wonderful village-like quality of this part of town. I know Cambridge is not a village, it takes a campus, it takes a university to bring this wonderful assembly of people together to deal with this very, very important subject. I am truly honored, President Vest and Chairwoman Choucri, to have been invited to speak to you at this important conference.
The US Council for International Business, the organization for which I am President, is the American Affiliate of the International Chamber of Commerce (ICC), the business and industry advisor committee to the OECD, and the International Organization of Employers (IOE), which have official consultative status with the UN system and their affiliate agencies, such as the World Trade Organization.
The IOE is a direct participant in the International Labor Organization, as some of you know. Our member companies know that good environmental management is good management. And, international environmental policy is a major issue affecting the bottom line of global companies, and our companies are all global companies.
The international business community has been active in formulating and advocating business policies to the sustainable development related to the work of the relevant international agencies since the 1972 Stockholm conference. It was preceded by a two-day conference presenting business experiences, environmental management and the business views of the issues of the Rio summit. I see here many members of delegations who were present at Rio and communicated business positions through their national delegations.
Business Community's Position
The ICC, and my organization included, has followed development since then with interest, making its positions clear and the UN position on sustainable development in UN treaty negotiations and to member governments.
So you will not be surprised if I tell you that the business community opposes environmental policies and actions that seek scapegoats rather than solutions or try to impose costly processes or regulations on business without a reasonable basis in science. These can be counterproductive to the causes of both environmental protection and sustainable economic growth.
I will illustrate this point when I talk about business's experience with the environmental policy agenda and the five years since the Rio summit.
My remarks will focus on three areas: (a) sustainable development and consumption, (b) trade and environment, and (c) multilateral agreements. In conclusion, I will venture some suggestions concerning the 1997 Review of the Earth Summit and the role business can play therein.
Sustainable Development is the watchword and overarching theme of the Rio Summit that has entered our vocabulary: Business has endorsed sustainable development as meaning meeting the needs of the present without compromising the ability of future generations to meet their own needs. This combines the mutually reinforcing objectives of economic growth and environmental protection. This is the basic concept which underlies our policy recommendations to our company members.
Principles Three and Four of the Rio declaration affirm this straining that "the right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations." In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it.
Since Rio, there have been significant accomplishments in our view and environmental improvement from both individual companies and business associations. I cite the ICC Business Charter for Sustainable Development, the Chemical Industries Responsible Care, and other industry voluntary codes. Status reports on achievements of these voluntary programs will be made to the 1997 Committee on Sustainable Development and General Assembly sessions, but by the International Chamber of Commerce on behalf of world business.
Most recently, the ICC and the UN Environment Program have held trainers seminars in developing countries and in Eastern Europe to share good environmental management process based on the ICC-UNEP environmental management training. I cite this as just one example of the kind of active collaboration that the Rio process stimulated.
But I want to stress that businesses engage in this process from a conviction, as I stated at the outset, that good environmental stewardship means good business.
Further to our concept of sustainable development, it is the free market that enables business to be the engine of growth that provides the wherewithal for environmental protection.
For us, the market is the primary institution. It is no coincidence that the richest free-market countries have the strongest environmental regulations and the best environmental quality.
Business, therefore, conceptually rejects a troubling interpretation of sustainable development, namely, that of sustainable consumption. I am not going to try and define this ambiguous concept, one version of which recalls Club of Rome limitations to growth. If the concept is meant to provide a rationale to a non-market approach, we should be warned of the possible consequences by the experiences not only of centrally planned economies, but of all overly regulated economies.
One example of how the sustainable consumption growth limitation approach is playing out is the current discussion in the CSD and in OECD about how to "get prices right" -- which means, in the context, reflecting the environmental costs -- and hundreds of pages have been written about how environmental taxes can make this principle operational.
Now, the effectiveness of environmental taxes in this regard is highly questionable. Beyond presenting a ready source of government revenues, little, if any, of it gets plowed back into environmental projects.
Furthermore, the push to impose environmental taxes on inputs, such as energy, which are consumed in the production process is frequently accompanied by demands for broader tax adjustments to offset the adverse effects on competitiveness. These in turn undermine the environmental objective that the tax is meant to achieve. And it can easily be perverted to protectionist ends and provoke trade conflicts.
Attempting to harmonize environmental taxes is clearly undesirable. Any one-size-fits-all tax is inevitably inconsistent with both industry-by-industry and country-by-country differences in production technologies and resource consumption. Penalties and disincentives should be a last resort and should never be considered without a full assessment of the costs and benefits of the measure.
Too often voluntary approaches and agreements and other more flexible and cost-effective approaches are ignored, when they could provide a more cost-effective way to resolve an environmental problem. The US experience with tradable permits under the Clean Air Act has produced real results where taxes would have failed or produced less output.
One size does not fit all with regard to economic instruments, and other less burdensome options should be explored within the CSD. Besides providing a false rationale for anti-market, anti-growth approaches to domestic environmental regulations, the concept of sustainable consumption feeds into the growing tension between developed and developing countries in tackling environmental problems.
The argument is made that OECD countries will have to make room for developing countries to develop by scaling back their own consumption. Now, does action in developed countries alone make any sense at all if it is canceled out by other countries? What would be the economic impact on developing countries if OECD nations scaled back their consumption patterns? Is the idea that developed countries should stagnate or even decline economically a potentially realistic option, a politically realistic option for a democratic society?
Sustainable consumption which limits growth is a blind alley. It will lead nowhere either domestically or internationally. I stress, it does make sense to seek to reduce the intensity of resource use and to improve efficiency. Business constantly strives to decrease the cost of its inputs and reduce waste, which it sees as lost capital. Some call this eco-efficiency, but it is really plain, good business; for business, sustainable development connotes a virtuous cycle in which it is engaged on all sides generating economic growth and employment, providing goods and services, lessening environmental impacts of its activities and providing new technologies and techniques that are greener.
Trade and Environment
International trade is an important aspect to the market and an engine of growth and sustainable development. Trade agreements, global agreements as embodied by the GATT and the World Trade Organization as well as regional free-trade agreements like NAFTA, provide a framework of disciplines and rules that permit trade to take place among nations to their mutual benefit.
Rio set in motion the examination of existing trade rules to determine if they are supportive of sustainable development. Some have thought to turn this relationship into an "either ... or" proposition, asserting the superiority of environmental regulation over trade or any other consideration.
The Rio Earth Summit gave impetus to trade and environment discussions in both the World Trade Organization and in the OECD.
Agenda 21, as well as the Uruguay Round, acknowledged that trade and environment policies can occasionally come into conflict. And, the OECD ministers endorsed last year a comprehensive report following four years of work in a trade and environment experts group setting out an agreed set of principles and proposals for further work to accomplish these objectives.
The WTO committee on trade and environment is currently discussing how such conflicts can be mitigated or at least managed with minimal damage to both trade and environmental objectives.
The organized business community believes that open trade and environmental protection should operate to reinforce one another. Unfortunately two years of work in the CTE (the Committee on Trade and Environment) has not brought us any closer to this goal. As we approach the WTO ministerial meeting in Singapore in December, we take note of the difficulties that the CTE will probably not resolve by then, but we will urge that work continue to address some of the high priority problems. I am going to cite a couple of them.
First is the course of the potential for trade disputes which may arise from multilateral and environmental agreements. We have advocated adjustment in GATT rules whereby if challenged, the trade measures used in a multilateral environment agreement which meets certain criteria would be exempt from basic GATT rules regarding nondiscrimination.
The purpose would be to create a presumption that agreements found by a WTO Panel to have met the criteria would benefit from "Safe Harbor" within the WTO.
Business interest in such a rule change is to provide certainty or at least to minimize uncertainty so as to permit trade and investment to take place. Unfortunately the devil is in the detail, and despite exhaustive discussions in Geneva and domestically in Washington, there is no meeting of the minds on the criteria.
The argument is split north and south as well, as the developed countries themselves and many environmental groups will not accept that the WTO should exercise any jurisdiction over the trade aspects of environmental agreements.
The other issue I want to cite is "third party multicriteria" (TPM) based eco-labels, which are a prime example of how badly designed environmental measures can adversely impact trade policy.
In many European programs labels are awarded based on criteria relating not only to the product but the way it is produced as well, both reflecting local assessments of environmental preferability.
Laws or programs that discriminate between products based on the way a product was processed or produced effectively empowers one country's environmental preferences on everyone else. These preferences may or may not be sound environmental choices. But they are almost inevitably discriminatory against foreign goods, even those produced pursuant to environmentally sound but different national regulations. They also limit development of new and often better technologies for products and processes.
In order to avoid or at least mitigate the trade conflicts that have arisen already and will continue to arise from the distortion resulting from multicriteria labeling schemes, we have recommended a set of principles that should be adopted by the CTE with regard to eco-labels.
These principles include truthfulness, sound scientific basis, non-trade discrimination, and transparency to business participation.
The Role of Business
Overall, our efforts with respect to trade and environment in the WTO, OECD, and European Union have been positive, offering constructive suggestions to assure the accommodation of both legitimate trade and environmental policy.
Some environmental groups have tried to use environmental objections to block further trade liberalization and growth.
We still remember the conflict over NAFTA, where some environmental groups objected to it, while others saw it as a pathway to environmental improvement in the border area and throughout Mexico. NAFTA, its environmental site agreement, and the North American Commission on environmental cooperation have led to improvements in environmental enforcement and cooperation among NAFTA countries, and business experience with it has been positive.
Just as new environmental trade barriers must be avoided, so too should green investment barriers.
Business rejects new efforts to resurrect investment codes in the name of environmental objectives. We would not want to see them raised in the OECD.
The problem with so-called environmental codes developed by non-business entities is that they often become mandatory and discourage investments. By targeting and burdening multinational companies which are by and large the most environmentally responsible operators, these initiatives also detract from opportunities for environmental technology cooperation.
I have mentioned business's need for certainty in the international environment and trade areas. It is this requirement which motivates business's strong position in favor of multilateral agreements and its rejection of unilateral approaches in dealing with international environmental challenges. Rio set some important MEAs in motion, notably on climate change and biodiversity. It gave important impetus to others, such as the Basil Convention, which governs transboundary movements and disposal of waste.
We have been concerned with some problems in the way in which some of these treaties have been developed without careful assessment of signs, risk, economic factors, or priority, leading to using trade measures as the instrument of choice rather than necessity. Basel is a clear case of a treaty gone awry because it failed to review environmental and economic issues before taking its decision to amend the treaty to prohibit all transport and export of hazardous waste -- as yet to be defined -- from OECD to non-OECD countries.
Emotionalism, which as MIT's President Vest recognized has its place, certainly in this case, prevailed over economic and scientific evaluation of the issue.
No assessment was made as to whether all OECD countries could indeed handle and properly treat hazardous waste, but the blanket assumption was made that not a single non-OECD country could act responsibly nor adopt "prior informed consent" by electing to treat waste designed for recycling in the same manner as waste destined for final disposal. The parties have assured that an environmentally friendly option would no longer be available to developing countries.
But, more broadly, the precautionary principle that urges action in the face of scientific uncertainty if the potential harm is great is being cited more and more frequently in treaties. While this is justifiable in some instances it is being used more and more to ignore or deny uncertainty.
Let me also point out that rapid changes in many developing countries will have to be increasingly recognized and trade agreements and multilateral environmental agreements.
We can no longer exclude all developing countries from commitments on the treaties, nor can we assume that they are unable to implement environmental treaty measures or take responsibilities for their own decisions, good or bad.
Talk of implementation and measures in OECD countries alone is not effective.
An example is in the context of climate studies by the International Energy Agency that have indicated that greenhouse emissions of developing countries will outstrip OECD emissions by the turn of the century, yet the treaty currently makes no reduction demands on developing countries and precludes them from any further commitment on the next round of limitations.
Leadership from developing countries is needed to help reduce greenhouse gases in the atmosphere and to fully address other transboundary challenges.
Finally, with respect to the Commission on Sustainable Development (UN-CSD), next year's General Assembly meeting will bring with it the temptation to initiate new and additional agreements. We must counsel caution in the light of the numerous treaties in existence and the risk of stretching finite resources to the breaking point. The several international processes have resulted in the platform of technical working groups and meetings worldwide called "treaty burnout."
Before contemplating any more for 1997, why not ask, are they really necessary?
I reiterate a strong position in the business community for multilateral solutions for environmental problems. Anything else will not make economic and environmental sense. International treaties continue to marginalize input from business even when business could be the most effective device for meeting the goal of the treaty in the most efficient way.
Business and the 1997 Review
Let me summarize in terms of conclusions or implications for the 1997 General Assembly Special Session.
Sustainable development as a key element in Agenda 21 should be affirmed. This stresses the importance of economic growth and minimal interference with market forces that will bring it about. But, as I have said, a concept of sustainable consumption is a blind alley. The work in this area focused on limitations in consumption will lead nowhere except to increase international tensions.
The CSD and the General Assembly should reinforce efforts in the WTO and others on trade and environment which are necessary to reduce uncertainty and also to provide environmental negotiators greater confidence that better environmental rules will be consistent with the trade policy.
The CSD and the General Assembly Special Session deliberations will recognize the increasing importance of sustainable development, but the practical difficulties should be recognized.
The CSD's strength is its ability to gather and synthesize through many UN agencies and member states these issues, which are complicated abd which cannot be tackled by any one entity or country. It can enhance this capability by more actively involving business participation.
Business has a long and constructive engagement in other related multilateral policy discussions, resulting in tangible achievements in the five years since Rio. Sustainable development is not just a green idea related to environment. It must be revitalized, and at least it must include better ways to engage in partnership with the public sector. There is enough ability now to make a major contribution to both economic growth and environmental protection.
Perspectives from the Scientific Community
Lee and Geraldine Martin Professor of Environmental Sciences, MIT
My remarks are related to the connection between global and local environmental problems. I want to comment by using some specific examples taken from my own research experience.
There are various types of scientific approaches employed in handling environmental problems. For example, a reductionist, fundamental approach is utilized in the field of stratospheric chemistry, in which all the important steps (elementary chemical reactions) are characterized in the laboratory and are then integrated in atmospheric models. The chemistry of urban atmospheric pollution (smog) is more complicated; it involves many more elementary steps, so a less detailed "engineering" approach is required.
Solving the stratospheric ozone depletion problems requires, however, an integrated approach. Besides the chemistry, one needs to consider atmospheric dynamics, tropospheric processes, biological effects, socioeconomic implications, etc., and this approach is required for most environmental problems.
On the one hand, mathematical models which incorporate and integrate information from each relevant discipline are often employed to provide insights into the behavior of the complex environmental system; the models have many limitations, but they nevertheless provide useful tools to make assessments.
On the other hand, the reliability of these assessments increases very significantly to the extent that the scientific components of the model are understood at a very fundamental level.
One of the projects I am involved with consists of studies of the chemistry and microphysics of atmospheric particulates at a fundamental level, aimed at better understanding the chemistry of the troposphere on a regional and global scale.
Complexity of Human Impacts
The chemistry of large regions of the troposphere is being affected by human activities such as combustion of fossil fuels and biomass burning. This "regional air quality" problem is beginning to reach global proportions and should be added to stratospheric ozone depletion and to the greenhouse effect as a major global environmental problem involving the Earth's atmosphere.
Urban air pollution and regional air quality are closely related: not only is the chemistry similar, but many of the problems that are now surfacing on a regional scale appeared first on the urban scale. One example is the formation of sulfuric acid aerosols from the combustion of coal, which was the origin of London's "killer fog" of the 1950s.
Another example is "photochemical smog," involving the production of ozone and other pollutants. The ingredients are volatile organic compounds and nitrogen oxides, both generated from fossil fuel combustion. Burning organic materials also leads to photochemical smog, such as slash-and-burn agriculture on a regional scale and the use of wood as a heating fuel in urban settings. Actually, backyard trash incinerators were once common in the Los Angeles area -- there were 300,000 units in the 1950s. But they were banned in 1958 because of their contribution to smog formation, in spite of significant public opposition at that time.
There is also an important connection in the policy arena between urban pollution and global environmental problems related to the inequity in the distribution of economic resources -- the "rich vs. poor" dilemma.
In this respect there is an important precedent: the Multilateral Fund of the Montreal Protocol, financed by the industrialized countries, was established in order to facilitate the transition to non-polluting technologies in developing countries. These countries rightly pointed out that a large fraction of the ozone-depleting compounds found in the environment had been emitted by the industrialized countries, with a cheaper -- but more polluting -- technology.
In the case of urban smog, in many cities the contribution to air pollution comes predominantly from older cars; new automobiles fitted with state-of-the-art emission control devices generate about 20 times less pollutants than the older cars. Policy-makers face the dilemma that allowing only newer, less polluting automobiles discriminates against the poor.
The solution, however, should not be to allow increasing numbers of cheap but polluting automobiles; rather, it should be to improve clean public transportation and to subsidize, if at all, the acquisition of cleaner automobiles by people with scarce economic resources. If one considers medium and long time scales, taking into account the environmental costs, e.g. health effects, these types of measures end up costing less.
Importance of Integration
The solution to global environmental problems such as the greenhouse effect and regional to global atmospheric pollution can be facilitated by taking an approach to these problems that integrates them with urban air quality.
In many countries the main contribution to emissions of greenhouse gases and ozone precursors originates in their large cities, and such countries are likely to pay more attention to these local issues. The existing research agenda on global change issues is dominated by the perspective from industrialized countries, with little connection to urban pollution problems.
We all know that there are large uncertainties in the climate change issue, so one might argue that there is no need to do something about energy today, such as a carbon tax, or CO2 caps. On the one hand, we can justify this need with the precautionary principle -- we need to have an "insurance policy." On the other hand, it is clear to me that if we consider population growth, if we consider economic growth in developing countries, and if we consider their undeniable goal of achieving a higher standard of living for their average citizens, we must conclude that the historical patterns of consumption of energy and of natural resources that have been characteristic of the industrialized countries up to the present should not be used as models for developing countries. Of course, the industrialized countries have to change as well.
Policy & Precaution
In this context the uncertainty about potential environmental damage is not large. We cannot go on much longer assuming that there is "no charge to use the environment." Environmental costs must be internalized somehow.
And I believe that we can make a much stronger case for the need for change towards sustainable development, particularly in developing countries, if we take an integrated approach to local, regional, and global environmental problems.