SESSION 5

GSSD Reports

Global Accords for Sustainable Development:
Enabling Technologies and Links to Finance and Legal Institutions

Session 5: Enabling Technologies

Chair: Joel Moses
Provost and D.C. Jackson Professor of Computer Science and Engineering, MIT

Let me begin by reminding you that the ability that really distinguishes what makes us uniquely human, distinguishes us from the animals (to get back to the complex systems issues), could be that the "soft capabilities" that Nazli mentions in the synopsis for this Program are really the critical ones for achieving really lasting and sustainable programs and development.

That is the way I would like to start the session. Our keynote speaker is Mr. Anders Wijkman, and the title of his talk is "Eliminating Barriers to Technology Access and to Diffusion of New Advances."

Keynote Address
Eliminating Barriers to Technology Access and to Diffusion of New Advances
Anders Wijkman
Assistant Secretary-General, United Nations
Director, Division of Policy and Programme Support, United Nations Development Programme

Technology Issues
I have been asked to focus on the role of technology in sustainable development. A daunting task, in particular at MIT where there is such tremendous knowledge and experience on issues like these. I am not a technologist. Hence my remarks will focus not so much on specific technology achievements, but rather on the overall framework in which technologies evolve.

Technology in Agenda 21
Technology plays a crucial role in our efforts to implement Agenda 21. In fact, it may be the only factor in the well-known equation describing the key forces affecting the environment (Environmental Impact = Population x Consumption Patterns/Life Styles x Technology) that we can realistically influence in the short- and medium-term perspective. Given continued population growth and the need to raise living standards, technology efficiency would have to increase by a factor 10 in the coming four to five decades if we want to stay put.

The debate on population most often deals with growth rates and various efforts to limit fertility. What we have to realize -- and indeed discuss -- is the inevitable increase of 3-4 billion people until the middle of the next century. How are we going to feed these people? What about jobs, housing, education, etc.? Also important is the rapidly changing age as well as geographic distribution. All our efforts as regards sustainability have to be viewed from this perspective -- but most often are not.

Production & Consumption
We talk a lot of changing consumption patterns in the industrialized world, but the truth is that our knowledge on human behavior is very limited. In fact, we know more about how to limit fertility than how to limit human consumption behavior. In saying this, I stress the need to undertake more research on problems related to sustainable development, involving much more fully the behavioral sciences in the process.

Let there be no mistake, development and rising living standards are an absolute must in developing countries. However, production and consumption patterns can develop along different lines. What needs to be influenced are the patterns and values guiding today's global consumers, whether they live in the North or the South.

Potential vs. Actual
This being said, we have to be realistic when it comes to technology change. We have to distinguish between the potential of technology, i.e., what it could do, and its reality, i.e., what it really does. In most areas there is a wide gap between potential and reality. The barriers for technology change are significant regardless of whether we look at the materially rich regions of the world or at the least developed countries. Let me add that in many areas we, in the North, do not have technologies for transfer that meet the requirements of sustainable development.

Sustainable Development: Three Obstacles
Let me start by making a few general observations with regards to sustainable development, Agenda 21, and its implementation. In my opinion, efforts to advance the concept of sustainable development so far have stumbled on several obstacles since Rio.

(1) Confusion
First, the notion of sustainable development has been confused with the subject of environmental sustainability, i.e., the protection of the natural resource base. UNCED was meant to deal with environment and development but has more or less been turned into an environmental agenda -- thus overlooking the critical issues of poverty. As we shall see later on, poverty is one of the major barriers for technology advance.

(2) Ambiguity
Second, even when looked upon purely from the perspective of an environmental agenda, there are severe shortcomings in Agenda 21. There is no clear theoretical framework guiding us with regard to issues like eco-systems resilience, carrying capacity, etc. We know pretty well what is not sustainable, but we do not know what is sustainable. Furthermore, and linked to that, indicators informing us about changes affecting eco-systems remain elusive. Here is a whole range of issues which need further research and analysis.

There is little understanding of how important the levels of energy and material throughput are when analyzing the prerequisites of sustainability. When throughput grows, so does waste generation. It is the continual accumulation of waste products that contributes the major threat to environmental sustainability.

The real issue goes beyond quantitative growth: it is how to bring our techno-systems into "sync" with natural systems. Nature functions in cyclical models. Our techno-systems are non-cyclical, based on linear flows of resources. If resources were used more efficiently -- and if resource flows were in better sync with natural systems -- many of our problems would be under control.

I am close to the work and the thinking of scholars behind a Swedish foundation, the "Natural Step." A branch of that foundation was recently launched in the US, supported by people like Paul Hawken and Herman Daly.

The Natural Step is based on the cyclic principle of nature, and is built upon four simple system conditions that are easy to understand and apply in order to achieve sustainability: i. substances from the Earth's crust must not systematically increase in the ecosphere; ii. substances produced by society must not systematically increase in the ecosphere; iii. the physical basis for productivity and diversity of nature must not be systematically diminished; and iv. there must be fair and efficient use of resources with respect to meeting human needs.

What the system conditions do is first and foremost to address the throughput issue. The message is that we have to limit throughput of energy and materials. Furthermore, we have to limit use of substances, principally chemicals, which are not biodegradable and thus constitute a threat to eco-systems. It is also important to protect forests as well as farmland and grazing land. They represent valuable sources for human consumption but also produce sinks for residue materials from society. Last but not least, the system conditions emphasize the importance of a fair distribution of resources.

A key element of the Natural Step approach is promoting the cyclical flow of resources. This means treating residue materials from various processes as a resource and not as waste. One example is residues from food production as well as consumption. These should be brought back to the soils instead of being wasted -- either on landfills, through incineration, or simply by being discharged into the sea.

In my mind, the discourse on sustainability urgently requires a better understanding of cyclical flows and how to build the cyclical flow concept into our techno-systems. Up until now, there are few technologies which fit this concept.

UNDP has recently embarked on a close cooperation with the ZERI project initiated by Dr. Gunter Pauli at UNU in Tokyo. The objective is to increase resource efficiency, in particular in processes using biomass products as inputs. Starting with breweries, Pauli has demonstrated that productivity of water use can improve tenfold and the grain used generate sevenfold increase of proteins for human consumption -- as compared with the conventional brewery. This is accomplished partly through the clustering of different activities, using residue materials from one industrial process as raw materials for another. Just imagine what this means for a country like China where demand for beer is increasing rapidly but where shortage of fresh-water and grain is a reality in many regions.

Pauli and UNU are systematically analyzing other biomass-based production processes, like paper and pulp, palm oil plantations, etc. In each case very impressive productivity gains are within reach. For us in UNDP, the challenge will be to support demonstration projects in different parts of the world to show that the ZERI concept works. The world is in urgent need of positive examples. ZERI provides them based on the eco-cycle approach.

(3) Mistaken Perceptions
The third obstacle has to do with the prevailing perception in society at large -- promoted by many economists -- that economic growth is automatically good for the environment. Such a proposition has been justified by the claim that there exists an empirical relation between per capita income and some measures of environmental quality. The contention has been that people in poor countries cannot afford to emphasize amenities over material well-being. Only when a country has reached a certain standard of living do people start paying attention to environmental legislation, the setting up of regulatory frameworks and institutions, etc.

It is true that some types of pollution normally go down when incomes rise -- like local air and water emissions -- but this does not mean that economic growth is sufficient to induce environmental improvement in general. There is mounting evidence that with higher income-levels certain pollutants involving long-term and more dispersed costs -- such as climate change -- do increase. Hence, policies that promote economic growth are not substitutes for environmental policy. It feels strange that this point has to be made, but judging from the way the general debate is going, not the least in the US, I think it is of profound importance to do it.

It has to be repeated on and on again: there are limits to growth, in particular when it comes to the absorptive capacity of eco-systems to handle all the waste products generated in society. Pollution of the environment has already reached levels so that biological productivity is beginning to be reduced. In addition, we depend on ecosystems for a number of important services like cleaning of air and water, climate control, building up of soils, etc. All these ecological services represent important values to us, are taken more or less for granted, and can most often not be substituted for.

Wrong Signals
The problem is that the market system, as we know it, does not provide the right signals to decision-makers when important eco-system functions are in danger. Nor does it provide the right incentives for the protection of these systems. As long as this is the case, I believe other efforts to promote sustainability -- including technology advance -- will be marginal. This point is being accentuated by the forces of globalization. National governments have gradually lost control as regards environmental and social regulation. In addition, the trade agreements put in place give no specific protection to the environment. On the contrary, countries that make an attempt to internalize the social costs of production run the risk of being undercut by free trade with nations not doing so.

Basic Tensions
There appears to be an inherent tension in our political as well as economic system between the short term and the long term. Ours is a culture of instant gratification. Time horizons of politicians as well as corporate leaders are extremely short-sighted. The way economic calculations are made means that we constantly discount the future. Attempts to internalize social costs into market prices are few and far between!

Markets are good at many things, but they do not by themselves offer solutions to problems of social deprivation, hunger and illiteracy, depletion of natural resources, degradation of the environment, and growing structural unemployment.

False Presumption
The presumption of a conflict between the state and the market is false. We need markets, but we also need wise politics to address the kind of problems just mentioned. The great challenge today is to develop the right kind of political institutions on global, regional, and local levels and to develop the necessary strategies. This is easier said than done. Progressive governance arose in parallel with democratic politics, but in an era of increasing individualism and globalization, the idea of government intervention is becoming almost an anathema. Yet, is there any other conceivable solution to our predicaments?

Technology & Sustainable Development
The observations just made are of paramount importance when discussing the role of technology in sustainable development. When looking at developing countries, the main problems of environmental degradation, i.e., resource depletion, are very much caused by poverty. Poor people, living on the margin, are forced to over-utilize their natural resource base to survive. Traditional systems of resource management very often have deteriorated because of population pressure and marginalization.

Limited Knowledge
Knowledge about more efficient technologies most often is lacking. In most instances credits are not accessible to enable subsistence farmers to acquire farm inputs, equipment, etc. There is an urgent need for research on the interlinkages of poverty and natural resources management and on development of small-scale adaptable technologies that could enable poor people depending on the natural resource base for their livelihoods to use these resources profitably but sustainably. The setting-up of small-scale credit schemes is another important activity.

Root Causes
If we do not tackle the root causes -- poverty -- there is very little that technology can achieve. According to a fresh report from the CGIAR, at least half of the present deforestation in the tropics -- a total of 38 million acres yearly -- is due to poor farmers' slash-and-burn agriculture. As long as we do not offer all these poor people alternatives to slash-and-burn, there is little hope for the forests. Here again, the role of wise politics is obvious.

Beyond Factor Four
When looking at the role of technology in industrialized countries, it is very much related to pollution control and resource efficiency. Here the potential is great, indeed. In a recent publication by Amory Lovins and Ernst v. Weiszacker, "Factor Four," the main message is that already with existing technologies resource efficiency -- i.e., the way by which we handle energy and materials -- could be enhanced by a factor of four. If this were to happen, the generation of waste products would be reduced by at least the same order of magnitude. I am not going to dwell on details. Maybe I could just refer to achievements within solar energy, e.g. photovoltaics.

Factor four is not enough. We need continuous efforts on research and technology development to further productivity and to meet the requirements of the eco-cycle approach. But every effort should of course be made to capture the gains made possible already by technology development.

Barriers to Technological Advance
One thing is clear: So far society has not been able to make full use of the potentials for efficiency gains offered by technology -- far from it! Unfortunately, very little of this potential efficiency gain is happening, the main reason being a combination of factors:

1. Strong vested interests supporting conventional technologies;
2. Conventional technologies being underpriced either because of subsidies and/or the polluter pays principle being ignored;
3. Lack of information and capacity to implement change;
4. Market penetration for new technologies is slow;
5. The absence of performance standards or adequate enforcement where such standards exist;
6. Positive incentives to encourage new technologies most often are lacking;
7. Social costs of economic activity are not internalized.

Probably the most important factor, in my opinion, is the failure of the market system to internalize the social costs of production and consumption. The situation is made worse by the fact that conventional technologies most often are heavily subsidized, often motivated as a way of supporting the poor. However, most of these subsidies really benefit the better-off, since most of the poor have very limited access to energy, water supplies, etc.

Closing Reality Gap
The great challenge is to close the gap between what technology could do -- its potential -- and what it actually does -- its reality. To really close that gap would require full-cost pricing, i.e. to internalize the social costs into market prices. One promising policy option would be an ecological tax reform, i.e. to gradually lower taxation on labor and increase environmental taxes. Also of great importance would be to revise the systems of national accounting.

Limiting Depletion
Depletion of natural resources as well as degradation of the environment must be treated as reductions in the capital stock rather than as contributions to domestic production. Too many countries in the South today are forced to disinvest their natural capital to survive. The proceeds from that are treated as income, which is to send totally wrong signals to decision-makers. In most situations, the countries become poorer -- not richer -- because of a rapidly declining base of timber-producing forests, fish stocks, minerals, etc.

Overcoming the Barriers
My comments so far have been pleas for on the one hand a better understanding of the interactions between eco-systems and our techno-systems, focusing our attention on the eco-cycle principle, and on the other hand a demand for wise policy interventions to bring about consistency between economic growth, social development, and environmental sustainability. Let me now turn to some more detailed suggestions on how to advance the agenda.

Expanding Benefits
The build-up of knowledge and technology today is phenomenal and has, as already stated, the potential of offering solutions to many of the problems of poverty and environmental degradation. However, not everything is positive about the knowledge revolution. So far it benefits only a small percentage of humanity, and there are indeed great risks that it will further marginalize the poor of this world.

Many experts contend that new generic technologies within information technology and telecommunications as well as bio-technology offer fantastic opportunities of leap-frogging for the Least Developed Countries. Just imagine what could happen within areas like telemedicine, distance education, solar energy, pollution control, and natural resources management.

True, every effort should be made to support such developments, but the starting point has to be capacity-building. To quote Francisco Sagasti: "In order to leap-frog, you need legs to jump from."

Expanding Teleconnectivity
Let me just mention the issue of tele-connectivity. There are more telephone lines in Manhattan than in all of Sub-Sahara Africa. In addition, current pricing policies for telecommunication services in many developing countries prohibits access to new technology for information exchange, in particular the WWW and Internet. Our efforts to connect the poor regions in the South -- where the private sector is less likely to invest -- have to double. Here development cooperation ought to play a key role.

UNDP has already made efforts, in particular within the Sustainable Development Networking Project (SDNP), whose main objective is to provide government agencies, researchers, and NGOs in LDCs access to the Internet. But much more ought to be done!

Within UNDP we are currently developing a strategy aiming at raising awareness of these problems, helping to bring about connectivity for the poor, identifying possible entry-points for support to new approaches within distance education, health care, etc.

Matching Supply & Demand
Recent developments in science and technology so far have done relatively little in terms of preventing poverty and environmental degradation. Many of the new technologies are supply-driven, i.e., solutions looking for problems. At the same time there are many urgent problems out there looking for solutions.

Again, the role of the market is crucial. One reason why there is limited interest in the problems related to poverty and environmental degradation is that the purely commercial aspects do not seem enticing to industry -- either because people with low income represent limited prospects for profit-making or because conventional technologies are so cheap that environmentally sound solutions have little change.

New Mechanisms
To overcome such obstacles -- and in the wake of a system of full-cost pricing -- we need mechanisms to convince private business about the long-term interest of investing in such areas -- either through financial support schemes to cover incremental costs, like the Montreal Protocol and GEF, or through public-private partnerships. Development cooperation agencies already play, but could play an even more, important role in promoting such arrangements.

Public-Private Partnerships
Public-private partnerships are absolutely needed, in particular in relation to energy, water, and waste management. UNDP recently launched a programme aimed at such partnerships in connection with the City Summit in Istanbul. The problems of energy supply and water services as well as waste management are daunting in the context of the mega-cities. Hence the need for new approaches building on the combined experiences of both the public and private sectors. The role of ODA would be to build bridges between the different communities, to facilitate the formulation of strategies.

The Montreal Protocol is a success story in this context. So far $400 million has flown to the South in the form of grants to assist private enterprises to transform their manufacturing processes to technologies not using ozone-depleting substances (ODS). This process of technology change had the greatest positive impact on the atmosphere and thus on sustainability. It prevented massive bankruptcy for those industries that were facing difficulties in switching technologies, allowing large populations to keep their jobs.

There still remains a lot to accomplish until the threat to the ozone layer is behind us. A particular challenge is how to reach out to mid-sized and small companies. Another challenge will be to mobilize additional resources from the OECD countries to be able to continue the supporting activities in the South. But we ought to look very carefully at the Montreal Protocol achievements when designing strategies in other areas.

International Institutions
A parallel process has been the establishment of the Global Environment Facility (GEF), responding to a wider set of problems than the Montreal Protocol. GEF is still struggling to find its optimal form and structure. The concept is right, i.e. to cover the incremental costs whenever efforts are made to respond to challenges of climate change, biodiversity loss, or pollution of the seas.

In many countries with economies in transition, energy prices have been fixed at somewhat arbitrary levels not necessarily linked to costs. This pricing system has reduced incentives to adopt energy-efficient technologies used elsewhere in the Western world and led to the development of a complex set of barriers to the adoption of energy-efficient technologies. GEF is working in Bulgaria to overcome a number of these barriers by undertaking a large-scale demonstration using the city of Gabrovo as a working laboratory.

Transfer Technologies
The project, due to begin implementation in early 1997, aims not so much at the adoption of technologies which are "new" in a global sense, but rather at removing barriers to the transfer of technologies that are new to the region.

In decentralized rural areas where population density is too low to justify the profitable extension of the electric grid, photovoltaic cells grouped together in systems to provide lighting, battery charging, and occasionally radio/TV connections appear to be the cheapest way to provide electrification. However, while many households can afford the systems, they cannot obtain financing for the system. In Zimbabwe, GEF has provided a revolving fund mechanism to provide short-term, low-interest loans to enable rural households to purchase these systems. In this case, the barrier was less a matter of the technology per se and more a matter of getting financing so that the market could expand and the rural householder could have access to the system.

The potential for the production of biomass in tropical developing countries is much larger than it is in mid-latitude areas where most developed countries exist. Therefore, the technologies to utilize biomass are less well-developed than are fossil-fuel technologies. In Brazil, GEF is helping the government and its utilities lay the foundation for a 30 MW power plant operating on eucalyptus chips. In this case, the cost of the technology and the lack of past engineering work on it have posed the obstacle to further development and implementation of a very promising technology.

Investment Requirements
GEF has accomplished a great deal. The problem, however, is that GEF presupposes that there is a national base-line of sustainable development in the countries considered for GEF funding. Most often this is not the case, i.e., there is not a clear national sustainable development strategy and little or no funding available to implement a national agenda.

Another problem -- and potentially more serious -- is that the magnitude of private investments in areas of relevance for GEF is very significant. To take an example, each year energy production investments in the range of $70-80 billion take place, most of them in developing countries. The resources GEF can spend on energy-related activities is in the range of $200-300 million yearly. The ratio shows how marginal GEF funding is, the importance of investing GEF resources based on a well-elaborated strategy, and also how important it is to find parallel ways of influencing private investments in this field.

The situation in the energy field is particularly precarious, since investments in conventional energy sources require a long time frame. In addition, as already mentioned, efforts to do away with subsidies in this field and to introduce full-cost pricing have had little success.

A promising way of transferring technology in the energy field is through joint ventures. What is very much needed are mechanisms whereby environmental performance standards would be established for all joint ventures, aiming at a promotion of renewables and efficiency.

Institutional Cooperation
One way to stimulate action in the direction needed would be to develop much closer cooperation between those development cooperation agencies as well as research institutions which work in favor of energy efficiency and renewable energy and which assist developing countries to build the right legal as well as institutional frameworks for sustainable energy.

Such a Global Energy Partnership would oblige all actors to take on a more integrated approach, to pool their resources, and to base all future energy activities on the best possible expertise. It is my sincere hope that such a partnership will evolve in connection with next year's follow-up conference to UNCED. UNDP is in a good position to take a lead on this. We have the expertise. We have a well-developed strategy related to sustainable energy and want to join hands with multilateral and bilateral as well as other institutions in the pursuance of this.

In short, we still have a long way to go to attain sustainable development. This meeting comes timely in view of next year's special General Assembly focusing on the Rio Conference and its follow-up. The scientific community ought to play a key role in the preparations for that conference.

Technology for Marginal Areas
In my intervention I have tried to focus on some of the critical issues at stake. Technology advance is an absolute prerequisite for sustainability. Given population growth and expected growth of the world economy, we are talking about a tenfold increase in resource efficiency. In addition, we need specific efforts aimed at technologies for the poor in marginal areas.

Jonathan Lash earlier pointed out that we are seeking profound changes. I could not agree more. Such changes will not come about within a framework of "business as usual." We have to reconsider our view of the world, our institution, and indeed the framework within which our economy operates. Science and technology has a key role to play in this process -- both in terms of analysis and in terms of developing the new approaches.

Action Agenda
The following are some of the main points in an "agenda for action":

1. Development of a coherent theoretical framework as regards carrying capacity and ecosystem resilience as well as the interactions between the natural systems and techno-systems, the main objective being to develop methodologies as how to link our techno-systems to natural systems.
2. At the international level we need measures to make global policies, including trade policies, internally consistent and conducive to sustainable development. We need a framework which brings consistency between economic growth, social development, and environmental sustainability.
3. Also at the national level we need to develop the same kind of frameworks, in particular, focusing at correcting market failures, fiscal policies, public sector procurement, research agenda, etc.
4. We need specifically to address the issue of poverty . A global crusade against abject poverty is needed, and here ODA has a crucial role to play. Such a crusade is motivated from an ethical perspective but also from the perspective of environmental sustainability. If we do not address this issue -- tapping some of the enormous wealth in this world -- there is little hope of reducing fertility rates and ultimately forest destruction and soil degradation.
5. We need a global crusade or partnership also to promote resource efficiency. A factor 10 is the long-term goal. This will require (a) tremendous efforts within science and technology; and (b) development of the right incentives to promote such technology developments.
6. Special efforts to help LDCs to benefit from the opportunities of new technologies, focusing very much on capacity-building. Here UNDP is making efforts within Capacity 21, but much more is needed.
7. Broad partnership with the private sector, making sure that private investments have the right focus in terms of resource efficiency and pollution control.
8. A crash program to promote renewable energy and changing efficiency, given the importance of energy for development as well as for environmental sustainability.

Technology Promise
At the end of the day, what will decide our eventual progress are the values guiding us. Technology is value-neutral. The way it is used and developed depends on the values prevailing in society. We live in a society void of visions, other than materialistic objectives. As Jonathan Lash pointed out, problems which know no borders cannot be dealt with based on the premise of national interest alone, nor can they -- I want to add -- be dealt with based on the premise of egoistic values alone.

Equity Imperative
Reference has been made to intra -generational equity. Just as important is inter- generational equity, and for such equity to be accomplished, the values guiding us have to go beyond self-interest and instant gratification.

Joel Moses:

Well, I want to thank Mr. Wijkman very much for a very forceful presentation. And, of course, at this conference, Nazli needs no introduction, so I will only mention that she will speak first on "Cyberspace for Global Sustainability."

Cyberspace for Global Sustainability
Nazli Choucri
Associate Director, Technology and Development Program, MIT

And I will be very brief. I would like to pick up from where Anders Wijkman left off on the issue of cyberspace by summarizing for you the essence of the Prologue to this Symposium, namely the First International Workshop on the Uses of Cyberspace for Global Sustainability, held here at MIT.

Scale of Cyberspace
Since this Workshop was a Prelude to this Symposium -- and Mr. Wijkman has already mentioned various uses of cyberspace technology -- I need not make the case again. However, I would like to start by reminding you of the scale of connectivity involved -- in terms of potential users and actual users today.

Currently about 50% of Internet users are outside the United States. By the turn of the century, we are expecting 80% of the world's users to be outside of the United States. And a similar shift is taking place in other indicators of scale and scope. Therefore, it is clear that we are in the midst of a globalization of the process of the use of cyberspace.

Is this good news or bad news? Will this trend support or impede strategies toward sustainability? I will leave it up to you to judge, but one thing is certain. There is a likely to be a lot of communication back and forth, and there is also going to be a lot of "empty words" (or "content-free" flows) going back and forth as well. It is therefore essential to consider the matter of quality and modes of quality control.

Deluge of Information
The problem is this: missing from our knowledge base at the moment -- and our technology base at present -- is a way of sifting through the avalanches of information being generated. Yesterday in the Cyberspace Workshop there was a discussion among representatives of the 17 institutions around the implications of that particular trend.

Prominent at the Workshop were the United Nations Sustainable Development Networking Program, whose task it is, as Mr. Wijkman told you, to network established connectivity among and within the developing countries. Also present were the members of the UN Commission on Sustainable Development, of the UNDP-Global Environment Facility, of CIESIN, and of many other groups.

Need for "Guides" 
The problem we posed to the group was as follows: Suppose you were to go from here to New York, but you had no map, you had no mode of transportation, you had no sense where New York was/is, and you had no idea why you were supposed to go to New York, you have no money for transport, you do not know what you do when you get there -- but your performance depends on it. That is something of a daunting challenge.

The problem we now have with cyberspace technology and with uses of cyberspace technology for any kind of intellectual or other benefit -- including policy and strategy for sustainability -- is the provision of those "maps."

Here at MIT we have a collaborative initiative involving the Political Science Department, the Technology and Development Program, the Artificial Intelligence Laboratory, the Laboratory for Computer Science, and the Center for International Studies. The task of this effort is to try to think about, design, and implement those "maps."

Integrated Approach 
I would try to share with you the importance of organizing intellectual knowledge related to sustainability in a way in which we can sift practical strategies and separate those from "pie in the sky" or separate our wish list from our pragmatic strategies.

We do not have time now to go into these details or this particular argument, but what I would like to do is simply to show you several transparencies that summarize the essence of the discussion at the Cyberspace Workshop. This is not an advertisement -- because the advertisement is already in your registration packet -- this is simply reminding you of the scale of the challenge.

One feature of our strategy is the information design in connective circles of hierarchical, embedded form. It is a metaphor that we have used for organizing some of the maps we are talking about. The question here, of course, is the question of why would we want to approach information in that way?

One of the reasons we want to do this is to begin developing an integrated and operational view of sustainability.

An integrated view means that it will evolve and change over time as our insights evolve and change over time.

An operational view means this is a simplified view of the pieces of the map, the center part is the conceptual piece and the rest are the steering maps, mechanisms that you will need to go from here to New York.

Mechanism in Use
The mechanism in use is the Internet. Yesterday we were very pleased to obtain a formal commitment by the participating groups (including the SDNP-UNDP, GEF, UN-DCSP) to engage in collaboration. The goal is to produce a synergism in what we do in relation to cyberspace.

Of course, one can always go straight to the WWW and to the Internet without use of the "map" or the "guides" that we are in the process of developing, but that would be akin to going to "New York with no information."

I must share with you an important reminder of the status of international connectivity at the present time. This map is already out of date, but only a few countries -- under ten -- are not connected. The rest of the world is, for all practical purposes, entirely connected.

This says nothing about the content of the connection or the quality of what is being transmitted or said. This simply indicates the range of technology reach.

Conceptual Framework
I would like you to imagine a set of embedded linkages that we are trying to sort out. Specifically, what are the "problems" we are dealing with? What are the sociological "solutions"? The scientific solutions? What is the set of international activities, formal and informal, public and private, that are theoretically designed to produce an alteration in current situations? This is the essence of the embedded framework.

Architecture for Connectivity
In addition, we need a map or steering mechanism to track information. This is in the combination of authoring tools, computation needed, and system architecture.

Details of Design
The information base with respect to human activities (e.g., agriculture, energy use, mobility, trade and finance, etc.) as well as also socioeconomic conditions (e.g., urbanization, conflict and violence, modes of government) constitutes the first "level" or "circle." It is important is that we really do wish to be able to talk about all of these issues at the same time . We do not want to pursue a segmented strategy. We need an integrated, coherent view.

The next levels refer to sustainability problems associated with each of these activities and conditions and the scientific, technological, or socio-economic and regulatory solutions envisaged.

The last transparency that I would like to show you refers to the next level, namely the types of coordinated action that emerge from coordinated efforts in the international community to implement solutions (private and public, among profit-making groups and voluntary groups, and both efforts that go through institutions and efforts that go through voluntary groups and voluntary organizations).

New Knowledge Base
A statement was made yesterday by Dr. Tom Malone in summarizing the discussion at the Cyberspace Workshop. He basically argued that the challenge before us now is to begin thinking about the new knowledge base requirements. 

This challenge is created by the growing cyberspace capability, the experience that we have had so far in this domain, and the experience with earlier information technology and earlier efforts. We need to find new and more effective ways to address the evolution of knowledge and the way in which we shape the knowledge-building strategy with respect to meeting the challenges before us.

We must reinforce the "knowledge-building" enterprise. We cannot take its structure of function for granted. Yesterday we were forced to appreciate the importance of focusing on the knowledge-building strategy as a key element in the overall imperatives facilitating our response to sustainability challenges. An essential feature of this strategy in management of information systems is the new virtual world of cyberspace.

Joel Moses: Thank you, Nazli. The next panelist is Dr. Pachauri, Director of the Tata Energy Research Institute, in New Delhi, and his title is "Energy and Sustainability: Developing Countries."

Energy and Sustainability: Developing Countries
R.K. Pachauri
Director, Tata Energy Research Institute, New Delhi, India

Thank you, Mr. Chairman. Let me at the outset thank Nazli for inviting me to this very important symposium with such a daunting presence of distinguished people. But she has put me after her. Hers is a very hard act to follow, so I am at a slight disadvantage.

Overview
Let me start by taking a broad overview, globally, of why I sense, as one senses in all such meetings, an expression of despair that perhaps things are not happening in the manner that they should. I think the reason (if I may philosophize) is that at no stage in human history, have we had a need for outstanding leadership; and perhaps you find that contrary to this requirement, at this point of time, we really have really poor leadership around the world. And I am not excluding any country in making that statement. I think this goes to the heart of what Ms. Dowdeswell said about the fact that -- while we have talked about actions that need to be taken -- we have talked about sustainable development, but there is something lacking by way of that human touch.

Human Touch
It is that human touch which is something that leadership produces, and leadership is able to get through to the public in bringing about change. There is, of course, a growing insularity in myopia which is responsible, firstly, in not seeing the effects of inaction, but also in not visualizing the place of technology in bringing about solutions for the future.

It is interesting that Jonathan Lash talked about the two major political conventions that were held recently with the two political parties in this country and that there was no mention of the word sustainable. It seems to me that this in itself is symptomatic of what I have just said. Now, I do not want to leave this topic by talking only about the Republican and the Democrat parties in this country.

If I look at my own country, India, I think the only region of sustainability which some of our leaders see at the moment is how long they can sustain themselves out of jail, and those of them who get into jail are obviously looking at life off sustainability beyond jail. So it is a difficult situation, and I think it is an unfortunate universal reality.

Technology Transfer
Let me get to the heart of the issue on technology transfer. We are really focusing on software issues, not so much on the hardware aspects of technology. So I will defer to a very specific provision in the Framework Convention on Climate Change that clearly says that the Convention, and the mechanisms by which the Convention is implemented, must facilitate the transfer of technology, and this is of course technology that would mitigate the problem of climate change and the emissions of greenhouse gases. There is a clear mention of that factor, a clear provision for this kind of facilitating action on the part of those who have to implement the convention. But unfortunately, nobody has focused on it up to this point in time, and this is four years after the convention itself was adopted and came into existence.

Technology Action
My own Institute organized two workshops, in both Berlin and Geneva -- concurrent with the Conference of the Parties -- and earlier this year we had a meeting in Washington on environmentally sound technologies only to focus on some of these issues. Because it is critical that here you have a Convention, you have an opening, you have an opportunity whereby you can bring about some actions that would facilitate the transfer of technology to those countries that are not able at this point of time to develop and use those technologies; unfortunately, very little is happening.

So, I would like to submit that before the next Conference of the Parties, here is a very concrete issue that has to be taken in hand and for which we need to establish some rules of the game, some specific actions that should be time bound. Otherwise I am afraid the phraseology and the wording in the Framework Convention would remain empty and hollow.

Who Will Lose? 
It was Ian Johnson who said that a "win-win" situation is not enough, because in a sense that represents business as usual. I agree with that, because if there is to be radical change, if there has to be a departure from business as usual, then it is not just "win-win" one is talking about. There will be some who lose, and this is where one has to accept that such losses, if suffered by a particular party or a particular group over a period of time, would undermine the interests of that group. This is where bringing about some major changes -- and bringing about a climate whereby such changes would be accepted -- becomes terribly important.

Mr. Maurice Strong rightly said that there are huge subsidies on energy, and I think the figure he mentioned from an OECD study was something like $350-400 billion a year. This in itself represents an enormous opportunity to turn things around. Because with these subsidies, not only are we promoting distorted activities, distorted lifestyles, but also perhaps perpetuating distorted choices of technology.

US Population Problem
In a conference that we had in March in Washington D.C., Undersecretary Tim Wirth made a very interesting point; and (as it was said earlier in the day that there has been no discussion on population in today's presentations and discussions) he said that while there are other countries in the world that have a population problem, the United States also has a serious population problem.

He said we are adding something like 3 million people a year to our population, and if each person consumes 40 times what a citizen of Bangladesh does, then in equivalent terms we are adding 120 million people to our population each year. So ,he says, it is a serious population problem that we have.

Now, that is an aspect that we need to consider when we make technical choices, and the development of technology would obviously follow if we were to get prices right, and if we were to internalize the costs of environmental damage.

Global Distortions
At a global level how is it that one can promote the development and transfer of the right kinds of technologies? I think there is something wrong in the regime that is at the moment governing technological transactions globally. Reference was made to the case of the patenting of turmeric earlier in the day, and I think the term that was used was bio-piracy. To me that seems like a very apt use of that term.

Anybody who lives in South Asia knows there is not a single dish that is cooked without the use of turmeric, and turmeric is something you use not just for eating. You use it when you get a wound, when you have various kinds of diseases. In other words, here is centuries-old indigenous knowledge which unfortunately has not been patented and somebody picks it up and patents it in another country.

There is obviously some kind of a distortion involved. And therefore, one needs to look at some of these issues in some depth and not merely from the point of view of immediate profits, because here again one is bringing about a system that is not sustainable.

Positive Note
I would like to end on a note of hope: the fact that there is, as a result of the UN conferences and all that has happened after these, a new realization. You see a number of forces and actors getting into business to see that we move towards sustainability. I will mention just one little example.

In my Institute we have launched a project called Green India 2047, i.e., growth with resource enhancement of environment and nature. The rationale behind it is that next year we would have completed 50 years of independence. That is a good time to take stock of what we have done to what Ian Johnson referred to as ecological or eco-systems infrastructure.

What we need to do is to restore the ill health of our ecological infrastructure -- and this is a project where we will only get support from the corporate sector. I am happy to report that 12 major companies in India have come forward and put down close to $1 million. A million dollars in the U.S. is not a lot of money. But it is a fair amount in India. So this only represents the sort of change in direction of the breeze.

And it shows that there is hope, particularly if one is to bring about awareness on a large scale.

This is where the scientific and the intellectual community has to get involved in a substantial way. Then I think even the problem of leadership that I referred to in the beginning could perhaps find some solutions.

Joel Moses:

Our next panelist is Liz Drake of the MIT Energy Laboratory, and the title of her talk is "Energy and Sustainability: Industrialized Countries."

Energy and Sustainability: Industrialized Countries
Elisabeth M. Drake
Associate Director, MIT Energy Laboratory

Speaking at the end of the day, this is probably going to be more of a recap than a lot of new ideas. But let me try and pull some of these things together talking about energy use in industrialized nations.

Fossil Fuels
We are very dependent on fossil fuel. It has been one of the key ingredients to our success in industrializing. It is something that has been very important to us, and it is an excellent energy source. We have had some experiments with nuclear energy, but in the United States today new nuclear plants are not being built and existing ones are being phased out. They are a significant part of our energy supply, perhaps 10%, and will probably have to be replaced by fossil fuel.

We have made some gains in efficiency, and we have reduced our energy intensity per capita, but I will say more about that in a minute.

Conservation
Conservation initiatives in the U.S. have been hampered by the fact that energy is cheap and convenient and we like to use it. And we do not think about conservation. It is a resource. We might think about conservation more if the price were higher, but then you get into these issues that people have talked about, about equity. Increasing the price of a basic commodity discriminates against the poor. Our unconstrained free markets at the moment do not have real incentives for us to change our behavior very much. We have all been referring to things like this. The graph shows the relative energy use per capita.

Energy Use Per Capita
The top bar is the United States. If that is 100%, you can see the other bars for Germany and Japan being about 50%, and then you see countries that are rapidly industrializing, Korea and Mexico, coming up around 30%. And you see China and India still having a fairly low percentage use per capita. And, not surprisingly, CO2 production just mirrors that same idea.

So we are using a lot of energy per capita, and a new U.S. citizen is going to be much more resource-intensive than someone in a developing country. Now if we combine this and look at the combined influences of energy use per capita and population -- let us start right here which is where we are roughly now -- we are using about eight billion tons of oil equivalent. This is 1994 data. And the USA is using about a quarter of the world's energy supply. And you can see countries like China using a chunk, but per unit of population obviously a lot less.

100 Years Hence with "Business-as-Usual" 
I just put this up here as a thought-exercise. The author took what he called a business-as-usual example. He considered prudent business that would encourage energy efficiency. He also considered that people would work on reducing the rate of increase in population. And he estimates about a quadrupling of energy use in 100 years. You can see how China has become a very dominant sector there in total energy use. The developing countries -- Africa is taking a chunk. And the U.S. fraction is down but it represents about the same total amount of energy. 

GHG Emissions
We have a challenge here if greenhouse gas emissions become problematic. Climate scientists do not know exactly what is going on, but we are getting indications that something is going on. We have set some voluntary goals, and most of the nations who said they would try to meet these goals are finding that it may be harder than they expected. While this is all going on, the technology sector is replacing energy capacity with fossil-based projects because this is the cheapest fuel at the present time.

Cost
If we are going to do something on greenhouse gas reduction, it is going to cost a lot. The cost may be addressed by removing subsidies. It may be through subsidizing the differential costs of other technologies. But even though we can do some things, we really have a limited number of options. We have a lot of present initiatives, but we are going to have to start looking at ways of changing our behavior, ways of controlling consumption, which is something that we hate to do.

Consumption
We all are brought up to believe that more is better. Maybe both the developed nations and the developing nations in the future are going to have to accept the fact that a little less than the more that we want will be the best for us and the world. Less energy consumption will reduce greenhouse gas emissions.

Fuel Switching
Let me turn to fuel switching. We can switch from coal to lower carbon or no carbon fuels. People are even looking at capturing CO2 from fossil fuel power plants, and there is a conference here next week if any of you are interested in that topic. If we look in the future, what are the choices going out 100 years? Well, get out the crystal ball.

Our friend who did the "business-as-usual" scenario shows that about half of the future energy supply under that scenario would come from coal. There is a significant amount of nuclear and you can see what the others are in there. From a greenhouse gas standpoint this is probably alarming. And you can look at other scenarios and again a number of people have done these kinds of projections.

Nuclear Option
We could say well, we are going to emphasize the nuclear option and that would increase energy cost and create some other problems -- perhaps stunting the total amount of energy use in the world.

Renewables
Or we could go to alternative energies, which I think most people are looking at as the more hopeful option. But this is going to be even more costly and difficult, and it is going to take some hard work.

Global Cooperation
The implications are that we are now having trouble stabilizing emissions in developed countries, and policies of "least regrets" or some others that are not too painful do not seem to be making it. It is going to be costly, and we are going to need global cooperation. If you look at where energy technology investments will get you the most CO2 reduction per unit investment, the developing countries offer a lot of opportunities, but I think that we, too, are going to have to look at ways to reduce our consumption. It is very easy, part of human nature, to procrastinate. And I think that is what we are doing.

Facing Uncertainty
When we are facing a serious problem and we are uncertain about what it might be, it is easy to do nothing. But I would like to look at the problem as when we are facing something such as the possibility that my house might burn down. What do I do? I buy some insurance . If we think about international investments as sort of a global insurance policy, from this angle it may seem more reasonable for people to start really putting some serious money into insurance. The industrialized nations are going to have to share their wealth, and these are things that people are talking about on the policy level.

One of the critical things is going to be technology transfer. But just as there is a problem in taking a Norwegian pine tree and transplanting it at the edge of the Sahara or in the rain forest, or taking a rain forest orchid and transplanting it to either of the other two places, the advanced technologies in the developed countries are not usually directly transferable.

Working Partnerships
Real working partnerships will be needed to adapt developed-world technologies so that they will be suitable for application in particular developing countries. They will then be desired by the countries that will meet special conditions within the countries that are accepting them. And so I believe this is very important. And, of course, this also puts a little bit of a requirement on the developing countries to be willing to work and learn and participate and educate the developing nation users that are providing the technology expertise so that good technologies can be developed.

Joint Efforts
This is not going to happen easily and I guess my only plea for the future is that we start doing things that get people to start working together, understanding each other. I can sit here in Cambridge and be unaware of the situation of poverty in a developing country and just put it out of my mind. But if I am really working collaboratively and understanding other cultures, I think there is a lot of hope. Because we all value the environment and basic ethical principles. They are part of our human values.

If we work together, we will be able to pull this off. But it is not going to be easy, and we are all going to have to sacrifice a little for the common good.

Joel Moses:

Our last panelist is Fred Moavenzadeh, Professor of Civil and Environmental Engineering, and the title of his talk is "New Strategies for Managing Large-Scale Settlements."

New Strategies for Managing Large-Scale Settlements
Fred Moavenzadeh
Director, Technology and Development Program, MIT

Complex Systems
The large cities, the major urban settlements, are one example of what our Provost called large-scale complex systems. This is basically a phenomenon of the past 100 years but in principle brings together the interaction which is very intense and very complex among three systems.

One is the ecological system. The second one is the social system and the third one is the technological system. And any attempt in finding a solution to the problems in larger scale human settlements, primarily the large cities, cannot be done in one of those three systems alone.

There has to be a solution that goes across these systems. So let me first tell you a little bit about these large settlements and then talk a little bit about the difficulties we have in finding technological solutions to this, and offer some ways out.

Urban Scale
Roughly about three fourths of the developed countries' population lives in the cities. But on a global basis about 30% of the population lives in the cities. The rate of growth, however, for urban settlement is much higher in the developing countries than it is in the developed countries. So if the current rate of growth continues, the argument is that two thirds of the world's population will be in urban cities by the year 2025.

At the present time the urban areas, the cities, also have become major economic forces. For example, 60% of global GNP is currently being used or generated in the urban areas. And the efficiency of economic activities is much higher in the urban areas. In the developed economies a proportion of GNP that is generated in urban areas is roughly 35% higher than the average.

But in developing countries major urban areas have better than twice and sometimes three or four times the rate of economic activities than the percentage of population. S‹o Paulo has only about 10% of Brazil's population but generates over one third of the GNP of Brazil. Thailand has only 10% of Thailand's population but generates over 40% of the GNP in Thailand. So in terms of economy they are major driving forces.

Global Economy
At the same time the global economy is increasingly being organized around these urban settlements. If you look back, you see that there have been periods when a few cities had dominated global economies. e.g., Venice during the Renaissance or New York and London during the industrialization era.

But today we do not find few large cities dominating the global economy. What we find is polycentric systems of cities that dominate regional economies. And they interact with each other through trade and communications. Therefore, there is a distributed network of very large-scale cities that are beginning to lay the foundation for a very large-scale impact on the global economy.

Similarly, the economic policies and urban developments are getting more and more entangled. For example, the property market, the housing, the infrastructure investments are becoming more and more sensitive in any region to the globalized economy and to the decision by multinationals and by foreign investors whether to invest or not. To give you an example, in the United States there has always been a major competition in recent years in attracting the auto industry to establish plants in their states. The states have put very lavish sets of economic incentives for the industry to come and look simply because they immediately create such a large economic activity that increases the value of the property, increases the taxes, and increases all kinds of other social activities in that region.

That phenomenon is now being transferred to developing countries, and recently, if you recall, Thailand and the Philippines went head-on for competition for attracting General Motors to put a manufacturing plant in their country. And Thailand finally won simply because it provided a substantial amount of incentives for the development of that General Motors plant.

Science and Technology
Similarly, science and technology and business is increasingly being focused in the urban areas, and through the universities the urban areas are trying to attract other industries. For example, in the Boston area we have Route 128, which has been a magnet for attracting small businesses and large. But more importantly, there is the Triangle Research Center in North Carolina. When it was formed, the North Carolina economy was 75% agriculture and 25% manufacturing. Today it is the reverse. And this is only in the period of about 25 years.

So the cities are beginning to recognize the importance of the type of science and technology and educational institutions that they have to have in order to attract major industries. 

Waste Generation
Unfortunately, this intense concentration of people and consumption in the cities has also led to a great deal of waste. All forms of pollution exist in the cities -- air pollution, noise, wastewater, solid waste, hazardous sites of old manufacturing, and encroachment of the green areas. And we heard this morning from Mr. Lash that sustainability was referred to only once and was never mentioned by the two leading candidates, the implication of that being that sustainability may not be receiving any attention. I can say the same thing about the cities but in a different way.

Problems of the cities always receive the attention of the politicians. It is always quoted in the newspapers. But still there is nothing done about it. So whether they are mentioned or they are not mentioned -- I should tell Mr. Lash that it really does not make any difference. Better not to be mentioned then mentioned and then do nothing about it.

The question is that the administration of these cities have basically recognized that in the global economy -- which is increasingly characterized by the mobility of capital and people -- the quality of life and environment is a major factor in strategies for economic development. Let me give you just an example of what I mean by difficulties in coming to grips with a solution.

Three Cities
We are doing a study of the role of technology in the solution of urban problems. And for that study we are comparing three major cities: Tokyo, London, and Los Angeles.

Similarities and Differences
All three of these three cities are major mega-cities. They have roughly the same size population. They have roughly the same size of economy. But when you look at the way that they are handling their technological systems, you see very different systems. For example, the energy intensity of their economies is very, very different. Liz Drake showed some examples with regard to comparison between Japan and the United States, and it is 50%. The same 50% exists in the urban areas. Similarly, the way that they handle their mobility is very different.

The way that they generate waste and they handle waste is also very different. You will find in Tokyo that the amount of waste they generate per capita is roughly about one third of the waste that is generated in Los Angeles.

The question is, why? The answer is that they obviously do not have a proprietary technology system, and we have one. The technology is available. They are using a different technological system than we are, certainly, but the reason for the use of different technological systems is not because that technological system is not available to London or Los Angeles.

Role of Incentives
It simply rests in the fact that the social systems, the economic incentives, the regulatory standards are very different in these three cities. And in order to provide for the appropriate technology to be implemented in these cities, you really should not put all the emphasis on the development of technology alone. Because it is not going to help. You have to put a focus on changing the social systems, the economic systems, and the regulatory systems.

Housing Industry Example
Let me give you a very specific example from my own research. In 1973, when the oil prices went up and there was all kinds of doomsday forecasting about the end of the world, the housing industry was identified as a major source of loss of energy. In other words, at that time in the United States a new house that we were building was heating more the outside of the house than the inside. So the house was basically a heat sieve. And the housing industry was known to be a very laggard industry. It is the last place you would want to look for technological innovation.

But during a period of ten years we went from a house that was heating the outside more than the inside to a house where all of a sudden the indoor air quality became an issue. It became so tight that people were getting headaches because they could not breathe. The fresh air was not coming in. It shows that once the economic incentive was there, once the government put the right regulations in place, once the society recognized that it has to do something, technology moved and changed from that sieve to the case where you had to worry about the indoor air quality.

So the point is that even in a laggard technological system like housing, there can be brought about such a dramatic change in a very short period of time. Ten years in the housing industry is nothing compared to many other industries.

Will & Way
So I am optimistic in the sense that there are examples that when the will is there. the way will be found. But I am somewhat pessimistic as to whether the will is there. I have to say that as an engineer, I listened today. I learned a lot. I did not see actions, and if I go out of here, I say fine, but what can I do? I hope that tomorrow we will find some answers to the type of questions that we are addressing.

Joel Moses:

Well, Nazli has given us dispensation to spend some time to answer some questions. So, sir. As long as it is only one.

Carl-Jochen Winter
University of Stuttgart

This is about the carbon intensity of the world energy system. And what you see here is in the last 100 years the carbon intensity, tons of carbon per -- let us say --kilowatt year or so, decreased by 30%. That of course is a consequence of going from coal to oil, from oil to natural gas, from natural gas to renewable energies. The energy system of the world became carbon poorer and hydrogen richer. And that brings me to one thought I would like to share with you.

The International Association for Hydrogen Energies, 11th Hydrogen Energy Conference took place in Stuttgart, Germany recently, and besides many, many items which I could mention here, I would like to restrict myself to one item which was brought forward as a very important one for sustainable energy development, and that is the fuel cell.

The fuel cell, for those of you are not familiar with that system, is a very clean, virtually zero emission energy converter, compact and highly efficient. You put a fuel cell aboard an automobile or a bus and emit hot air and water steam, or you take the fuel cell as a heat power unit for stationary purposes in cities, large settlements. Or you put it over a gas turbine, steam turbine combined cycle with 70% efficiency.

For a mechanical engineer, that is wonderful. That is all very important, but what I am saying is since we are in a technical university, there is a fundamental item related to the fuel cell. And we have tremendous difficulties to gain more and more materials able to govern these high temperatures. The fuel cell is not dependent on high temperatures. So what I am saying is there is a piece of thermodynamics which has not yet got entrance into our operations of energy systems.

Carlos Enrique Suarez
Fundacion Bariloche

I want to take the invitation of Ms. Drake that I think it was really a good exchange of ideas -- she asked developing countries' views -- I want to say that developing countries are ready to use new technology, for example, that which avoids CO2 emissions. And in reality they have already done very extensive work -- for example, Latin America has developed in the 70s and 80s electric resources and as a consequence that CO2 emissions in Latin America is the lowest.

The question is people and policies. This is why there are differences between Japan and Los Angeles.

Fred Moavenzadeh:

I totally agree with you. I did not mean to say that technology is the only factor. Rather I tried to point that the framework within which technology evolves is tremendously important. And what you are just now describing is a very sad fact of life: that short-term profitability and scarcity of capital -- the combination of those two -- have a tendency right now to allocate investments in favor of these kinds of products. And that is why we had to internalize the social costs. We had to apply the polluter pays principle, which was discussed and agreed upon in international meetings already in the beginning of the 70s. So I totally agree with you. 

I think one of the reasons we are at this point today is that when people talk about the market and insist on the market the way it is functioning today, it is because they saw the planned economies of the socialist countries as much worse in terms of effects on the environment. What I tried to say is that the fact that market systems are superior does not make them perfect.

We have to continue to improve, and the only thing I can say is that we have to be patient. Only very recently was a book launched in the international market which had some impact dealing with financial institutions and long-term sustainability.

I met an investor the other day in one of the most prestigious firms on Wall Street, and he had never heard about sustainable development. He did not know what the term was. And I guess we are going to deal with this tomorrow, the whole role of the financial institutions. So please do not get the impression that we have belittled the problem. On the contrary, I think insisting -- on and on today we have insisted -- that we have to have a combination of market and regulatory policies is the only way to go.

Comment from the Floor:

We need to look carefully at cost structure. The issue is not short-term versus long-term profitability. The issue is that the environmental cost of burning fuel is conventionally not included in the cost calculation of the gas-burning facilities. The benefits of the environment of hydroelectric power, on the other hand, are also not included in the benefits. So it creates a distortion, and therefore the investor goes toward where the benefit is.

The market does not take into account the environmental cost. So somehow or other we have to create in our cost-benefit analysis the environmental cost of burning fossil fuel versus generating power by hydroelectricity. Once that cost goes into the cost calculation, you will see that the picture will be different.

Comment from the Floor:

Mr. Chairman, I know it is getting late, but I want to make one point which unfortunately all of us have been missing in the past, and that is the important role of culture. Unfortunately, all the development paradigms -- or the single development paradigm -- that the whole world has adopted are so totally devoid of considerations of culture . And I think this is a very dangerous trend.

There are a billion people on the face of this earth who are very, very poor. If they lose their moorings in the culture that has sustained them for thousands of years and they follow the same path that has been adopted by the richer sections of this planet's population, then I think there is very little hope for them. They will end up in slums. They will end up socially dispossessed. And I think what is needed also is a reaffirmation of culture and its role in the whole process of development.

Joel Moses:

I know we could have a much longer discussion. I would like to stop at this point and thank our speaker, the rest of the panelists. Thank you to the audience. Thank you very much.