## Global Monitoring Report 2008 — Foreword and Key Chapter Excerpts

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### Foreword — central messages and assessment at midpoint
- Urgent action is needed to help the world meet the Millennium Development Goals (MDGs) by 2015 and to combat climate change, which disproportionately threatens poor countries and poor people.
- Development and environmental sustainability goals are closely related and have many synergies; the report provides an integrated assessment and timely input for 2008 international discussions.
- Midpoint assessment highlights:
  - The first MDG (halve extreme poverty and hunger) is likely to be met at the global level due to a surge in global economic growth, but there are serious shortfalls in fighting hunger and malnutrition.
  - Human development MDGs are unlikely to be met on current trends; prospects are gravest for reducing child and maternal mortality, with likely shortfalls also in primary school completion, empowerment of women, and sanitation.
  - Regional variation:
    - Sub-Saharan Africa lags on all MDGs, including poverty reduction, though many countries now show improved growth performance.
    - South Asia lags on most human development MDGs but will likely meet the poverty reduction MDG.
    - Most countries are off track to meet most MDGs; fragile situations fall furthest behind.
  - Most MDGs remain achievable for most countries with stronger country and partner efforts.
  - 2008 is a crucial year to generate momentum through planned high-level meetings.

### Six-point agenda for inclusive and sustainable development (overview; Foreword highlights first two points)
- Sustain and broaden the growth momentum
  - Center strategy on strong and inclusive growth.
  - Poor countries need to achieve annual GDP growth of 7 percent or more to make serious dents in poverty.
  - Only about one-third of Sub-Saharan Africa’s population lives in countries that have achieved sustained GDP growth of 7 percent or more in the past decade.
  - Essentials: sound macroeconomic policies; a conducive private investment climate (including access to key infrastructures); good governance.
  - In fragile states, governance improvement and security enhancement are crucial.
  - A dynamic agricultural sector is key in many African and low-income countries (an "African Green Revolution" identified as a strong foundation).
  - Monitor risks from financial market turbulence and the rise in energy and food prices; respond with prudent fiscal and monetary policies and well-targeted safety nets where needed.
- Achieve better results in human development
  - Accelerate progress in education and health (examples: Fast-Track Initiative in education; health systems strengthening; combating malaria).
  - More resources are needed, including increased donor support; quality and equity of spending are as important as amounts.
  - Strengthen governance, accountability, and expenditure management to raise service quality and access for poor populations.
  - Stronger focus on combating malnutrition, and on the links among health, education, nutrition, water and sanitation, pollution, and climate change.

### Integrate development and environmental sustainability — core messages and diagnostics
- Core messages:
  - Integrate environmental sustainability into core development work and maximize synergies.
  - Sound resource management is critical for natural resource–dependent countries.
  - Mitigation requires financing and technology transfer to support low-carbon transitions in developing countries without diverting resources from other development programs.
  - Developing countries need support for adaptation; the best way to adapt is to develop—diversify economies, strengthen infrastructure and health systems, and curb climate-sensitive diseases.
- Key findings and diagnostics (selected exact figures):
  - Growth and poverty
    - Growth in developing countries has averaged over 7 percent in the past five years.
    - The number of extreme poor (those living under $1 a day) declined by 278 million between 1990 and 2004, including 150 million in the last five years of that period.
    - The population of the developing world rose by about 1 billion between 1990 and 2004.
    - Globally, around 1 billion people continue to live in extreme poverty.
    - Excluding China, extreme poverty between 1990 and 2004 declined by 32 million.
    - Fragile states account for about 19 percent of the population of low-income countries but more than one-third of their poor people.
  - Human development and health
    - About 40 million more children are in school halfway to 2015.
    - Gender disparity in primary and secondary schools has declined by 60 percent.
    - 3 million more children survive every year.
    - 2 million lives are saved every year by immunization.
    - 2 million people now receive AIDS treatment.
    - Remaining shortfalls:
      - 75 million children of primary school age are still not in school.
      - 10,000 women die every week from treatable complications of pregnancy and birth.
      - More than 190,000 children under five die of disease every week.
      - Over 33 million people are infected with HIV, with more than 2 million dying every year from AIDS.
      - More than 1 million people die of malaria every year, including 1 child every 30 seconds.
      - About half of the developing world lacks basic sanitation.
  - Natural capital and environmental pressures
    - Natural capital constitutes more than 40 percent of the national wealth of low-income countries (close to 60 percent if the more advanced emerging market countries are excluded), compared with only 5 percent in high-income countries.
    - An area of forest equivalent to the size of Panama or Sierra Leone is lost every year to land use changes, concentrated in Latin America and Sub-Saharan Africa.
    - 1.6 billion people, about a third of the developing world’s population, are without access to modern energy and rely on more carbon-emitting biomass and fossil-fuel energy.
    - Per capita freshwater availability could fall below critical levels in the near future in many countries in the Middle East and South Asia.
    - Particulate matter concentrations in low-income countries are on average nearly three times higher than in high-income countries.
  - Climate change impacts and health costs
    - Nonmitigation scenarios through 2080 show developing countries in Sub-Saharan Africa, South Asia, and parts of Latin America suffering the largest losses in agricultural output, ranging from 15–60 percent.
    - Environmental risk factors play a role in 80 percent of diseases globally.
    - The economic burden of environmental health hazards has been estimated at 1.5–4 percent of GDP.
    - The cost of climate change in disability-adjusted life years was estimated at 5.5 million annually in 2000.
    - More than 200 million people in developing countries live in potential impact zones where they would become refugees from coastal flooding at a three-meter sea level rise.
    - At a one-meter sea level rise, without adaptation efforts, more than 10 percent of Vietnam’s population would be affected, the country would lose 10 percent of its GDP and 29 percent of its wetlands.
    - During the 1990s, 200 million people per year, on average, were affected by climate-related disasters in developing countries, compared with about 1 million in developed countries.

### Policy recommendations and the six-point agenda (selected actions repeated across chapters)
- Sustain and broaden the growth momentum
  - Central elements: sound macroeconomic policies; a conducive private investment climate; infrastructure; good governance; dynamic agriculture in low-income countries; monitor and respond to financial market and commodity price risks.
- Achieve better results in human development
  - Scale up and improve quality and equity in education and health (Fast-Track Initiative, health systems strengthening, malaria eradication); focus on early childhood nutrition and integrated multisectoral approaches.
- Integrate development and environmental sustainability
  - Price carbon; promote development and diffusion of cleaner and more energy efficient technologies and renewable energy; reduce deforestation; provide financing and technology transfer for mitigation and adaptation as additional to current ODA.
  - Strengthen adaptation via development-led measures and "climate proofing" (early warning systems; dams to accommodate runoff; climate-proof roads and bridges).
  - Financing estimates cited: by 2030 annual flows to developing countries on the order of $100 billion for mitigation and $28 billion to $67 billion for adaptation (UNFCCC Secretariat estimates quoted in the source).
  - Expectation: over 80 percent of these flows from the private sector; carbon markets to play an increasing role; public financing essential to create enabling environment; assistance for mitigation and adaptation should be additional to official development assistance.
- Scale up aid and increase its effectiveness
  - Donors must expedite aid delivery to meet commitments; sizable shortfalls loom if current trends persist.
  - At $103.7 billion in 2007, DAC net ODA was about $15 billion higher than its 2004 level, but preliminary indications point to further declines. The 2005 Gleneagles target called for a $50 billion increase in real terms by 2010 to reach $130 billion in constant 2004 dollars.
  - Aid composition issues: about 70 percent of the increase in ODA post-Gleneagles has been in the form of debt relief; core development aid has shown relatively little increase; medium-term predictability remains low.
  - New donors and modalities (China, India, vertical funds, innovative financing such as IFFIm, AMCs, solidarity levies) expand resources but complicate aid coherence and predictability.
- Harness trade for strong, inclusive, and sustainable growth
  - A successful Doha Round in 2008 is crucial; failure would disproportionately hurt those least able to afford it.
  - High food prices provide an opportunity to advance agricultural trade liberalization.
  - Aid for trade rose 10 percent in 2006 to about $23 billion, with well over half directed to economic infrastructure; only half flowed to low-income countries and about a quarter to LDCs.
  - Trade policy can support transfer of environmentally friendly technologies by removing barriers to trade in environmental products and services.
- Leverage IFI support for inclusive and sustainable development
  - IFIs should use leverage, coordination, and knowledge services to support collective action on global/regional public goods (including climate change); tailor products to differentiated country needs; strengthen country-led strategies, capacity building, and results tracking.
  - MDB gross disbursements in 2007 reached a record $49 billion; gross concessional flows rose by 11 percent to over $12 billion in 2007.
  - IFIs’ share in net ODA was 8 percent in 2007.

### Sustaining and broadening growth — economic prospects, risks, and selected numeric projections
- Global GDP growth projection and recent performance:
  - Global GDP growth in 2008 is projected to slow to 3.7 percent from 4.9 percent in 2007.
  - Growth in developing countries projected at 6.7 percent in 2008 (slowing by about a percentage point from 2007 but still relatively strong).
- Headline inflation (February 2008):
  - United States: 4.1 percent
  - Euro area: 3.3 percent
- Regional projections and notes:
  - Emerging and developing countries growth: 2007: 7.9 percent; 2008 (projected): 6.7 percent.
  - Developing Asia: table context shows 9.7 percent (2007) → 8.2 percent (2008 projected) → 8.4 percent (2009 projected); text cites China 9.3 percent and India 7.9 percent in 2008 projections.
  - Sub-Saharan Africa growth projected to reach 6.3 percent in 2008.
- Commodity-price and terms-of-trade observations:
  - World prices for key commodities exported by developing countries increased by 100–300 percent during the past four years (period cited in the source).
  - Oil prices have tripled in the past five years to record nominal highs of over $100 a barrel; in real terms oil prices near a historical peak of $96 a barrel (in “today’s dollars” per the source).
- Food-price developments:
  - Over the past 12 months (source period) world experienced an average food price increase of 15 percent.
  - Corn (ethanol feedstock) price doubled during the past two years (per the source).

### Scaling up aid — volumes, composition, and constraints (selected figures)
- DAC net ODA:
  - $103.7 billion in 2007 (about $15 billion higher than 2004 pre-Gleneagles level).
  - Net ODA/GNI was 0.31 percent in 2006.
- Aid composition and trends:
  - After rising during 2002–05, total net ODA from DAC donors fell by 5 percent in real terms in 2006; preliminary indications show net ODA declined by a further 8.4 percent in real terms in 2007.
  - About 70 percent of the increase in ODA post-Gleneagles has been in the form of debt relief.
  - Core development aid (program and project aid) showed relatively little increase and must rise sharply as debt relief operations wind down to meet the Gleneagles targets.
- Aid to Sub-Saharan Africa:
  - Aid flows from DAC and multilateral donors to Sub-Saharan Africa climbed to $40 billion in 2006, an increase of $6.9 billion in real terms over 2005 levels and $12.4 billion over 2004 amounts.
  - For low-income countries in the region, ODA accounts for almost two-thirds of all external financing on average.

### Harnessing trade — trade growth and policy priorities (selected numeric highlights)
- Worldwide merchandise exports in 2007 reached $13.7 trillion, growing 14 percent in value; developing-country exports rose 17 percent.
- Aid for trade:
  - Aid for trade rose 10 percent in 2006 to about $23 billion.
  - Composition (2002–06): Economic infrastructure 55 percent; Productive capacity building 42 percent; Trade policy and regulations 3.4 percent.
  - Top recipients in 2006: Iraq, India, Vietnam, Afghanistan, and Indonesia — combined nearly 30 percent of total.
- Trade restrictiveness:
  - Tariff Trade Restrictiveness Index (TTRI) examples: TTRI of high-income countries is approximately 12.4 percent for agriculture compared to 1.4 percent for manufactured products (as cited in source).

### Leveraging IFI support — operational shifts, financial flows, and select figures
- MDB performance and flows:
  - MDB gross disbursements reached $49 billion in 2007.
  - Gross concessional flows rose by 11 percent to over $12 billion in 2007.
  - MDB nonsovereign flows to nonsovereign entities rose to over $13 billion in 2007, a quadrupling since 2000.
  - Guarantees from IDA and IBRD have an average leverage ratio of almost 10 to 1 (reported in source).
- IDA15 and AfDF XI replenishments:
  - IDA15 pledges: $25.1 billion in donor pledges for mid-2008 to mid-2011; will allow $41.6 billion of new commitments during fiscal 2009–11 (source reporting).
  - AfDF-XI donors agreed to $8.9 billion in support for 2008–10, an increase of 52 percent over AfDF-X.
- IFI share in net ODA:
  - IFIs’ share in net ODA was 8 percent in 2007 (source).

### Special theme: Environmental sustainability — monitoring, risks, and policy priorities
- Framework highlights:
  - Environmental monitoring must include externalities (local air pollutants; greenhouse gas stocks), stocks of natural capital (forests; fish populations), and capacity of governments to manage resources.
  - MDG 7 indicators include:
    - 7.1 Proportion of land area covered by forest
    - 7.2 CO2 emissions, total, per capita and per $1 GDP (PPP)
    - 7.3 Proportion of fish stocks within safe biological limits
    - 7.4 Proportion of total water resources used
    - 7.7 Proportion of population using an improved drinking water source
    - 7.8 Proportion of population using an improved sanitation facility
    - 7.9 Proportion of urban population living in slums (and other subtargets)
- Selected environmental and climate figures:
  - Forests and land use:
    - World average forest endowment in 2005: 0.61 hectares of forest per capita.
    - Net loss of forest area, 2000–05: 73,000 square kilometers a year.
  - Energy and access:
    - About a quarter of the world population (1.6 billion people) has no access to electricity.
    - Developing countries aggregate (2005): Population 4,944 million; Population without electricity 1,570 million; Electrification rate 68.2 percent; Rural electrification rate 56.4 percent.
  - Climate projections (IPCC scenarios, 2090–99 vs. 1980–99; best estimates and likely ranges reported in source):
    - B1 scenario: Best estimate temperature change = 1.8°C; Likely range = 1.1–2.9°C; Sea level rise = 0.18–0.38 meters.
    - A1B scenario: Best estimate temperature change = 2.8°C; Likely range = 1.7–4.4°C; Sea level rise = 0.21–0.48 meters.
    - A2 scenario: Best estimate temperature change = 3.4°C; Likely range = 2.0–5.4°C; Sea level rise = 0.23–0.51 meters.
    - A1FI scenario: Best estimate temperature change = 4.0°C; Likely range = 2.4–6.4°C; Sea level rise = 0.26–0.59 meters.
  - Mortality and disease burden attributed to climate change (2000):
    - Global estimate: 166,000 deaths associated with climate change in 2000 (77,000 malnutrition; 47,000 diarrhea; 27,000 malaria).
    - DALYs attributed to climate change in 2000: World total 5,517 (thousands); per 1 million population = 925 (source table).
  - Emissions and land use:
    - When emissions from land use change are included, the top 10 emitters account for two-thirds of CO2 emissions.
    - World emissions per capita (fossil fuel burning, 2004): 4.5 tons of CO2 per person; High-income countries: 13.3 tons per person; Middle-income countries: 4.0 tons per person; Low-income countries: 0.9 tons per person.
  - Fisheries:
    - The share of fish stocks moderately exploited or underexploited fell from 40 percent in 1974 to 25 percent in 2006; the share of overexploited stocks rose from 10 percent in 1974 to 25 percent (year cited in source).
- Sustainability indicators and adjusted net savings
  - Adjusted net savings is presented as a national-accounts–based measure of sustainability that adjusts net saving for investment in human capital, depletion of minerals/energy/forests, and damages from particulate matter and CO2 emissions.
  - Findings:
    - Adjusted net savings are negative in many developing countries.
    - In fragile states, adjusted net savings in 2005 were estimated at minus 22 percent of GNI.
    - Other developing countries (excluding emerging markets and fragile states) had negative adjusted saving rates (minus 5 percent of GNI).
    - Emerging markets showed positive adjusted net savings (30.6 percent for emerging market economies as a composite in a regional table).
  - Policy emphasis: continue tracking natural capital; improve data; strengthen institutions and property rights; treat water as an economic good where appropriate; avoid subsidies that encourage inefficient resource use and poor targeting.

### Adaptation, mitigation, and international finance (selected programmatic notes)
- Adaptation measures:
  - Best way to adapt: development-led measures (diversify economies; strengthen infrastructure and health systems; curb climate-sensitive diseases).
  - "Climate proofing" investments cited as having immediate payoffs: early warning systems; dams to accommodate increased runoff; climate-proof roads and bridges.
  - National Adaptation Programmes of Action (NAPAs) and donor support identified; 46 countries preparing or having prepared NAPAs (source period).
- Mitigation and carbon finance:
  - UNFCCC Secretariat estimates by 2030 annual financial flows to developing countries on the order of $100 billion for mitigation and $28 billion to $67 billion for adaptation.
  - Over 80 percent of these flows are expected to come from the private sector.
  - Carbon markets and CDM activity: CDM cumulative transacted CERs exceed 1 billion with cumulative value exceeding $17 billion (source reporting period); carbon market value estimated $30 billion in 2006.
  - Clean Energy Investment Framework and Clean Technology Fund concepts are discussed as IFI responses.
- REDD and forest carbon:
  - REDD (Reducing Emissions from Deforestation and Forest Degradation) under UNFCCC negotiation to compensate countries for avoided deforestation; World Bank facilities cited include Forest Carbon Partnership Facility and BioCarbon Funds to pilot forest carbon finance.

*Source: Foreword and chapter excerpts from the IMF/World Bank Global Monitoring Report 2008 (supplied PDF excerpt).*

*Source: Global Monitoring Report 2008 — Foreword and selected chapter excerpts from the supplied IMF PDF excerpt.*

### Foreword....................................................... xi

### Foreword

### Placement and front matter
- Foreword appears on page "xi".
- It precedes "Acknowledgments" (page "xiii") and "Abbreviations" (page "xv").
- The "Executive Summary" begins on page "xvii".

### Context within the report
- The Foreword is part of the report's front matter and introduces a larger work that includes an Executive Summary, multiple thematic sections, a special theme on Environmental Sustainability, References, and statistical monitoring annexes.
- The broader report includes a special thematic section titled "ENVIRONMENTAL SUSTAINABILITY" and chapters addressing growth, human development, aid architecture, trade, international financial institutions, and national and global environmental sustainability (chapter numbering and full chapter titles appear in the report's table of contents).

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/gmr/2008/eng/_gmr.pdf*

### Foreword

### Foreword

### Central messages
- Urgent action is needed to help the world meet the Millennium Development Goals (MDGs) by 2015; urgent action is also needed to combat climate change that threatens the well-being of all countries, but particularly of poor countries and poor people.
- The goals of development and environmental sustainability are closely related, and the paths to those goals have many synergies.
- The report provides an integrated assessment of development and environmental sustainability and offers timely input for 2008 international discussions.

### Assessment at midpoint
- The MDG assessment at midpoint presents a mixed picture: significant progress alongside formidable challenges.
- The first MDG calls for reducing extreme poverty and hunger by half. Although the poverty goal is likely to be met at the global level, thanks to a remarkable surge in global economic growth over the past decade, there are serious shortfalls in fighting hunger and malnutrition.
- On current trends, the human development MDGs are unlikely to be met. Prospects are gravest for the goals of reducing child and maternal mortality; shortfalls are also likely in primary school completion, empowerment of women, and sanitation MDGs.
- Regional and country variation:
  - Sub-Saharan Africa lags on all MDGs, including the goal for poverty reduction, though many countries in the region are now experiencing improved growth performance.
  - South Asia lags on most human development MDGs, though it will likely meet the poverty reduction MDG.
  - At the country level, on current trends most countries are off track to meet most of the MDGs, with those in fragile situations falling behind most seriously.
- Most MDGs remain achievable for most countries if stronger efforts are made both by the countries and their development partners.
- 2008 is a crucial year to generate necessary momentum, with planned high-level meetings providing an opportunity to agree on priorities and milestones.

### Climate and environmental sustainability
- MDG 7 underscores the strong links between development and environmental sustainability, the special theme of this report.
- Ensuring environmental sustainability is necessary for achieving the other MDGs and maintaining long-term growth and development.
- Early action to control greenhouse gas emissions will significantly reduce mitigation and adaptation costs.
- Even if efforts to stabilize emissions are successful, some degree of warming and related impacts will continue to occur into the next decades; developing countries will be the most affected.
- Historical data cited: In the 1990s about 200 million people a year, on average, were affected by climate-related disasters in developing countries, compared with 1 million in developed countries.
- Poor countries’ heavier dependence on natural resources and agriculture increases vulnerability to climate change; their poverty and lack of development make them less able to adapt.
- Development, adaptation, and mitigation are closely connected. Mitigation will require financing and technology transfer to developing countries; such support should not divert resources from other development programs.

### Six-point agenda for inclusive and sustainable development (overview)
- The report proposes a six-point agenda to expedite and broaden progress toward the MDGs and to ensure the sustainability of that progress. (Detailed components of the agenda are presented in the report; the Foreword highlights the first two points.)

1. Sustain and broaden the growth momentum
- Strong and inclusive economic growth must be at the center of the strategy to achieve the MDGs.
- Poor countries need to achieve annual GDP growth of 7 percent or more to make serious dents in poverty.
- Stronger, concerted efforts are needed to spur growth in lagging countries in Africa and elsewhere and in fragile states.
- Only about one-third of the region’s population in Africa lives in countries that have achieved sustained GDP growth of 7 percent or more in the past decade.
- Cross-country essentials for robust growth:
  - sound macroeconomic policies;
  - a conducive private investment climate, including access to key infrastructures;
  - good governance.
- In fragile states, improvement of the governance environment, together with security enhancement, is crucial.
- In many countries in Africa, and in low-income countries more generally, a dynamic agricultural sector is key to achieving strong and inclusive growth and will help to mitigate upward pressures on food prices. An African Green Revolution is identified as a strong foundation for growth and poverty reduction in the region.
- Risks to developing-country growth arising from financial market turbulence and the rise in energy and food prices need careful monitoring and appropriate policy responses, including prudent fiscal and monetary policies and, where needed, well-targeted safety nets to cushion the impact of the price increases on the poor.

2. Achieve better results in human development
- Progress toward the human development goals must be accelerated, requiring commitment of more resources, including increased donor support, to key programs in education and health (for example, the Fast-Track Initiative in education, health systems strengthening, and combating malaria).
- More spending on education and health programs is not the sole answer; the quality and equity of spending are equally important.
- Improved governance, stronger accountability mechanisms, and sound expenditure management are essential to raising the quality of education and health services and improving access for poor, underserved populations.
- A stronger focus is needed on combating malnutrition, especially among children, to underpin better human development outcomes.
- Policies and programs must factor in the strong links between health and education outcomes, nutrition, and environmental factors—water and sanitation, pollution, and climate change.

### Financing, aid, trade, and the role of international financial institutions
- Donors must scale up aid in line with their commitments; sizable shortfalls loom if current trends in aid persist.
- Reformed developing countries are in a position to utilize increased resources productively.
- The changing aid architecture, including new sources and modalities of aid, promises more resources and innovation but poses new challenges for aid effectiveness and coherence.
- The Accra High Level Forum in September 2008 is identified as an opportunity to address new dimensions of the aid effectiveness agenda.
- The need to catalyze and leverage more private capital in support of development is emphasized.
- Trade can be harnessed more effectively to contribute to strong and inclusive growth. The international community must achieve a successful outcome of the Doha trade negotiations in 2008.
- The current high food prices provide a window of opportunity to break the impasse on agricultural trade liberalization.
- Increase aid for trade, together with behind-the-border reforms of key trade-related services, can help poor countries take advantage of trade opportunities and promote more inclusive globalization.
- International financial institutions (IFIs) have a crucial role through financing, knowledge, and coordination services; they must tailor their products and services to increasingly differentiated country needs and respond to expanding global and regional public goods agendas, such as combating climate change.

*Foreword, Global Monitoring Report 2008*

### 3. Integrate development and

### 3. Integrate development and environmental sustainability

### Core messages
- Environmental sustainability must be integrated into core development work, maximizing synergies.
- For natural resource–dependent countries, sound resource management is critical for sustainable growth.
- Mitigation of carbon emissions will require financing and technology transfer to support transition to low-carbon growth in developing countries; such support should not divert resources from other development programs.
- Developing countries will need support with adaptation to climate change; for poor countries, the best way to adapt is to develop—by diversifying economies, strengthening infrastructure, developing health systems, and curbing climate-sensitive diseases such as malaria and diarrhea.

### Key findings and diagnostics
- Growth and poverty
  - Growth in developing countries has averaged over 7 percent in the past five years.
  - The number of extreme poor (those living under $1 a day) declined by 278 million between 1990 and 2004, including 150 million in the last five years of that period.
  - The population of the developing world rose by about 1 billion between 1990 and 2004.
  - Globally, around 1 billion people continue to live in extreme poverty.
  - Excluding China, extreme poverty between 1990 and 2004 declined by 32 million.
  - Fragile states account for about 19 percent of the population of low-income countries but more than one-third of their poor people.
- Human development and health
  - About 40 million more children are in school halfway to 2015.
  - Gender disparity in primary and secondary schools has declined by 60 percent.
  - 3 million more children survive every year.
  - 2 million lives are saved every year by immunization.
  - 2 million people now receive AIDS treatment.
  - Remaining shortfalls and burdens:
    - 75 million children of primary school age are still not in school.
    - 10,000 women die every week from treatable complications of pregnancy and birth.
    - More than 190,000 children under five die of disease every week.
    - Over 33 million people are infected with HIV, with more than 2 million dying every year from AIDS.
    - More than 1 million people die of malaria every year, including 1 child every 30 seconds.
    - About half of the developing world lacks basic sanitation.
- Natural capital and environmental pressures
  - Natural capital constitutes more than 40 percent of the national wealth of low-income countries (close to 60 percent if the more advanced emerging market countries are excluded), compared with only 5 percent in high-income countries.
  - An area of forest equivalent to the size of Panama or Sierra Leone is lost every year to land use changes, concentrated in Latin America and Sub-Saharan Africa.
  - 1.6 billion people, about a third of the developing world’s population, are without access to modern energy and rely on more carbon-emitting biomass and fossil-fuel energy.
  - Per capita freshwater availability could fall below critical levels in the near future in many countries in the Middle East and South Asia.
  - Particulate matter concentrations in low-income countries are on average nearly three times higher than in high-income countries.
- Climate change impacts and health costs
  - Nonmitigation scenarios through 2080 show developing countries in Sub-Saharan Africa, South Asia, and parts of Latin America suffering the largest losses in agricultural output, ranging from 15–60 percent.
  - Environmental risk factors play a role in 80 percent of diseases globally.
  - The economic burden of environmental health hazards has been estimated at 1.5–4 percent of GDP.
  - The cost of climate change in disability-adjusted life years was estimated at 5.5 million annually in 2000.
  - Children in developing countries are particularly affected by increases in diarrhoea, malaria, and respiratory infections.
  - More than 200 million people in developing countries live in potential impact zones where they would become refugees from coastal flooding at a three-meter sea level rise.
  - At a one-meter sea level rise, without adaptation efforts, more than 10 percent of Vietnam’s population would be affected, the country would lose 10 percent of its GDP and 29 percent of its wetlands.
  - During the 1990s, 200 million people per year, on average, were affected by climate-related disasters in developing countries, compared with about 1 million in developed countries.

### Implications for developing countries and IFI roles
- Sound macroeconomic management, governance, and institutional strengthening (including property rights to natural resources) are critical to ensure resource wealth supports development rather than contributing to the “resource curse.”
- The Extractive Industries Transparency Initiative provides a foundation for enhanced international cooperation for efficient and transparent management of natural resources.
- The declining relative financing role of international financial institutions (IFIs) increases the importance of their leverage, coordination, knowledge, and tailored advice, especially for low-income countries, fragile states, and concentrations of poverty within middle-income countries.
- IFIs should adapt strategies to respond to global and regional public goods, such as combating climate change, through advice, direct interventions, and partnerships with other development partners and the private sector.

### Policy recommendations and agenda (six-point agenda)
- Sustain and broaden the growth momentum
  - Strong and inclusive growth must be central to achieving the MDGs.
  - Concerted efforts are needed to spur growth in lagging countries in Africa and fragile states; a dynamic agricultural sector is crucial.
  - Sound macroeconomic policies, a conducive private investment climate, infrastructure, and good governance are essential.
  - Monitor and respond to risks from financial market turbulence and rises in oil and food prices.
- Achieve better results in human development
  - Step up key programs in health and education (for example, the Fast-Track Initiative, eradication of malaria, health systems strengthening).
  - Emphasize quality and equity of public spending as well as increased spending.
  - Focus on combating malnutrition and on links among health, education, nutrition, water and sanitation, pollution, and climate change.
- Integrate development and environmental sustainability
  - Integrate environmental sustainability into core development work and maximize synergies.
  - For resource-dependent countries, prioritize sound resource management.
  - Prioritize development-led adaptation for poor countries and support transition to climate-resilient and low-carbon growth with financing and technology transfer that do not divert resources from other development programs.
- Scale up aid and increase its effectiveness
  - Donors must expedite aid delivery in line with commitments to avoid sizable shortfalls in official development assistance.
  - Address challenges and opportunities from a changing aid architecture (new sources and modalities) to improve aid effectiveness and coherence.
  - Leverage increased private flows and public-private partnerships for development finance.
  - Both borrowers and creditors should attend to debt sustainability to prevent reaccumulation of unsustainable debts following debt relief.
- Harness trade for strong, inclusive, and sustainable growth
  - Aim for a successful Doha trade outcome in 2008; high food prices present an opportunity for agricultural trade liberalization.
  - Increase aid for trade and implement behind-the-border reforms and services liberalization to strengthen competitiveness.
  - Use trade policy to facilitate transfer of environmentally friendly technologies by removing barriers to trade in environmental products and services.
- Leverage IFI support for inclusive and sustainable development
  - Use IFIs’ leverage and coordination role to achieve collective action on development and global/regional public goods.
  - Tailor IFI advice, products, and services to differentiated country needs and adapt operational strategies in response to client differentiation and global change.

*Source: _gmr - 3. Integrate development and*

### 1. Sustaining and Broadening the

### 1. Sustaining and Broadening the Growth Momentum

### Implications of Global Economic Developments
- Immediate priority: contain international financial market turbulence and limit its impact on developing country growth.
- Global growth projections and recent performance:
  - Global GDP growth in 2008 is projected to slow to 3.7 percent from 4.9 percent in 2007.
  - Growth in developing countries slowing by about a percentage point but still remaining relatively strong at 6.7 percent.
- Risks and vulnerabilities:
  - Persistence of financial market turbulence and knock-on effects on growth pose downside risks.
  - Private capital flows could reverse; countries with large current account deficits and asset bubbles (especially in emerging Europe) are particularly vulnerable.
- Policy guidance:
  - No single prescription—assess vulnerabilities and responses on a country-by-country basis.
  - Prudent policies that allow automatic stabilizers to operate may be preferable to policy activism for many countries.
  - Renewed attention to fundamentals: prudent external debt management, fiscal discipline, and flexible exchange rate policies.
- Rise in oil and food prices:
  - Causes: supply constraints and rapid demand growth, including increasing use of food crops for biofuels.
  - Macroeconomic impact so far relatively limited, offset by rising prices of other commodity exports and higher capital inflows.
  - Net oil and food importers could worsen if prices rise further or offsetting developments reverse.
  - Poor people in developing countries spend as much as a half of their income on food; the urban poor are most directly affected.
- Policy responses to price shocks:
  - Short term: energy demand management and targeted safety nets for affected poor.
  - Long term: increase energy production and promote agricultural growth.
  - Cushioning impact: rely on targeted safety nets; avoid price controls and trade restrictions.
  - If needed, IMF and World Bank could provide financial support through the Exogenous Shocks Facility or IDA financing.

### Policies and Institutions for Strong and Inclusive Growth
- Medium-term challenge: spur stronger growth in lagging countries that have not shared in recent growth surges.
- Three broad essential areas for robust growth across countries:
  - Sound macroeconomic policies.
  - A conducive private investment climate, including a business-friendly regulatory environment and access to key infrastructure.
  - Good governance.
- Progress has improved but remains uneven; deeper and more consistent reform progress is needed for sustained broad-based growth.

- The growth agenda in Africa:
  - Around 20 countries (about a third of the region’s population) continue to record very low growth implying stagnant or declining per capita incomes; many are fragile states affected by conflict.
    - Policy agenda: security enhancement, political reform and consolidation, capacity building, and actions to build private sector opportunities; need for international aid and strengthened governmental capacity.
  - Another group, also roughly a third of the region’s population, has improved growth to an average of 5–6 percent, with some achieving higher growth (examples include Ghana, Mozambique, Rwanda, Tanzania, and Uganda).
    - Policy priorities: solidify macroeconomic stability, improve private investment climate via regulatory and institutional reform and stronger physical infrastructure, and deepen regional and global links.
    - These countries demonstrate capacity to utilize scaled-up external assistance effectively.
  - A third group, resource-rich countries accounting for most of the remaining one-third of the population, have achieved average growth rates as high as 9 percent, fueled by the boom in resource prices.
    - Main challenge: manage and transform natural resource wealth into long-term sustainable growth through good governance, transparent extraction and management, and productive investments to diversify the economic base.
    - Explicit resource rent policies often needed; participation in Extractive Industries Transparency Initiative (EITI) encouraged:
      - 24 implementing countries (of which 17 are in Sub-Saharan Africa) including 7 with national EITI reports out and a system in place for validating performance.
- Role of agriculture and poverty reduction:
  - An estimated 900 million rural people in the developing world live on less than $1 a day; most are engaged in agriculture in some form.
  - A recent World Bank study estimated that GDP growth originating in agriculture is about four times more effective in reducing poverty than GDP growth originating outside the sector.
  - An African Green Revolution is proposed as a strong foundation for growth and poverty reduction.

- Income inequality and globalization:
  - Within-country income inequality has increased in many countries, more pronounced in higher-growth countries.
  - IMF analysis: major factor contributing to rising inequality is technological progress (reducing demand for low-skill workers and increasing rewards for higher-skill workers); financial globalization contributed but was more than offset by the equalizing effect of trade liberalization.
  - Policy responses: broaden access to education and financial services; improve investment climate to provide a level playing field; boost agriculture in poor countries.

### Achieving Better Results in Human Development
- Urgent need to expedite progress toward human development MDGs; major scaling up needed in education and especially health.
- More resources required, including donor support to initiatives such as the Fast-Track Initiative in education, health systems strengthening, and combating malaria—but more spending alone is not enough.
- Quality and equity of spending are critical; emphasis on early childhood interventions (e.g., improved nutrition).

- Raising quality of health services:
  - Quality in health is highly uneven across and within countries; access is improving but poor outcomes often suggest low or falling quality as access rises.
  - Rising per capita income is positively related to health care quality, but rising public health spending alone is not.
  - Key measures: improved governance, competency of providers, incentives to improve performance, accountability mechanisms, sound expenditure management, better information (real-time data, oversight, checking absenteeism, monitoring and auditing), focus on results, effective use of the private sector, and strengthening the voice of clients.

- Equity in spending and outcomes:
  - Public health and education spending often skewed toward higher-income households.
  - Top income quintile benefits substantially more than the bottom quintile in practically all developing regions—by a factor of more than two in South Asia and Sub-Saharan Africa.
  - Example inequities in Latin America: a child born in the poorest quintile is almost three times as likely to die before age five as a child born in the richest quintile; almost six times as likely to be malnourished; and only two-thirds as likely to receive medical treatment for a simple complaint such as a fever.
  - Low service quality further exacerbates inequity; conditional cash transfer (CCT) programs can help where feasible.

- Tackling malnutrition:
  - Malnutrition is the underlying cause of at least 3.5 million deaths annually and accounts for 35 percent of the disease burden of children under age five.
  - Malnutrition during pregnancy increases risk of maternal death at delivery and accounts for more than 20 percent of maternal mortality.
  - Severe to moderate stunting affects as many as 35 percent of children under five in Sub-Saharan Africa and South Asia; South Asia has the highest incidence of child malnutrition; the child malnutrition rate in India is double the African average.
  - Food security is important but mother’s education and family income are equally or more important; access to clean water and basic sanitation reduces disease risk.
  - Technical interventions exist and need to be scaled up within a multisectoral approach emphasizing maternal education, innovative delivery mechanisms (e.g., school feeding with locally purchased food, CCTs), community and private sector engagement.
  - The recent sharp rise in world food prices increases urgency.

- Addressing environmental health risks:
  - Principal environmental risk factors for health: water and sanitation (diarrhea and malaria), indoor and urban outdoor air pollution (respiratory infections), and climate change (tropical vector-borne diseases such as malaria).
  - About a quarter of all deaths in the developing world are principally attributable to environmental risk factors.
  - Unsafe drinking water and poor sanitation and hygiene account for around 90 percent of diarrhea cases worldwide.
  - More than 40 percent of the global burden of malaria can be prevented through improved environmental management.
  - An estimated 1.5 million deaths annually caused by respiratory infections are attributable to environmental pollution.
  - Water and sanitation MDG costs: meeting the water and sanitation MDG will require annual investment on the order of $30 billion, roughly double the current level.
  - Priorities: improve access to clean water and basic sanitation, promote better hygiene, better operation and maintenance of existing systems, use of tariffs while protecting the poor, private participation opportunities, institutional strengthening of sector agencies, and cross-sector coordination.

### Integrating Development and Environmental Sustainability
- Environmental sustainability must be integrated into core development work to maximize synergies and sustain growth by reducing carbon intensity and strengthening adaptation capacity.
- Climate change response requires both mitigation and adaptation; early action reduces future costs.
- Mitigation framework key elements:
  - Pricing of carbon to provide market-based incentives.
  - Development and diffusion of cleaner and more energy efficient technologies and renewable energy sources.
  - Financing and technology transfer to support transition to low-carbon growth in developing countries.
  - Reducing deforestation.
- Low-cost, high-impact opportunities: invest in “no-regrets” energy efficiency options based on existing technologies that would pay for themselves if subsidies were removed.
- Strengthening adaptation (vital for developing countries):
  - Best way to adapt is to develop—diversify economies, strengthen infrastructure, develop health systems and curb climate-sensitive diseases.
  - “Climate proofing” investments can have immediate payoffs: early warning systems, dams to accommodate increased runoff, climate-proof roads and bridges.
  - Adaptation programs must be country specific due to varied vulnerabilities.
- Financing mitigation and adaptation:
  - UNFCCC Secretariat estimates by 2030 annual financial flows to developing countries will need to be on the order of $100 billion to finance mitigation and $28 billion to $67 billion for adaptation.
  - Over 80 percent of these flows are expected to come from the private sector, with carbon markets playing an increasingly important role.
  - Public sector financing also essential to create enabling environment; assistance for mitigation and adaptation should be additional to current levels of official development assistance.
- Institutional strengthening:
  - Integration of environmental management with development requires institutional capacity building and policy improvements (e.g., property rights to natural resources).
  - Institutional capacities for environmental management are particularly weak in developing countries; progress strongest in Eastern Europe and Central Asia, lagging in South Asia and Sub-Saharan Africa.
  - Weak enforcement capacity undermines environmental policy progress.

*Italic: IMF — Global Monitoring Report chapter 1 content provided in the supplied PDF excerpt.*

### 4. Scaling Up Aid and Increasing

### 4. Scaling Up Aid and Increasing its Effectiveness

### Role of domestic mobilization and ODA
- Developing countries must mobilize more domestic resources by spurring economic growth, strengthening revenue administration, and improving the efficiency of spending.
- Reforms are needed to mobilize private investment—domestic and foreign.
- For most low-income countries, ODA remains a major source of development finance; in Sub-Saharan Africa official flows account for about two-thirds of all capital inflows.
- Even with stronger domestic mobilization and private capital inflows, most low-income countries will need a substantial increase in ODA to improve prospects for achieving the MDGs.
- In middle-income countries, aid plays a smaller but still important role: catalyzing reforms, tackling concentrations of poverty, countering negative shocks, and assisting with global or regional public goods such as climate change.

### Increasing aid to exploit scale-up opportunities
- The time to deliver on aid commitments to support the MDGs is now; donors must expedite aid delivery.
- If current ODA trends persist, sizable shortfalls loom, particularly harming poor countries and fragile states that offer promising opportunities to scale up development results.
- Many countries have improved policies and capacities and can utilize increased aid productively, but donor response has tended to fall short.
- Both aid recipients and donors need to deliver on commitments if the MDGs are to be achieved.

### Recent aid trends and the Gleneagles target
- After rising during 2002–05, total net ODA from DAC donors fell by 5 percent in real terms in 2006.
- Preliminary indications are that net ODA declined by a further 8.4 percent in real terms in 2007.
- At $103.7 billion in 2007, DAC net ODA was about $15 billion higher than its 2004 (pre-Gleneagles) level.
- The 2005 Gleneagles target called for a $50 billion increase in real terms by 2010, which would raise total net ODA to $130 billion in constant 2004 dollars.
- Aid to Sub-Saharan Africa has risen but at well short of the rate needed to achieve the targeted doubling of aid by 2010.
- About 70 percent of the increase in ODA post-Gleneagles has been in the form of debt relief.
- Core development aid—program and project aid—has shown relatively little increase.
- As debt relief operations wind down, core development aid will need to rise sharply to reach the Gleneagles target.
- Preliminary evidence from DAC’s 2007 forward survey suggests donor intentions are not yet sufficiently ambitious to meet the 2010 targets.

### Changing aid landscape and modalities
- New sources of aid have emerged: new official bilateral donors (including some developing-country donors such as China and India) and private donors.
- New modalities include global vertical funds (e.g., Global Fund to Fight AIDS, Tuberculosis, and Malaria; Global Alliance for Vaccination and Immunization) and innovative financing modalities (e.g., International Finance Facility for Immunization, Advance Market Commitments, solidarity levy on airline tickets).
- These sources and modalities expand the potential aid envelope and create opportunities for experimentation and innovation in development finance.
- They also pose challenges for aid effectiveness and coherence, increasing risks of fragmentation and earmarking.

### Ensuring aid effectiveness in a changing architecture
- Progress on implementing the Paris Declaration is encouraging but uneven: alignment and harmonization have improved, and predictability is improving—largely in the near term.
- Medium-term predictability remains low; longer time horizons for aid commitments and clearer rules for qualification and disbursement are needed.
- Increased complexity of the aid architecture heightens the importance of strong country-led strategies, linked to budgetary frameworks and underpinned by stronger country systems and capacities.
- A key challenge for the Paris agenda is integrating new sources and modalities of aid into the aid alignment and harmonization framework.
- The Accra High Level Forum in September 2008 is identified as a timely opportunity to address these dynamic dimensions.

### Health sector financing: challenges and priorities
- New donors and channels (vertical funds, earmarked bilateral funds, private donors) have increased attention and financing for health.
- Aid to health more than doubled between 2000 and 2006.
- Multiplicity of donors and vertical focus on communicable diseases complicate alignment with country strategies:
  - In seven African countries, support from vertical funds for fighting HIV/AIDS ranges from one-third to one-half of total spending on health.
  - Donor funding for HIV/AIDS exceeded that for malaria by 40 percent in Ghana and 160 percent in Rwanda, even though malaria is the leading cause of morbidity and mortality in both countries.
- Efficiency and integration issues:
  - Roughly one-half of health aid is off budget.
  - Mismatches exist between rapid increases in earmarked funds and absorptive capacity.
  - In Ethiopia, health systems strengthening received about 15 percent of donor financing for health, compared with 60 percent for HIV/AIDS.
- Policy priorities:
  - Better align and integrate vertical and earmarked funds with country strategies and systems.
  - Improve donor coordination and complementarity.
  - Strengthen health systems (human resources, financial management and procurement, information, governance) to support integrated programs (communicable diseases and mother and child health).
  - Recent initiatives such as the International Health Partnership and selection of health as a special focus sector in Paris monitoring acknowledge these needs.

### Securing debt sustainability
- Debt relief under HIPC and MDRI has improved debt indicators, but long-term debt sustainability remains a challenge for several post completion–point countries.
- Prudent debt management as part of a sound macroeconomic framework and reforms to build resilience to exogenous shocks are necessary to prevent renewed unsustainable debt burdens.
- Creditors need to consider debt sustainability in lending decisions.
- The Bank-Fund Debt Sustainability Framework is a tool for borrowers and creditors to assess and manage risks.

---

### 5. Harnessing Trade for Strong, Inclusive, and Sustainable Growth
- Worldwide merchandise exports grew 14 percent in value in 2007, above the average 9 percent growth recorded in the previous 10 years; developing-country exports rose 17 percent.
- Research shows faster economic growth in countries that have liberalized trade more.
- Trade restrictiveness has declined in developing countries during this decade, with middle-income countries seeing the largest declines.

Key policy messages
- A successful Doha Round is crucial for sustaining strong trade growth and making its benefits more inclusive, especially against potential protectionist pressures.
- Lack of agreement on agricultural trade liberalization is a key bottleneck; current high food prices provide a window to break the impasse.
- Highly restrictive and distortive agricultural support policies in high-income countries harm consumers and producers in developing countries and impede MDG progress.
- Doha must aim for a major reduction of barriers to agricultural trade; bulk of potential benefits from Doha depend on that.

Developing-country policy stance and opportunities
- Developing countries have higher average levels of trade restrictiveness than high-income countries but more neutral cross-sectoral trade policy regimes between agriculture and manufacturing.
- Since the mid-1980s, gross subsidy equivalents of support to farmers in high-income countries have remained at about $200 billion a year.
- In developing countries support moved from a negative amount of about $100 billion a year (effective taxation) to positive amounts, except in Africa where trade policy continues on balance to tax farmers.
- Doha offers developing countries an opportunity to lock in relatively neutral cross-sectoral trade policy stances and to gain efficiency from lowering applied protection.

Complementary policies and aid for trade
- Exploiting trade opportunities requires behind-the-border policies to improve competitiveness and supply response capacities; services policies (transportation, telecommunications, finance) are particularly important.
- Countries with better trade logistics are more successful in integrating into global markets; poor countries are hampered by weaker trade logistics.
- Many developing countries have opened key logistical services to foreign competition, but services trade regimes remain relatively restrictive; most services liberalization has been unilateral.
- Aid for trade needs substantial scaling up to address behind-the-border constraints, especially for LDCs where trade capacity and competitiveness constraints often bind.
- Progress on aid for trade includes enhancing the Integrated Framework for LDCs and donor commitments to a trust fund.
- Aid for trade rose 10 percent in 2006 to about $23 billion, with well over half directed to economic infrastructure.
- Only half of aid for trade flowed to low-income countries, and only about a quarter to LDCs.

Trade and environmentally friendly technologies
- Trade policy and aid for trade can support mitigation and adaptation by promoting transfer and adoption of environmentally friendly technologies.
- Trade barriers on environmental goods and services tend to be highest in low-income countries, paralleling overall trade restrictiveness.
- Removing restraints on trade in such products and assisting producers in developing countries to benefit from initiatives such as carbon labeling can harness trade for strong, inclusive growth and better environmental outcomes.
- Streamlining intellectual property rights and investment rules can further aid transfer and assimilation of environmentally efficient technologies.

---

### 6. Leveraging IFI Support for Inclusive and Sustainable Development
- Net financial flows to developing countries from IFIs relative to other financing sources have been declining; in 2007 IFIs had a share in net ODA of only 8 percent.
- Net nonconcessional flows turned slightly positive in 2007 after four years of large negative flows.
- The IFIs’ declining relative financing role does not imply less relevance; their development leverage beyond financing is the true measure of impact.
- Record pledges for IDA15 and AfDF XI reflect shareholder recognition of IFIs’ broader leverage.

Strategic shifts in IFIs
- IFIs face rapid change from globalization, evolving international financial architecture, and differentiated client needs across low-income countries, fragile states, and middle-income countries.
- Major strategic reviews across IFIs introduced important shifts with three common themes:
  - Shift in client and business focus to promote inclusive and sustainable globalization: sharpened focus on low-income countries and fragile states, concentrations of poverty in middle-income countries, strengthened private sector operations, and greater product and service differentiation across clients.
  - Orientation toward knowledge services as a critical development leverage: building absorptive capacities, strengthening country strategies, underpinning aid effectiveness, disseminating best practice, and developing a shared knowledge base; innovation is needed to increase flexibility and responsiveness.
  - Increased emphasis on global and regional public goods: direct interventions and enabling environments to leverage private sector across macroeconomic and financial stability, international financial architecture, trade, communicable disease control, global environmental commons, regional economic integration, and knowledge goods.
- Adapting governance structures (members’ quotas, voice, participation) is important for continued IFI effectiveness.

Operational outcomes
- MDBs posted strong financial operations performance in 2007: gross disbursements reached a record $49 billion.
- Concessional and nonconcessional flows to nonsovereign entities were dynamic elements:
  - Gross concessional flows rose by 11 percent to over $12 billion, with flows to Africa showing the fastest increase.
  - MDB support to Sub-Saharan Africa has more than doubled since [text cut off].

*Source: _gmr - 4. Scaling Up Aid and Increasing*

### 2000. Implementation capacity (including

### _gmr - 2000. Implementation capacity (including

### Scaling up concessional finance and MDB flows
- Implementation capacity (including fiduciary) constitutes the key bottleneck in scaling up concessional finance.
- MDB non-concessional flows to nonsovereign entities rose to over $13 billion in 2007, a quadrupling since 2000.
- Half of these flows are accounted for by the International Finance Corporation (IFC) and the other half by private sector arms of other MDBs.
- Nonsovereign flows to Africa have more than doubled since 2000.
- An important IBRD-IFC innovation in 2007 was the establishment of a Global Emerging Markets Local Currency Bond Fund (GEMLOC).
- Guarantees, cofinancing, and trust fund operations have also expanded (guarantees from IDA and the International Bank for Reconstruction and Development have an average leverage ratio of almost 10 to 1).
- Nonconcessional lending to sovereigns, about $23 billion in 2007, has been generally flat, with large fluctuations depending on circumstances in individual countries.

### Fragile states: needs, challenges, and MDB engagement
- Challenges to effective engagement are especially complex in fragile states.
- The needs in these countries are huge, as they are farthest away from reaching the MDGs, but they present difficult political and governance contexts for effective delivery of development finance and services.
- MDB financial flows to fragile states rose by about 55 percent in the five-year period 2002–07, reaching $2.4 billion.
- As some of these states move from peace-building to state-building, demand for MDB support will rise further.
- Developing and implementing effective operational strategies for fragile states is a key element of the IFIs’ contribution to the agenda for inclusive and sustainable development.

### Country-led strategies, capacity building, and IMF/MDB roles
- Strong country-led development strategies (poverty reduction strategies or equivalent strategic frameworks) are central to development effectiveness, especially in a changing aid architecture characterized by a plurality of aid sources and modalities.
- Strengthening country strategies is an important focus of IFI knowledge services and capacity building.
- In 2007, 13 percent of low-income countries were deemed to have well-developed operational frameworks while another 67 percent had taken significant action to develop such frameworks (comparable figures for 2005 were 8 percent and 56 percent, respectively).
- Both the IMF and the MDBs are engaged in efforts to strengthen analytic support and policy advice, tailor it better to different client needs, and enhance its impact.

### Alignment, harmonization, and institutional collaboration
- The IFIs are making progress on alignment and harmonization in the framework of the Paris Declaration, but monitoring surveys show room for improvement on several dimensions: use of country systems and implementation frameworks; efficient modalities for joint operations and programmatic and sectorwide approaches; and predictability of support.
- Harmonization in the context of the changing aid architecture, with the emergence of new players such as vertical funds that committed around $3.5 billion last year, poses new challenges.
- In 2007 the report of an External Review Committee (Malan report) identified areas for strengthening collaboration between the IMF and the World Bank, including in crisis management, work on fiscal and financial sector issues, and technical assistance.
- Implementation of the committee’s recommendations is proceeding under a Joint Management Action Plan drawn up during the year.

### Results tracking, monitoring, and evaluation
- IFIs are making progress in strengthening the results orientation of their operations and supporting partner countries’ capacity to manage for results.
- A range of internal and external monitoring and evaluation methodologies have been developed to track IFI performance and results.
- Improvements have been made in implementation of key programs such as the development outcomes targeted in the IDA14 Results Measurement System, and the World Bank’s Africa Action Plan and Infrastructure Action Plan.
- MDBs’ Comparative Assessment System (COMPAS) indicators show progress on several dimensions of the results agenda, such as results orientation of country assistance strategies and processes related to projects and program design and implementation.
- The indicators point to the need for stronger efforts to link resource allocation, incentives, and institutional learning to results.
- Findings from IFI independent evaluations over the past year included the need to further streamline conditionality, correct underinvestment in regional public goods, achieve further progress in decentralization, and improve the development impact of private sector projects.
- Overall, results tracking methodologies need to develop a stronger focus on real results on the ground, such as the MDGs, rather than processes.
- Stronger, concerted support is needed to build country development data capacity.

### Environmental sustainability and climate change priorities
- Programs supporting environmental sustainability exemplify the IFIs’ increasing engagement in the provision of global public goods.
- Over the years, the IFIs have considerably expanded their environmental activities—in energy, pollution control, water, land, biodiversity, environmental institutions.
- These activities have accounted for 12–15 percent of their lending in recent years.
- Going forward, a major priority will be responding to the increasing challenge of climate change.
- The IFIs have a crucial role to perform in supporting global collective action to combat climate change and are actively developing new strategies to scale up work in this area. An example is the Clean Energy Investment Framework.
- Key elements of their engagement will include:
  - Integrating climate action into core development work
  - Providing innovative and concessional financing, such as the Global Environment Facility and carbon finance
  - Expanding the role of markets, such as the Carbon Partnership Facility and Forest Carbon Partnership Facility
  - Facilitating new technology development and diffusion
  - Creating an enabling environment to tap the private sector—engaging the IFC and other MDB private sector arms
  - Expanding research on mitigation and adaptation, such as low-carbon country growth studies

### MDGs at midpoint: progress, gaps, and statistical capacity
- At midpoint between the adoption of the MDGs in 2000 and their target date in 2015, the review of progress gives a mixed picture of significant improvement and formidable challenges ahead.
- Accelerated economic growth makes the MDG 1 of halving extreme poverty by 2015 likely at the global level.
- Current estimates suggest that two-third of the poverty reduction effort to be accomplished between 1990 and 2015 had been realized by 2005, and that a prolongation of current GDP trends would most probably allow achievement of MDG 1 before 2015.
- Between 1990 and 2006, the probability for a child born in a developing country dying before the age of 5 declined from 10.1 to 7.9 percent.
- Maternal mortality progress between 1990 and 2005—an estimated reduction from 430 to 400 deaths per 100,000 births—represents less than one-tenth of the distance to be covered to meet MDG 5.
- Between 1990 and 2006, only 41 percent of the total distance to the MDG was covered using the primary completion rate as an indicator of progress.
- It is estimated that 31 million to 36 million people worldwide were living with HIV in 2007; of these, 21 million to 24 million were in Sub-Saharan Africa, and 3 million to 5 million were in South Asia.
- Data from 2004 suggest that 60 and 50 percent, respectively, of the distance to MDG 7 of halving the proportion of people without access to safe water and sanitation facilities had been covered.
- The challenge to reach the MDGs will increasingly be concentrated in low-income countries, and especially fragile states.
- At the country level, on current trends most countries are off track to meet most MDGs; on all MDGs—except MDG 3—the proportion of off-track countries exceeds that of on-track countries.
- Data gaps remain large: 78 out of 149 developing countries lack adequate data to monitor poverty trends.
- Developing countries are making progress in improving statistical capacity, as measured by a World Bank statistical capacity index for 117 low- and middle-income countries between 1999 and 2007.
- By February 2007, more than 100 developing countries had developed or initiated an NSDS (National Strategies for the Development of Statistics).
- Options to strengthen statistical capacity include raising user demand through greater awareness of data quality, incorporating assessment of statistical institutional sustainability into indices, using catalytic vertical funds to protect resources for NSDS implementation, and incorporating measures of statistical capacity into aid allocation and evaluation processes.

*Italic: Content derived from the supplied IMF chapter text.*

### 1. More details on trends in progress toward

### 1. More details on trends in progress toward

### Progress on MDGs and malnutrition
- More details on trends in progress toward the MDGs are provided in the annex, Monitoring the MDGs.
- Malnutrition (proportion of underweight under-5 children) declined from 34 to 23 percent between 1990 and 2006 in developing countries, using older U.S. growth standards. Data are currently being revised to account for new child growth standards, but trends observed using older U.S. growth standards are not likely to be radically affected.

### Income poverty, growth, and recessions
- The number of developing countries experiencing prolonged economic recessions (negative per capita GDP growth) went down from 26 to 13 between 1985–95 and 1995–2005.
- The relationship between growth and poverty reduction is asymmetric: worst poverty reduction performances are strongly associated with worst growth performances, while best growth performances are less significantly associated with best poverty reduction performances (World Bank. 2007. World Development Indicators 2007).

### Revisions to purchasing power parities (PPPs) and poverty estimates
- The World Bank released new PPPs based on 2005 prices (2005 benchmark), replacing PPPs based on 1993 prices previously used to compute international poverty lines.
- PPPs in 2005 show different patterns due to economic transformation over 1993–2005 and improved methodologies; the use of more recent PPPs will modify previously published poverty estimates.
- It is not expected that these PPP revisions could fundamentally affect the projection that global poverty will likely be halved in 2015.
- The ICP 2005 PPP revisions led the IMF to revise estimated global growth in 2007 down to 4.9 percent from 5.2 percent in the October 2007 World Economic Outlook, driven mainly by downward revisions for PPP-based GDP of China and India.
  - For 2007 China’s share of global output is now estimated at 10.9 percent (down from 15.8 percent).
  - India’s share has declined to 4.6 percent (from 6.4 percent).
  - The United States’ share of global GDP has been revised up from 19.3 percent to 21.4 percent.
- The ICP revisions will also lead to revisions of poverty estimates (for example, the number of people living under US$1 a day); new PPP-based poverty estimates are being prepared by the World Bank.

### Education: primary gross enrollment and measurement caveats
- Low-income countries’ gross enrollment ratios in primary schools went up from 81 percent in 1991 to 102 percent in 2005.
- The indicator is computed by dividing the number of students in the last grade (excluding repeaters in that grade) by the total number of children of graduation age. It typically includes a large number of children above graduation age (repeaters or late starters) in the numerator and thus tends to overestimate the genuine proportion of graduation-age children actually graduating.

### Persistence of country status and structural challenges
- Country statuses (e.g., classification as fragile or low-income) may change, but status tends to be persistent for many countries (World Bank. 2007. Meeting the Challenges of Global Development).
- Many fragile states continue to exhibit negative per capita growth rates.
- Income inequality has risen within many countries, mainly as a result of technological progress affecting relative wages of unskilled workers, underscoring the importance of improving access by low-income workers to high-quality education.
- Key drivers for strong growth and poverty reduction include a stable macroeconomic policy framework, strong private sector development, and good governance.
- Many developing countries have made steady progress in improving macroeconomic policies, the investment climate, and governance; however, governments need to step up reforms in areas such as labor laws, property rights, and contract enforcement.
- Depletion of natural resources and environmental degradation undermine long-term growth prospects of many developing countries.

### Recent global economic developments and prospects (summary)
- After a long uninterrupted period of strong global expansion, world economic growth began to moderate in response to financial market turbulence that started in August 2007.
- Global GDP growth in 2008 is projected to slow to 3.7 percent, from 4.9 percent in 2007.
- Global growth remained broad-based with strong expansions in emerging market and other developing countries, which have increased their shares in global production and trade.
- Emerging market and developing countries remain significant drivers of global growth; convergence between advanced and developing economies supports poverty reduction via private sector–based growth.
- Private capital and workers’ remittances have grown in importance as financing sources in many developing countries.

### Financial market turbulence, inflation, and commodity prices
- Global credit market conditions deteriorated sharply since August 2007 due to repricing of credit risk, increased volatility, and a broad loss of liquidity.
- Rising delinquencies in U.S. subprime mortgages led to higher yields on collateralized securities and a sharp widening of spreads on structured credits, particularly in the United States and the Euro area.
- Market strains led to a drying up of high-yield corporate bond issuance, sharp contraction in the asset-backed commercial paper market, reduction in interbank market liquidity, and stress on financial institutions reliant on wholesale funding.
- Flight to quality drove down yields on government debt; sovereign spreads widened for some emerging markets and capital flows scaled back in places.
- Core inflation increased since mid-2007 in both advanced and emerging economies, driven by spillovers of higher energy and food prices. Headline inflation in February 2008:
  - United States: 4.1 percent
  - Euro area: 3.3 percent
- Upward pressure on food prices reflected biofuel-related demand for corn and other items, poor weather conditions, supply disruptions, and global demand growth.
- Oil prices rebounded to new highs in March 2008.

### Impacts on emerging and developing economies
- Despite financial turbulence, global growth eased only modestly in 2007 to 4.9 percent, supported by robust expansions in emerging market and developing countries.
- Rapid growth in most emerging markets counterbalanced slowing growth in the United States (United States grew at about 2.2 percent in 2007, compared with 2.9 percent in 2006).
- Growth in the Euro area and Japan slowed in the last quarter of 2007.
- Emerging market and developing countries’ group growth is projected to slow to 6.7 percent in 2008, from 7.9 percent in 2007.
- Regional notes and projections:
  - Developing Asia: real GDP growth projected to reach 9.3 percent for China and 7.9 percent for India in 2008.
  - Middle East: GDP growth projected to reach 6.1 percent on average in 2008.
  - Other emerging economies in Asia, including Indonesia and the Philippines, remained buoyant.

### Financial turbulence: characterization and channels of transmission
- The turbulence concentrated in mature financial markets (U.S. subprime, leveraged loans) prompted deleveraging, severe money-market disruptions, funding difficulties for financial institutions, widening credit spreads, and more volatile bond and equity markets.
- Major central banks responded with large liquidity injections; the U.S. Federal Reserve lowered interest rates six times since August.
- Spillovers have deepened as credit losses and balance-sheet impacts became clearer; effects on credit insurance and other segments have emerged.
- Emerging markets experienced increased risk premiums (EMBIG spreads roughly doubled since June 2007) and reductions in equity valuations; private external debt market issuance declined though flows remained relatively sustained and international reserves continued to rise.
- Factors explaining relative resilience of many developing countries:
  - Innovative financial instruments at the heart of the turbulence are less prevalent in less-developed markets.
  - Stronger fundamentals and improved policies in many countries (more favorable current account positions, significant surplus for developing countries as a group).
  - High levels of foreign exchange reserves in several emerging economies.
- Channels through which developing countries may be affected:
  - Direct financial spillovers (widening spreads, reduced capital flows).
  - Lower global economic growth leading to corrections in trade flows and commodity prices.
  - Adverse effects on commodity exporters, especially less-diversified low-income countries.
  - Potential vicious cycle for emerging markets: lower growth → weaker fundamentals → higher risk premiums → faltering asset prices.
- Policy implications:
  - No single policy prescription fits all countries; vulnerabilities and responses must be assessed country by country.
  - Countries with prudent external debt management, fiscal discipline, and flexible exchange rate policies will be better positioned to cushion shocks and facilitate adjustment.
  - Financial sector supervisors should strengthen arrangements and learn from fault lines exposed in the turmoil to preserve financial systems’ capacity to support growth.

### Key numerical highlights and projections (selected)
- Malnutrition in developing countries: 34 percent (1990) → 23 percent (2006).
- Number of developing countries in prolonged per capita recessions: 26 (1985–95) → 13 (1995–2005).
- Low-income primary gross enrollment ratio: 81 percent (1991) → 102 percent (2005).
- Global GDP growth:
  - 2007: 4.9 percent
  - 2008 (projected): 3.7 percent
- Advanced economies growth projected 2008: 1.3 percent.
- United States growth: 2.2 percent (2007); United States growth in table entries shows 0.5 (2008 projected) and 0.6 (2009 projected) in a detailed table.
- Headline inflation February 2008:
  - United States: 4.1 percent
  - Euro area: 3.3 percent
- Emerging and developing countries growth:
  - 2007: 7.9 percent
  - 2008 (projected): 6.7 percent
- Regional projections in table (selected entries):
  - Developing Asia: 9.7 percent (2007) → 8.2 percent (2008 projected) → 8.4 percent (2009 projected) in table context; China and India specifically noted as 9.3 percent and 7.9 percent in 2008 projections in text.
  - Middle East: 5.8 percent (2007) → 6.1 percent (2008 projected) → 6.1 percent (2009 projected) in table context.

*Source: IMF.*

### 2008. Economic activity in the oil-exporting

### _gmr - 2008. Economic activity in the oil-exporting

### Regional growth and outlook
- Economic activity in the oil-exporting countries is particularly buoyant in the non-oil sectors, fueled by increasing public investment in infrastructure, social spending, and consumer demand.
- Oil-importing countries in the region are benefiting from the favorable external environment; their GDP growth rates outpace growth in the oil-exporting countries.
- Emerging Europe: benefited from sustained recovery in Western Europe and further integration in the global economy, but outlook clouded by recent slowdown in Western Europe and prospect of lower capital inflows.
- Regional growth expectation:
  - Regional growth is expected to reach 4.4 percent in 2008, with the Baltics in the lead.
- Latin America: growth by historical standards remains robust, but 2008 prospects are vulnerable to the slowdown in the United States.
- Sub-Saharan Africa:
  - Growth projected to reach 6.3 percent in 2008, led by expansion of oil production and traditional nonfuel commodity exporters.
  - Growth performance uneven; some subregions and countries (e.g., countries in the CFA franc zone, fragile states) remain on a low growth path.

### Vulnerabilities and risks
- Overall balance of risks to the global outlook is tilted to the downside.
- Main risk: ongoing turmoil in financial markets further reducing domestic demand in advanced economies with significant spillovers into developing countries.
- Emerging market countries heavily dependent on capital flows could be particularly exposed.
- Other elevated risks: oil and nonfuel commodity prices (affecting activity and inflation), monetary policy trade-offs, heightened financial sector vulnerabilities, risk of disorderly unwinding of global imbalances.

### Growth in developing countries, poverty reduction, and MDG progress
- Global poverty and MDG:
  - Population share of the extremely poor (living on less than $1 a day) projected to fall from 29 percent in 1990 to 10 percent in 2015.
  - By 2004 this share had already dropped to 18 percent.
  - Preliminary estimates suggest the number of extremely poor people in developing countries fell by about 278 million between 1990 and 2004.
- Distribution of per capita growth 2003–07:
  - About one-fourth of developing countries had per capita growth during the past five years on average below 2 percent a year.
  - The 17 fragile states in the low-growth category: per capita income contracted annually by about 1 percent on average over the period 2003–07.
- Per capita growth improvements:
  - Majority of developing countries achieved average per capita growth rates above 2 percent during 2003–07.
  - Emerging market economies in this category roughly doubled per capita growth rates compared with the 1990s.
  - Several fragile states showed strong acceleration reflecting transitions from conflict or higher oil and gas exports (examples cited include Sierra Leone, Angola, Chad, Sudan).

### Commodity prices, terms-of-trade shifts, and implications
- Commodity price boom:
  - World prices for key commodities exported by developing countries increased by 100–300 percent during the past four years.
  - Copper and uranium: more than quadrupled.
  - Oil prices: tripled.
  - Aluminum, coal, and gold: doubled.
- Trade and export dependence:
  - Nonfuel and fuel commodities constitute about one-fifth of world trade.
  - On average commodities represented about 74 percent of developing countries’ exports during 2003–06.
  - Oil exporters: oil exceeds 70 percent of total exports in many such countries.
- Terms-of-trade impacts:
  - Positive terms-of-trade effects for oil exporters and certain metals exporters (examples cited: Kazakhstan; República Bolivariana de Venezuela; Azerbaijan; the Islamic Republic of Iran; Angola; Sudan; Mongolia; Niger; Papua New Guinea; Zambia).
  - Negative terms-of-trade shocks hit countries importing oil and food (examples cited: El Salvador; Jordan; Madagascar; Mauritius; Haiti; Togo).
  - Fragile states with weak growth and deteriorating terms of trade: domestic per capita purchasing power declined by an average annual rate of 2 percent during 2003–07, versus an annual per capita GDP decline of almost 1 percent.

### Growth in Africa: patterns and policy challenges
- Long-run growth rise:
  - Economic growth in Africa rose from a low of 2.3 and 2.1 percent annually in the 1980s and 1990s, respectively, to an average of 5.6 percent in the past five years.
- Three broad country groups (over past 10 years):
  - First group: 7 resource-rich countries, about one-third of region’s population, strong growth averaging about 9 percent annually. Main challenge: managing and transforming natural resource wealth into sustainable growth.
  - Second group: about 18 countries, about one-third of population, moderate to strong growth averaging about 5.5 percent. Main challenge: build on reforms, strengthen investment climate, infrastructure, and deepen regional/global links.
  - Third group: about 20 countries, remaining one-third of population, average growth about 2.1 percent, weaker policies and institutions, many affected by conflict. Main challenge: security, political reform, capacity building, and attracting private sector investment.

### Management of natural resource revenues (policy guidance)
- Principles for managing windfall resource revenues:
  - Medium-term fiscal policy should be guided by estimates of the magnitude and permanency of additional fiscal revenue; permanent increases can allow gradual spending increases with a lag to confirm permanence; temporary gains should largely be saved.
  - One-off increases in spending financed by temporary windfalls are possible if limited in duration and addressing specific problems; should be limited to nonrecurring projects and areas where implementation capacity is not binding; windfall can be used to repurchase nonconcessional external debt.
  - Overall macro policy mix should reconcile effective use of resources with price stability; under flexible exchange rates choices include sterilization via higher fiscal surpluses or nominal exchange rate appreciation; with fixed exchange rates temporary higher domestic inflation and real appreciation may be unavoidable and productivity improvements are key to restoring competitiveness.
  - Sound institutions, governance, and public finance management are essential; use of medium-term frameworks, well-designed transparent institutions (oil and stabilization funds, oil accounts, fiscal rules) integrated with the budget is recommended.
  - Participation in the Extractive Industries Transparency Initiative encouraged.

### Rising income inequality and policy implications
- Empirical patterns:
  - Since the beginning of the 1980s, per capita incomes rose in most countries, but income inequality within countries (Gini coefficient) increased in most cases.
  - Increase in inequality was more pronounced in higher-growth countries; in contrast, inequality tended to decline or remain stable in some CIS countries and Sub-Saharan Africa.
- Drivers:
  - Technological progress: greatest impact on increasing income inequality by reducing demand for low-skill activities.
  - Financial globalization: contributed to increased inequalities as richer segments gain better access to financial services.
  - Trade liberalization: tended to reduce income inequality in developing countries by increasing agricultural exports and incomes of less-skilled workers.
- Policy implications:
  - Expand access to education to enable workers to participate in technologically advanced and remunerative sectors.
  - Broaden access to financial services.
  - Harness trade to promote stronger and more inclusive growth.

### Shifts in foreign public and private financing flows
- Net capital flows and current transfers to developing countries increased strongly in recent years, both in U.S. dollar terms and as a share of GDP.
- Private financing:
  - During the 1990s about half of external financing available to developing countries (as a percentage of GDP) consisted of private financing; by 2007 the share of private financing had increased to about two-thirds of total external financing.
  - Much private financing flowed to resource-rich economies and some fragile states with mining potential or significant remittances.
- Composition changes:
  - Debt-generating financing (official and private) became less important relative to nondebt forms (foreign direct investment and workers’ remittances).
  - Official financing in emerging markets became relatively insignificant and on average negative in recent years as many countries accelerated repayment of their official debt.
- Effects:
  - Growth in foreign direct investment often linked to extractive sectors; improvements in macroeconomic stabilization and investment climate also attracted private equity and bond investors in emerging markets.

### Oil price developments affecting low-income countries
- Oil price facts:
  - Oil prices have tripled in the past five years to record nominal highs of over $100 a barrel.
  - In real terms, oil prices are near their historical peak of $96 a barrel (in today’s dollars).

*Source: IMF (content unit: _gmr - 2008. Economic activity in the oil-exporting).*

### 1979. Part of the large increase in prices results from to the depreciation of the U.S. dollar. Expressed

### _gmr - 1979. Part of the large increase in prices results from to the depreciation of the U.S. dollar. Expressed

### Oil prices: recent moves, outlook, and risks
- Part of the large increase in prices results from the depreciation of the U.S. dollar. Expressed in euros, oil prices have only doubled over the last five years.
- Oil prices are expected to stabilize and fall gradually in the coming years.
- High oil prices have led to slowing demand growth and increasing supply, with rising capacity in OPEC (Organization of Petroleum Exporting Countries) and non-OPEC countries.
- On current projections, prices could remain well above $60 a barrel this decade, before declining to $50 a barrel by 2015.
- Risks to this outlook are mainly to the upside.

### Impact of the oil price shock on oil-importing low-income countries (2003–05 evidence)
- IMF staff working paper on 62 countries concluded the following country group outcomes:
  - 16 countries: decline in the oil import bill relative to GDP owing to a contraction in the volume of oil imports; many passed on world market price increases to domestic prices; the oil price rise did not lead to an adverse impact on the balance of payments for this set of countries, as they saw improvements in both the current and capital accounts during 2003–05.
  - 12 countries: faced higher oil imports but benefited from substantial current account offsets in the form of improved exports or grant receipts, or both.
  - 12 countries (third category): faced both higher oil imports and a worsened current account but a substantial improvement in the capital account.
  - 22 remaining importers: benefited from neither current account nor capital account improvements sufficient to offset the oil shock and thus saw a deterioration in their international reserves; within this group, a majority maintained relatively comfortable reserve coverage levels and could accommodate the drawdown in reserves; only in a subset of 7 countries did reserves fall to very low levels.
- Although more recent detailed cross-country analyses were not yet published in the source, country-by-country information for 2006–07 points to similar variable impacts.

### Distributional and poverty implications
- The impact of higher oil prices—compounded by rising food prices—on the most vulnerable segments of the population may be severe.
- Even in countries that benefited from offsetting price increases in commodity exports or capital inflows, the oil shock may have disproportionate effects on the poorest.
- A scenario of decoupling—where oil prices soar (as a result of political developments) while commodity prices deflate in a context of lower global demand—could reverse current mitigating factors.

### IMF and World Bank policy responses and recommendations
- The IMF and the World Bank stand ready to assist members in dealing with exogenous shocks of this nature.
- Under the IMF’s Exogenous Shocks Facility, balance of payments support can be provided to countries faced with a significant increase in world market prices for major import products, such as oil or food.
- International Development Association financing could help prevent costly disruptions to priority spending and mitigate the impact on the poorest.
- Countries are urged to pursue policies to reduce their vulnerability to oil shocks through energy diversification and improved energy efficiency. The World Bank can assist with development policy and sector support operations.

### Food prices, biofuels, and policy implications
- Over the past 12 months, the world has experienced an average food price increase of 15 percent.
- Major drivers of food price increases: high rates of global economic growth (particularly demand growth in emerging markets), serious droughts and animal diseases in some regions, and at least partly an attempt to encourage the use of biofuels in industrial countries.
- Production of ethanol from corn has led to a doubling of corn prices during the past two years (per the source).
- Industrial-country biofuel policy issues noted:
  - Sugar-based ethanol can be produced cheaper by some countries (e.g., Brazil) with greater nonrenewable energy savings and lower emissions, but sugar-based ethanol faces prohibitive trade barriers in the United States and Europe.
  - Production subsidies and trade barriers in industrial countries have distorted the biofuels market.
- Policy recommendations:
  - Industrial countries should eliminate subsidies and reduce tariffs on ethanol to allow freer trade in biofuels.
  - Developing countries should pursue policies to increase agricultural production through small-holder productivity gains.
  - Short-term measures to cushion poor households from food price shocks are needed, including:
    - Trade reforms to facilitate flows within and among developing countries and investment in infrastructure to reduce transportation cost.
    - More investment in generation of improved technologies and improved extension services to promote adoption of better crop varieties.
    - Well-designed, targeted safety nets to provide transitory support to the affected poor, avoiding recourse to distortive price controls and trade restrictions.
    - Access to weather-based index insurance to reduce weather risks and cover loans necessary to finance new technologies.
- The World Bank is actively engaged in supporting these efforts and could respond with additional financing if necessary.

### Workers’ remittances: scale, impacts, and policy issues
- Remittance flows:
  - Recorded remittance flows to developing countries grew fourfold between 1991 and 2006 and exceeded US$200 billion in 2006—twice the amount of official assistance to developing countries.
  - If unrecorded flows through formal and informal channels are included, actual flows would be significantly larger.
- Benefits and evidence:
  - Remittances represent the single largest source of foreign exchange for many countries, exceeding total development assistance.
  - Remittances have had positive impacts on poverty alleviation; examples provided:
    - In Tajikistan most remittances are under US$1,000 a year and tend to be spent mainly on consumption; in the booming remittances period 2000–06 the poverty rate in Tajikistan declined by 20 percent.
    - Extreme poverty fell by 35 percent in El Salvador and Mexico; moderate poverty fell by 21 percent in El Salvador and 15 percent in Mexico (source examples).
  - A study of 76 countries found that every 10-percent increase in remittances led to a 1-percent decline in poverty.
- Risks and policy considerations:
  - Ambiguous effects on social outcomes; migration often involves relatively better-educated people, producing potential brain drain.
  - Remittances can create monetary management challenges (currency appreciation, inflationary pressures) in small economies with shallow foreign exchange markets.
  - Remittances may diminish pressure for reforms by creating an illusion of sustainable affluence.
  - Policy responses include tax exemptions for remittances, matching public funds with migrant organization investments, simplifying banking procedures, involving microfinance institutions, reducing remittance sending costs, and encouraging partnerships between international banking/postal services and money transfer operators while preserving anti–money-laundering standards.

### Investment climate, private capital, and growth
- Private capital flows have broadly positive impacts on growth; foreign direct investment (FDI) generally associated with higher growth and technology transfer.
- Recent evidence indicates bidirectional causality between FDI and growth, though the impact of FDI on growth is almost always stronger than growth on investment.
- Portfolio investment impact on growth is inconclusive but may aid financial deepening.
- Doing Business and Enterprise Surveys findings:
  - Reforms have been frequent in areas such as starting a business, trading across borders, and credit information.
  - Within the last five years (per source), 92 of 175 countries reduced days needed to register a business; 57 reduced the number of procedures.
  - Reforms are less frequent in sensitive areas (labor regulations, bankruptcy law) requiring larger institutional change.
  - Improving investment climate matters for firm size: weak investment climates tend to hurt SMEs most and can encourage micro/informal firms; weak property rights disproportionately harm larger firms.
- Interaction and implementation:
  - Effectiveness of reforms depends on broader institutional quality; complementarities (e.g., creditor rights plus efficient courts) matter.
  - Emphasis needed on implementation and enforcement to close the gap between law on the books and practice; corruption can widen this gap.

### Governance, inequality, and public financial management
- Good governance positively impacts growth and can support more inclusive outcomes.
- CPIA and other indicators show incremental governance improvements between 2000 and 2006 in most developing-country groups, with most progress in revenue mobilization and budget management and least in property rights and quality of public administration.
- Fragile states show limited progress and remain weak in quality of public administration and transparency, accountability, and corruption.
- PEFA implementation: as of end-February 2008, 74 countries had completed or substantially completed a PEFA assessment; 4 countries had repeat assessments; only 28 PEFA reports had been made public and posted on the PEFA Web site (source notes the need for continued disclosure).

### Natural capital, adjusted net savings, and sustainability
- Natural capital is a large share of total wealth in developing countries and falls as income rises; intangible capital share tends to rise with income.
- Agricultural land is an important share of total natural wealth in developing countries; preserving soil quality is important for sustaining development.
- Adjusted net savings incorporates human capital investment, depletion of minerals/energy/forests, and damages from particulate matter and CO2 emissions.
- Negative adjusted net savings indicates a potentially unsustainable long-term path.
- Findings:
  - Reflecting high rates of natural resource depletion, adjusted net savings are negative in many developing countries.
  - In fragile states, adjusted net savings in 2005 were estimated at minus 22 percent of GNI.
  - Other developing countries (excluding emerging markets and fragile states) had negative adjusted saving rates (minus 5 percent of GNI).
  - Emerging markets showed positive adjusted net savings, reflecting robust saving efforts in countries such as China and India and smaller impacts of natural resource depletion.
- Empirical relation:
  - There is a tendency for higher adjusted net saving rates to be associated with higher short-run per capita growth (scatter of adjusted net saving rates averaged 2000–02 against per capita growth averaged 2002–06).

*Source: Excerpt from the IMF/World Bank material provided in the content unit.*

### 1. This chapter discusses growth and poverty

### 1. This chapter discusses growth and poverty

### Scope and definitions
- Emerging market economies: developing countries with substantial access to international capital markets; mainly middle-income countries, although some low-income countries (such as India) are also included.
- Other developing countries: mainly low-income countries.
- Fragile states: discussed as a separate category.

### Terms of trade, GDI, and GDP
- In countries with large terms-of-trade fluctuations, gross domestic income (GDI) offers a more reliable measurement of changes in purchasing power than GDP.
- Real GDP measures value added of physical output but does not reflect purchasing power; if the terms of trade improve compared with the base year, income generated by a given level of real GDP increases, and vice versa.

### Data limitations and measurement notes
- The data on remittances remains patchy, although significant improvements have been achieved recently. The World Bank has developed the most comprehensive database on skilled migration to date.
- PEFA is a partnership of the World Bank, the IMF, the European Commission, the United Kingdom’s Department for International Development, the Swiss State Secretariat for Economic Affairs, the French Ministry of Foreign Affairs, the Norwegian Ministry of Foreign Affairs, and the Strategic Partnership with Africa. It includes 28 indicators covering aspects of budget formulation, execution, and reporting as part of an overall diagnostic Performance Measurement Framework report on the quality of a country’s public financial management (PFM) systems.
- The methodology for some estimates follows World Bank 2006; China dominates the East Asia figures in table 1.7. The relatively low total wealth and high produced capital share in this region reflect difficulties with the methodology of estimation for China. The negative values for intangible capital reported for fragile states and major oil producers reflect very low returns on total assets in these countries.

### Selected referenced literature (as cited)
- IMF 2007.
- IMF 2008.
- Dorsey and others, forthcoming.
- Hansen and Rand 2006; Alfaro and Charlton 2007; Chowdhury and Mavrotas 2006.
- World Bank 2006; World Bank 2007.
- Kireyev 2008.
- Ozden and Schiff 2005; Ozden and Schiff 2007, p. 5.
- Gupta, Pattillo, and Wagh 2007; Adams and Page 2003.
- Aterido, Hallward-Driemeier, and Iarossi 2007.
- Aterido, Hallward-Driemeier, and Pages 2007.
- Safavian and Sharma 2007.
- Kaplan, Piedra, and Seira 2007.
- Gonzalez, Lopez-Cordova, and Valladares 2007.
- de Renzio and Dorotinsky 2007.
- Dasgupta 2001; Hamilton and Hartwick 2005.

### Adjustments to savings, 2005 (percent of GNI) — regional values
- East Asia & Pacific: 44.4; 2.2; 10.3; 7.8; 1.2; 1.2; 26.1
- Europe & Central Asia: 23.9; 4.1; 10.4; 17.5; 0.6; 1.2; –1.7
- Latin America & the Caribbean: 21.0; 4.3; 12.0; 8.6; 0.4; 0.4; 3.9
- Middle East & North Africa: 33.7; 4.5; 10.9; 32.2; 0.6; 1.2; –6.7
- South Asia: 29.4; 3.5; 9.1; 5.5; 0.8; 1.2; 16.5
- Sub-Saharan Africa: 17.3; 3.8; 10.7; 16.1; 0.4; 0.7; –6.8
- Emerging market economies: 30.6; 3.5; 10.7; 9.9; 0.8; 1.0; 11.7
- Other developing countries: 30.0; 3.7; 10.2; 27.0; 0.6; 0.9; –5.0
- Fragile states: 19.9; 3.4; 10.0; 33.4; 0.9; 1.1; –22.2
- High-income countries: 18.6; 4.6; 13.1; 1.4; 0.3; 0.3; 8.2
- World: 22.1; 4.3; 12.3; 4.9; 0.4; 0.5; 8.1
- Major oil producers: 34.6; 3.6; 9.1; 41.7; 0.5; 1.5; –14.4
- Source for table values: World Development Indicators 2007.

*Source: _gmr - 1. This chapter discusses growth and poverty*

### 25.  Ferreira  and  others,  forthcoming.  Fer-

### Achieving Better Results in Human Development

### Progress toward the MDGs: status and limits
- The world has made steady progress toward meeting the numerical targets for the human development Millennium Development Goals (MDGs); achievements have been impressive in some cases, and progress is measurable even in lagging countries.
- Numerical attainment of MDGs masks important variations in quality, which hold up attainment in education and health.
- Quantity of education (universal primary completion and gender parity, MDGs 2 and 3) does not necessarily translate into learning or human capital development; quality matters as much as, if not more than, quantity.
- Addressing quality in public health care provision contributes to combating malnutrition, reducing child mortality, improving maternal health, and limiting the spread of HIV/AIDS, malaria, and tuberculosis (MDGs 1, 4, 5, and 6).
- Malnutrition remains a major concern, especially in South Asia and Sub-Saharan Africa; it lowers immunity and undermines the ability to cope with unsafe drinking water and lack of sanitation.
- Environmental health risks affecting early infancy contribute to stunting, wasting, lowered immunity, and increased mortality. Indoor air pollution (from biomass reliance) and outdoor air pollution raise morbidity and mortality risks. Climate change expands exposure to tropical vector-borne diseases such as malaria.

### Equity considerations in meeting the MDGs
- Inequalities in access to health and educational services exist almost everywhere: the poor tend to be less healthy and less educated than the rich. Factors include income, ethnicity, gender, social status, and unequal distribution of service quality.
- Commonly employed outcome measures: child survival rates, anthropometric indexes, aggregated adult health measures; education measures: school completion rates and student achievement; input-based measures: public expenditure in health and education.
- Regional example (selected measures of health inequality, latest available years):
  - Under-five mortality rate (per 1,000 live births): Latin America & the Caribbean — Poorest quintile 86.5, Richest quintile 34.8, Ratio of poorest to richest quintile 2.95, Concentration Index –0.17
  - Under-five mortality rate: Middle East & North Africa — Poorest 101.0, Richest 44.0, Ratio 2.27, Concentration Index –0.13
  - Under-five mortality rate: South Asia — Poorest 131.7, Richest 65.8, Ratio 2.10, Concentration Index –0.12
  - Under-five mortality rate: East Asia & Pacific — Poorest 96.1, Richest 37.9, Ratio 2.89, Concentration Index –0.18
  - Under-five mortality rate: Europe & Central Asia — Poorest 78.9, Richest 41.3, Ratio 1.97, Concentration Index –0.11
  - Under-five mortality rate: Sub-Saharan Africa — Poorest 171.1, Richest 100.5, Ratio 1.86, Concentration Index –0.09
  - Under-five mortality rate: World — Poorest 136.0, Richest 73.6, Ratio 2.17, Concentration Index –0.12
  - Medical treatment of fever (% of under-five child population): World — Poorest 30.2, Richest 51.1, Ratio 0.58, Concentration Index 0.12
  - Medical treatment of adult illnesses (% of female population): World — Poorest 34.2, Richest 56.0, Ratio 0.66, Concentration Index 0.11
  - Note: table adapted from Gwatkin and others 2007 based on DHS data; averages are unweighted means for latest available years.
- Public spending on health care and education tends to be skewed toward high-income segments of the population; with the exception of Latin America and the Caribbean, public spending on health services consistently favors the rich, and spending on public education favors the rich across all regions.
- Out-of-pocket payments for publicly provided services are an equity concern; proportion of out-of-pocket payments tends to be higher in countries with lower national income, risking inadequate utilization and pushing households into poverty.
- Progress on gender equity in primary education has been dramatic over four decades; in Europe & Central Asia and Latin America & the Caribbean, girls are surpassing boys. Nevertheless, excluded groups and rural populations still show persistent gender gaps.

### Improving equity in education and health: evidence and interventions
- Reaching poor and marginalized groups requires targeted interventions tailored to language, cultural barriers, and accessibility.
- Examples of targeting:
  - Argentina: child-feeding programs deliver between 40 and 75 percent of benefits to the poorest 20 percent; 20 to 50 percent of government-administered immunizations were given to children from lower-income groups.
  - Gujarat, India: mobile reproductive health camps and education sessions clustered beneficiaries among middle-income groups rather than the poorest.
  - Matlab, Bangladesh: expansion of maternal health services increased facility-based births overall but did not improve usage by the very poor; in the most unequal years a woman in the richest quintile could be up to 3.5 times as likely to be a beneficiary as a woman in the poorest quintile.
- Education for All Fast-Track Initiative (FTI) achievements (selected):
  - Increased primary school enrollment: an increase of 4.4 percentage points in all countries and 8.2 percentage points in Sub-Saharan countries.
  - Gender parity: from .87 to .92 between 2000 and 2006 in all countries and from .82 to .89 in Sub-Saharan countries.
  - Primary completion rates: an average increase of 12 percentage points, from 57 to 69 percent in all countries, and a 17 point increase, from 37 to 54 percent, in Sub-Saharan countries.
  - Mobilized donor funding: the FTI Catalytic Fund grew rapidly in 2006-07 to over $1 billion in donor pledges.
  - FTI Catalytic Fund pledges and grants to date: fifteen donors have pledged $1.2 billion through 2009, and $301 million in grant agreements have been signed with 18 countries; current requests for funding are estimated at $878 million.
- Conditional cash transfers (CCTs) have been shown to be highly effective in encouraging school enrollment, completion, and child health checkups; administrative difficulties and insufficient supply of services are key challenges, especially in remote areas.
- Early childhood nutrition and cognitive stimulation (first six years) have permanent effects; neglect yields long-term behavioral, health, and income consequences.

### Health care quality: measurement, impacts, and variability
- Health care quality definition used: “proper performance (according to standards) of interventions that are known to be safe, that are affordable to the society in question, and that have the ability to produce an impact on mortality, morbidity, disability, and nutrition.”
- Quality is multidimensional and can be assessed by inputs (structure), processes (supply-side clinical behaviors and demand-side patient evaluations), and outcomes (mortality, morbidity)—each with measurement challenges and limited cross-country comparability.
- Why improve quality:
  - Better-quality health care benefits individuals, households, and society by improving nutritional and mortality outcomes, infant health, and usage rates among the underserved.
  - Evidence that even low-income households are willing to pay higher user fees for improved access and reliability.
  - Higher initial quality can lower long-run costs by reducing post-consultation complications.
- Evidence linking spending to outcomes is weak: most studies have not found strong links between government health spending and health outcomes. The statistical insignificance suggests service delivery quality is likely low and varies widely across countries.
- Examples of quality and utilization impacts:
  - Ghana: communities with more doctors, lower consultation fees, and basic drug availability had improved child nutritional status and higher child survival; effects were particularly strong in rural areas.
  - Côte d’Ivoire: doctor and drug availability positively influence child health, but quality of services received differs systematically between poor and nonpoor children.
  - India, Indonesia, Tanzania: more competent doctors (top quintile) more frequently performed common diagnostic procedures.
- Absenteeism and effort:
  - Absenteeism is chronic and pervasive in primary health care facilities.
  - Bangladesh: absenteeism by physicians in larger clinics was 40 percent; in smaller subcenters with a single doctor absenteeism was 74 percent.
  - Across five developing countries, absence rates averaged 35 percent between 2002 and 2003.
  - Low absenteeism correlates with well-functioning facilities (e.g., potable water) and greater utilization; chronic absenteeism reduces usage and dissuades future use.
- Provider variation and accountability:
  - NGOs charging modest fees often provide higher quality and higher utilization than free government clinics in low-income, rural communities, sometimes even when NGOs pay staff less than government rates—likely due to greater accountability and reliability.
  - Within countries, quality depends on socioeconomic status, ethnicity, and whether provider is public or private. In some contexts, private sector delivers higher overall quality due to higher effort despite lower training.
  - Racial/ethnic disparities in quality exist, e.g., significant differences in quality provided to indigenous versus nonindigenous patients in Mexico.
- Performance measures show large cross-country and within-region variation:
  - Provision of assistance during delivery by a doctor or health care professional ranges from 78 percent of all live births in the Middle East & North Africa to 18 percent in South Asia.
  - Use of oral rehydration treatment for children with diarrhea in South Asia is almost double that in the Middle East & North Africa.
  - Vaccination coverage of children ages 1–2 years varies substantially within Sub-Saharan Africa (example: 8.1 percent in Uganda reported as a low point).

### Policy implications and priorities
- Prioritize improving quality of education and health services, not just expanding quantity or spending.
- Target interventions to reach poor and marginalized groups, including language- and culture-specific programs and geographic targeting to rural and minority populations.
- Strengthen accountability and reliability of service delivery (address absenteeism, ensure essential drugs and potable water at facilities).
- Support programs that combine demand-side incentives (e.g., CCTs) with supply-side improvements to meet increased demand.
- Invest in early childhood nutrition and cognitive stimulation to secure long-term human capital gains.
- Enhance measurement of health care quality across inputs, processes, and outcomes to better monitor effectiveness and equity.

*Source: Chapter excerpt “Achieving Better Results in Human Development” (adapted from provided IMF/World Bank content).*

### 75.9 percent in Eritrea.

### _gmr - 75.9 percent in Eritrea.

### Cross-country and intracountry variation in health service quality
- Reported figure: 75.9 percent in Eritrea.
- Evidence indicates cross-country differences may be smaller than intracountry variations.
- Large intracountry variations exist by:
  - type of facility,
  - medical condition,
  - domain of care.
- Studies cited show clinic processes (examination and counseling procedures) can exert a positive, significant impact on outcomes (example: birth weights), while structural factors alone did not.

### Relation of health care quality to income, public spending, and economic growth
- Aggregate measures of health quality (selected outcome indicators) provide broad generalizations.
- Health quality is positively related to national income.
- There is little relationship between public health spending levels and quality measures.
- Possible factors explaining this divergence:
  - Public health expenditures skewed toward expensive secondary and higher-level care benefiting higher-income quintiles.
  - Health care expenditures may proxy for structural measures (equipment, essential drugs) that are a relatively poor determinant of health care quality.
  - Failure to monitor health care delivery services adequately can lead to poor outcomes.
  - Inequality of spending, poor governance, and measurement difficulties weaken observed associations.
- Policy implication: More balanced spending and raising service performance offer important tools for reaching the human development MDGs.

### Health quality measurement (selected proximate measures and index)
- Health quality in the source includes 8 measures of outcomes:
  - percent live births with no antenatal care,
  - percent live births with no tetanus injections,
  - percent live births with no trained medics during delivery,
  - percent children with no cocktail of essential vaccinations,
  - percent women with births receiving key components of antenatal care,
  - percent women with births receiving no postnatal care,
  - percent children with acute respiratory infection not treated in a medical facility,
  - percent children with diarrhea with no treatment.

- Country-level proximate measures (selected entries, various years):
  - Burkina Faso 2003: Assistance during delivery by doctor 37.9; Children with full set of vaccinations in first year of life 27.8; Receipt of acute respiratory infection treated at health care facility 35.9; Treatment of diarrheic children with oral rehydration therapy 26.5.
  - Cameroon 2004: Assistance during delivery by doctor 61.7; full vaccinations 38.1; ARI treated 40.6; ORT 24.2.
  - Chad 2004: Assistance 16.1; full vaccinations 5.4; ARI treated 6.5; ORT 17.7.
  - Ghana 2003: Assistance 47.1; full vaccinations 49.8; ARI treated 44.0; ORT 46.4.
  - Kenya 2003: Assistance 41.6; full vaccinations 43.7; ARI treated 49.1; ORT 29.2.
  - Malawi 2004: Assistance 57.4; full vaccinations 47.1; ARI treated 36.5; ORT 61.1.
  - Mozambique 2003: Assistance 47.7; full vaccinations 42.8; ARI treated 55.4; ORT 54.1.
  - Rwanda 2005: Assistance 28.4; full vaccinations 66.3; ARI treated 27.9; ORT 18.6.
  - Uganda 2006: Assistance 42.6; full vaccinations 9.7; ARI treated 73.5; ORT 43.4.
  - Zimbabwe 2005/06: Assistance 68.5; full vaccinations 34.1; ARI treated 26.3; ORT 61.6.
  - Regional average, Sub-Saharan Africa: Assistance 45.9; full vaccinations 34.7; ARI treated 40.9; ORT 36.3.
  - Egypt, Arab Rep. of 2005: Assistance 74.2; full vaccinations 81.4; ARI treated 63.4; ORT 35.7.
  - Jordan 2002: Assistance 98.3; full vaccinations 23.0; ARI treated 76.4; ORT 22.0.
  - Moldova 2005: Assistance 99.5; full vaccinations 2.1; ARI treated 59.7; ORT 34.9.
  - Bangladesh 2004: Assistance 13.2; full vaccinations 67.0; ARI treated 19.9; ORT 74.6.
  - Cambodia 2005: Assistance 43.8; full vaccinations 52.3; ARI treated 45.3; ORT 35.8.
  - Indonesia 2002/03: Assistance 66.3; full vaccinations 42.1; ARI treated 61.3; ORT 48.4.
  - Philippines 2003: Assistance 59.8; full vaccinations 58.9; ARI treated 54.8; ORT 57.6.
  - Bolivia 2003: Assistance 60.8; full vaccinations 12.1; ARI treated 51.5; ORT 38.2.
  - Colombia 2005: Assistance 90.7; full vaccinations 25.2; ARI treated 0 (reported as 0? table shows 0?) ; ORT 55.4.
  - Dominican Republic 2002: Assistance 97.8; full vaccinations 22.3; ARI treated 63.5; ORT 32.3.
  - Haiti 2005: Assistance 26.1; full vaccinations 27.0; ARI treated 31.5; ORT 43.8.
  - Regional average, Latin America & the Caribbean: Assistance 72.0; full vaccinations 17.8; ARI treated 40.1; ORT 45.1.
- Source for proximate measures: Demographic and Health Surveys, various years.
- Note: Full range of vaccinations include BCG, diphtheria, polio, and measles.

### Education quality, human capital, and growth (parallels to health)
- Findings from Hanushek and Wößmann (using international standardized test scores for a group of 50 countries):
  - One standard-deviation increase in international standardized test scores contributes to higher growth in long-term GDP per capita of 2 percent.
  - The payoff to increasing quality, per year of schooling of the population, is 80 percent higher for developing countries than for developed countries.
- Improving educational quality requires a focus on:
  - efficient education spending,
  - sound institutions that encourage competition, autonomy, and accountability.
- Simply increasing educational spending does not guarantee improved educational quality.
- Policy implication for health: Quality of health care deserves greater attention and measurement; tools in health are more complex and less comparable across countries.

### Child malnutrition: consequences, measurement, and trends
- Critical points:
  - Nutritional deficits in childhood increase risk and severity of diseases (diarrhea, measles, pneumonia) and raise mortality risk.
  - Malnutrition reduces school achievement and cognitive abilities, diminishing lifetime human capital accumulation.
  - There is a "window of opportunity" for preventing malnutrition: from conception to two years of age; deficits during this period can lead to irreversible physical and cognitive impacts.
- Common anthropometric measures:
  - Stunting (low height for age) — measure of chronic malnutrition.
  - Wasting (low weight for height) — captures more transient episodes of malnutrition.
- Micronutrients monitored: iron, iodine, vitamin A.
- Long-term empirical findings (country studies and interventions):
  - Rural Pakistan (1986–1990): increase of 0.25 of a standard deviation in average nutrition translated into an increase of 5.5 percent in the probability of school enrollment for the entire cohort; equated to an increase in average productivity equal to a 0.65 percent increase in lifetime earnings; effect was seven times greater for girls than for boys.
  - Filipino cohort (born 1983–84 and 1994–95): an increase of one standard deviation in nutrition would lead to enrollment improvements equivalent to between 11 and 21 months of school attendance.
  - Rural Zimbabwe (late 1970s and drought episodes 1982–1984): delayed school entry by five months and an estimated reduction in lifetime earnings of 14 percent.
  - Guatemala randomized community-level nutritional intervention (1969–77): twenty-five years later, women who received nutritional supplements as children had up to 1.2 years of additional schooling compared with those who had not, and higher levels of economic productivity.
  - Jamaica cohort: beneficiaries of childhood nutritional interventions outperformed non-beneficiaries in 11 of 12 cognitive and educational tests.
- Progress and distribution:
  - Nutrition outcomes have been steadily improving, reflected in downward trends in stunting in most developing regions.
  - "Today just 36 countries account for 90 percent of all stunted children worldwide."
  - Since the mid-1990s, prevalence of stunting has fallen throughout Asia, especially East and Southeast Asia; Sub-Saharan Africa is a notable exception with modest declines.
- Risk from recent commodity price increases:
  - Rising food and fuel prices lower real income of non-producing households and may cause substitution toward less food or cheaper, less nutritious diets, potentially raising malnutrition levels among the poorest households.

### Stunting trends (moderate and severe stunting as a % of under-five children), 1990–2005
- Latin America & the Caribbean: 1990 = 18.0; 1995 = 15.3; 2000 = 13.0; 2005 = 11.1.
- Middle East & North Africa: 1990 = 26.2; 1995 = 23.1; 2000 = 20.2; 2005 = 17.6.
- South Asia: 1990 = 50.8; 1995 = 45.2; 2000 = 39.7; 2005 = 34.5.
- East Asia & Pacific: 1990 = 35.9; 1995 = 29.2; 2000 = 23.5; 2005 = 18.9.
- Sub-Saharan Africa: 1990 = 36.7; 1995 = 35.8; 2000 = 34.9; 2005 = 34.1.
- Developing countries: 1990 = 37.9; 1995 = 33.5; 2000 = 29.6; 2005 = 26.5.
- Developed countries: 1990 = 2.8; 1995 = 2.8; 2000 = 2.7; 2005 = 2.6.
- World: 1990 = 33.5; 1995 = 29.9; 2000 = 26.7; 2005 = 24.1.
- Source: Adapted from de Onis and others 2004, based on WHO data.

### Regional patterns, gender, and drivers of malnutrition
- Stunting and wasting patterns:
  - South Asia has slightly higher incidence than Sub-Saharan Africa of moderate stunting, but lower incidence of severe stunting.
  - Severe stunting: under-five females are less malnourished than males in many regions; in Middle East & North Africa and South Asia differences are not statistically significant.
  - Wasting is far less pervasive than stunting; wasting in middle-income countries is statistically indistinguishable from high-income countries.
- Micronutrient deficiencies:
  - Vitamin A deficiency concentrated in Sub-Saharan Africa and South Asia.
  - High-risk areas for zinc deficiency mainly in Sub-Saharan Africa and South Asia.
  - Anemia prevalence highest in South Asia and Sub-Saharan Africa, with little evidence of improvement over time.
- Two main factors contributing to differences in malnutrition prevalence:
  - Income (strong positive association between poverty rates and malnutrition).
  - Education (strong negative correlation between levels of female education and malnutrition).
- Household-level evidence:
  - Insufficient maternal schooling frequently the main constraint to adequate child nutrition.
  - In Ghana, the most highly educated mothers were more than three times as effective in reducing child malnutrition as the least educated mothers.
- Simulations and elasticity:
  - Assuming an annual per capita income growth rate of 2.5 percent from the 1990s to 2015 for 12 countries, projected reductions in child malnutrition range from 13 percent (Romania) to 63 percent (Peru); however only 3 of the 12 countries actually met the 2.5 percent assumption during the 1990s.
  - Estimated income elasticities of nutrition range from –0.01 to – 0.82.
  - Example: Assuming an annual income growth rate of 5 percent and an elasticity of –0.5 percent, it would still take Tanzania until 2026 to meet the MDG malnutrition goal.

### Policy-relevant implications and recommendations (implied by findings)
- Prioritize measurement and improvement of service delivery processes (e.g., examination and counseling) alongside structural inputs.
- Rebalance public health spending toward services that improve quality and reach lower-income quintiles.
- Invest in early-childhood nutrition interventions targeted at the conception-to-two-years window to prevent irreversible deficits.
- Strengthen maternal education and female schooling as a key strategy to reduce child malnutrition.
- Account for poverty dynamics and food/fuel price shocks in nutrition policy to protect the most vulnerable households.

*Source: Excerpt from the provided IMF PDF content.*

### 1.5 percent, lower than the 2.2 percent rate

### _gmr - 1.5 percent, lower than the 2.2 percent rate

### Relationship between malnutrition, poverty, and education
- Partial regression plots relate height two standard deviations below median to:
  - poverty headcount ratio ($2 day PPP adjusted basis) as percentage of population; and
  - female primary education completion rate, as percentage of relevant age group.
- Key numeric references in the analysis:
  - "1.5 percent, lower than the 2.2 percent rate" (contextual comparison in the source).
- Source for these analyses: World Bank calculations, based on WHO and WDI data.

### Making a Difference in Child Malnutrition — findings and interventions
- Core findings:
  - Malnutrition is often assumed to be caused by food insecurity, but household behavior and assets are equally important (or perhaps even more important) determinants.
  - Food security is necessary but not sufficient to guarantee positive nutrition outcomes.
  - Nutrition during pregnancy and the first two years of life is especially important; focusing investments on nutrition supplements for pregnant women and children under age two would have a high payoff over the long term.
  - Maternal education and rising household income improve nutrition; shorter-term efforts such as teaching mothers about hygiene and sound feeding practices have been shown to be effective even among uneducated women.
- Known, inexpensive, and implementable interventions:
  - Oral rehydration therapy.
  - Promotion of exclusive breastfeeding.
  - Ensuring adequate levels of iron, iodine, vitamin A, and zinc for pregnant women, infants, and children, often via fortifying common foods such as flour and salt.
  - Promoting the use of iron cookware.
  - Availability of fortified snack foods at home or school to compensate for poor nutrition without causing meal substitution.
  - Community nutrition interventions to influence how communities compensate for inadequate food for children and mothers.
- Delivery and targeting:
  - Interventions are effective only to the extent they are targeted to populations in need.
  - The quality of delivery of these services affects their success.
  - Where subsistence is the norm and consumption of commercial foods is rare, fortification and commercial distribution strategies may be less applicable.

### The environment and health goals — links to malnutrition and child mortality
- Key relationships and estimates:
  - It has been estimated that 23 percent of all deaths are principally attributable to environmental factors.
  - Environmental risk factors play a role in more than 80 percent of diseases globally.
  - An estimated 24 percent of the global disease burden from all causes is attributable principally to environmental factors.
  - In developing countries, 25 percent of all deaths were found to be attributable to environmental risk factors, compared to 17 percent in developed countries.
  - Among children under five, over 40 percent of the global disease burden is linked to environmental risk factors; an estimated 4.7 million children under five died in 2000 from illness related to unsafe environments.
  - Together, diarrhea, lower respiratory infections, and malaria account for 24 percent of all deaths in children under age 15.
  - Roughly 94 percent of diarrheal cases worldwide can be attributed to the environment, resulting in 1.5 million deaths annually.
  - Another estimated 1.5 million deaths annually result from respiratory infections caused by environmental factors.
  - Roughly two-fifths of global malaria cases could be prevented through improved environmental management.
  - The WHO estimates that the environment—in particular poor water, sanitation, and hygiene—accounts for about half of the health burden of malnutrition.
  - Recent evidence points to infections and early infancy exposure to environmental health risks causing permanent growth faltering, lowered immunity, and increased mortality.

### Impacts of environment on health and the economy
- Definitions and classifications:
  - Environmental health includes physical, chemical, and biological factors external to a person and related behavioral factors; modifiable environmental risks are those reasonably amenable to management or change.
  - Traditional hazards: lack of access to clean water, poor sanitation, poor waste disposal, indoor air pollution, vector-borne diseases.
  - Modern hazards: urban air pollution, agro-industrial waste, toxic chemicals.
- Economic burden:
  - The economic burden on society caused by poor environmental health has been estimated at approximately 1.5–4 percent of GDP annually.
- Vulnerable populations:
  - The poorest and most vulnerable populations—women, children, migrants, people living with HIV/AIDS—are generally the most adversely affected by environmental risk factors.
  - These populations tend to reside in areas with the worst environmental conditions and typically have lower resistance to infection.

### Water, sanitation, and hygiene — status and implications
- Global access and MDG progress:
  - According to WHO’s Joint Monitoring Programme for Water Supply and Sanitation, over a billion people do not enjoy reasonable access to a safe drinking water supply.
  - 2.6 billion people (40 percent of the world’s population) do not have access to basic sanitation.
  - The world is roughly on target for reaching the MDG goal of halving the proportion of people without sustainable access to safe drinking water, but it is expected to miss the goal for access to basic sanitation by half a billion people.
- Transmission and prevention:
  - Almost all diseases associated with lack of drinking water supply and sanitation are transmitted by fecal material not disposed of properly.
  - Adequate water and sanitation can interrupt some transmission routes; behavioral changes in hygiene are also needed to realize full health benefits.
- Urban-rural and income disparities:
  - Levels of access to improved water and sanitation in urban areas have been static, while access in rural areas has been improving.
  - Summary global statistics conceal major disparities by income group; access to different levels of service varies with income quintile.

*Source: World Bank calculations, based on WHO and WDI data.*

### 2.16 shows for 32 countries in Africa, the

### _gmr - 2.16 shows for 32 countries in Africa, the

### Water and sanitation: unequal access
- Less than 10 percent of the bottom expenditure quintile has access to improved water supply.
- Nearly 70 percent of the top quintile has access to improved water supply.
- Over half of the bottom quintile has no access to sanitation of any kind.
- Only 6 percent of the top quintile has no access to sanitation.
- Service levels for water and sanitation are linked to expenditure levels; as incomes increase, many families invest in these basic services and are willing and able to pay at least for water.

### Indoor air pollution: exposure patterns and drivers
- A recent study on Bangladesh analyzes individuals’ exposure to indoor air pollution at two levels: differences within households attributable to family roles; and differences across households attributable to income and education.
- Findings:
  - High levels of exposure for children and adolescents of both sexes, with particularly high exposure for children under five.
  - Among adults, men had half the exposure of women (women’s exposure was similar to that of children and adolescents).
  - Elderly men had significantly lower exposure than elderly women.
  - Household choices of cooking fuel, cooking locations, construction materials, and ventilation practices were significantly affected by family income and adult education levels (particularly for women).
  - The poorest, least-educated households had twice the pollution levels of relatively high-income households with highly educated adults.
  - The typical household could cut their children’s pollution in half by adopting two simple measures: increasing children’s outdoor time from three hours a day to five or six hours; and concentrating that outdoor time during peak cooking periods.
- Source cited: Dasgupta and others 2004.

### Global burden and regional distribution of solid-fuel indoor pollution
- Half of the world’s population relies on inefficient, highly polluting solid fuels for daily energy needs.
- Approximately 32 percent of the global burden of disease caused by indoor air pollution occurs in Sub-Saharan Africa.
- 37 percent in South Asia.
- 18 percent in East Asia and the Pacific.
- In developing countries, solid fuel use is the fourth most important environmental risk factor, and it accounts for approximately 3.7 percent of DALYs lost.
- Specific health outcomes associated with indoor air pollution include acute lower respiratory infection, chronic obstructive pulmonary disease, and lung cancer.

### Outdoor (urban) air pollution: impacts and scale
- Outdoor air pollution is mainly caused by combustion of petroleum products or coal by automobiles, industry, and power stations; in some countries, major sources include wood or agricultural waste and industrial dust-generating processes.
- Outdoor air pollution is believed to contribute 0.6–1.4 percent of the total burden of disease in developing countries.
- Other pollutants (such as lead in water, air, and soil) may contribute up to 0.9 percent.
- An estimated 800,000 people die prematurely every year from lung cancer and cardiovascular and respiratory diseases caused by outdoor air pollution.
- Estimated attributable shares:
  - 5 percent of global lung cancer cases,
  - 2 percent of deaths from cardiovascular and respiratory conditions,
  - 1 percent of respiratory infections,
  - resulting in 7.9 million premature deaths (attributed in the text to pollution caused by urban particulate matter).

### Health effects of climate change
- Climate change is human-induced (anthropogenic) change to the global climate system and constitutes an environmental risk with global health implications requiring local interventions.
- Methods for measuring health effects of climate change are in early stages; estimates rely on derived relationships applied to projections of future climatic conditions.
- A global estimate measured the burden of disease in 2000 attributable to climate change at 925 DALYs per million, with strong regional variations; largest burdens in Sub-Saharan Africa, Asia, and the Eastern Mediterranean.
- Changes in climate are believed to have caused over 150,000 deaths, or the loss of over 5.5 million DALYs annually, since the year 2000.
- Projected health effects of climate change (with confidence levels provided in source):
  - Increased malnutrition and consequent disorders, including those related to child growth and development — High
  - Increased number of people dying and suffering from disease and injury due to heat waves, floods, storms, fires, and droughts — High
  - Continued change in the range of some infectious disease vectors — High
  - Mixed effects on malaria; in some places the geographical range will contract, elsewhere it will expand, and the transmission season may change — Very high
  - Increased burden of diarrheal diseases — Medium
  - Increased cardiorespiratory morbidity and mortality associated with ground-level ozone — High
  - Some increased benefits to health, including fewer deaths from cold; these benefits are expected to be outweighed by the negative effects of rising temperatures worldwide — High

### Quantification of deaths and DALYs due to solid fuel use (table summary)
- Deaths (thousands) | DALYs (thousands) | Total burden (%)
  - East Asia & Pacific: 540 | 7,087 | 18.4
  - Europe & Central Asia: 215 | 441 | 1.4
  - Latin America & the Caribbean: 267 | 742 | 2.0
  - Middle East & North Africa: 118 | 3,572 | 9.3
  - South Asia: 522 | 14,237 | 36.9
  - Sub-Saharan Africa: 392 | 12,318 | 32.0
  - World: 1,619 | 38,532 | 100.0
- Source cited: Bruce and others 2006.

### Addressing environmental health risks: interventions, costs, and implementation challenges
- Simple interventions can yield large benefits at modest cost, but effectiveness varies with delivery and governance.
- Cost and scale needs for water and sanitation:
  - An estimated US$30 billion in annual investments is needed to reach the MDG targets of halving the fraction of the population without basic access to water and sanitation (costs do not include wastewater treatment).
  - Currently only US$15 billion is spent globally per year.
- Considerations for future water and sanitation investments:
  - Institution building should accompany infrastructure construction (example: local professional operators).
  - Urban networks need extension to peri-urban areas and smaller towns.
  - Technical standards could be adjusted so that developed-world “gold standards” are not imposed on low-income countries that cannot afford them.
  - Hygiene promotion should be included as part of the investment.
  - Strengthen institutional and policy frameworks to ensure long-term operation and maintenance and adequate user-charge financial bases.
- Indoor air pollution interventions and cost-effectiveness:
  - A study comparing four alternative solid fuels found cleaner fuels yielded the greatest gains across all regions; improved stoves also had a significant impact.
  - In Sub-Saharan Africa and South Asia, an improved biomass stove was the most cost-effective intervention.
  - Cleaner fuels (such as kerosene) were the most cost-effective in East Asia and the Pacific.
- Cost per DALY of selected interventions (US$ per healthy year gained):
  - Insect-treated bed nets: 9–31 (Two net treatments with insecticide per year)
  - Insecticide residual spraying: 11–34 (Two rounds of spraying per year)
  - Breastfeeding promotion and diarrhea treatment: 9–30 (Two interventions during first year of life)
  - Measles immunization: 98
  - Cholera immunization: 2,945
  - Water and sanitation upgrading:
    - Hand pump or standpost: 94
    - House connection: 224
    - Sanitation construction and hygiene promotion: < 270
  - Acute respiratory disease in children (pneumonia): 398 (Four case management interventions)
- Implementation challenges highlighted:
  - Governance failures can raise costs and reduce effectiveness (examples: variable bed net use, political pressure against user charges for water).
  - The need to design programs that actually reach families and invest in education to help households prevent illness and use treatments.

### Conclusion: policy implications and priorities
- Halfway to 2015, progress toward MDGs for health and education has been serious but uneven.
- Stronger, more targeted efforts are needed to improve access for poor and underserved populations.
- Greater attention to the quality of education and health investments—and governance and accountability of public programs—is required to meet MDG objectives.
- Many countries are falling short on the malnutrition goal; evidence points to the need to reach pregnant women as well as young children.
- Environmental hazards (climate change, indoor and outdoor air pollution, water and sanitation deficits) pose major risks to health status; mitigating these hazards and expanding water and sanitation coverage have positive impacts on health that must be considered in investment decisions.
- Positive synergies across goals exist and should be exploited.

*Source: Excerpts from the provided IMF content unit.*

### 72. WHO and UNICEF 2006.

### Scaling Up Aid: Opportunities and Challenges in a Changing Aid Architecture

### Changing aid architecture: features and implications
- Emergence of global funds and nontraditional bilateral donors, growing role of private foundations, NGOs, corporations, and more public-private partnerships.
- New players are “bringing fresh funding, enthusiasm, and business models” while increasing complexity, proliferation of aid channels, fragmentation of aid, and a trend toward vertical programs and earmarking that pose challenges for coherence and predictability.
- Calls for better donor coordination, division of labor, harmonization with the Paris Declaration, and alignment of global public needs with national development interests.
- The Accra High Level Forum identified as a timely opportunity to address dynamic dimensions of the aid agenda.

### Mixed progress on aid volumes (DAC donors)
- Aid declined in 2006 and 2007 as major debt relief operations tapered off.
- Group of Eight and other donors committed to increase aid by $50 billion (from 2004 levels) by 2010; meeting this requires core development aid to expand at an estimated 12 percent annual growth rate.
- Net ODA contracted by 4.5 percent in real terms in 2006 and fell an additional 8.4 percent in real terms to $103.7 billion in 2007.
- Of the $104.4 billion aid envelope from DAC in 2006, $73 billion was for core development assistance (excluding bilateral debt relief, bilateral emergency assistance, and administration costs).
- Growth of core development aid slowed to about 4 percent in real terms in 2006 (down from 10.3 percent expansion in 2005 and below the average annual growth of 5 percent during 2002–06).
- To meet 2010 commitments (assuming debt relief returns to early-2000s levels and humanitarian share holds), core development aid would need to grow by about $40 billion or at an average annual growth rate of around 12 percent.
- Combined net ODA/GNI was 0.31 percent in 2006 (below the early 1990s level and below the 2010 projected target of 0.35 percent).
- Five donors reached or exceeded the United Nations ODA target of 0.7 percent of GNI; two donors had net ODA less than 0.2 percent of GNI.

### Composition and concentration of ODA
- DAC members’ ODA composition shifted during 2004–06: the share of debt relief doubled to almost one-fifth of the total; contributions to multilateral institutions fell from nearly a third to a quarter; technical cooperation declined from 24 percent in 2004 to 21 percent in 2006.
- Much of the expansion in ODA over 2002–06 concentrated in a few countries: Afghanistan and Iraq account for nearly half of the increase in ODA; additional aid to Nigeria and the Democratic Republic of Congo largely reflects debt relief.
- Aid expansion to PRS-II countries was mixed: around 50 percent increase to Burkina Faso and Madagascar and about 40 percent to Ghana during 2002–06; other countries saw modest increases or declines.

### Opportunities for scaling up and absorptive capacity
- Many second-generation poverty reduction strategy (PRS-II) countries have strengthened strategies and institutional frameworks and can productively absorb increased aid; examples cited include Burkina Faso, Ghana, Madagascar, Mozambique, Rwanda, Tanzania, and Vietnam.
- First-generation PRS countries can start with moderate increases and build as absorptive capacity expands; examples include Armenia, Bangladesh, Honduras, the Kyrgyz Republic, and Mali.
- Fragile states, particularly postconflict and reengagement countries, present opportunities for selective, focused, and carefully sequenced increases in aid tailored to weaker governance contexts.

### New channels, bottlenecks, and donor forward-planning
- Fast-growing programs: GFATM reached $1 billion in disbursements in its fourth year of operation.
- Millennium Challenge Corporation had committed $5.5 billion in multiyear aid compacts to 16 countries as of February 2008 but had disbursed about $180 million.
- Forward survey of donors’ aid allocations (2007) used country programmable aid subset; donor coverage improved to 47 percent for DAC members and 69 percent for multilateral donors, but planned scaling up appears modest and insufficient to meet 2010 targets.
- Several fragile states are among those seeing increases in planned country programmable aid.
- Donor pledges for IDA15 amount to $25.1 billion (covering mid-2008 to mid-2011), representing the largest expansion in donor funding in IDA’s history.

### Health sector, climate change, and additionality
- Health sector illustrates challenges: multiplicity of donors and vertical focus on communicable diseases complicate aid effectiveness; International Health Partnership launched in September 2007; health chosen as a special focus sector for deepening and widening Paris principles and monitoring.
- Climate change mitigation and adaptation will require significant increases in development finance; support should be additional and not divert resources from other development programs; new and innovative funding sources will be required.

### Innovative financing mechanisms
- Solidarity tax on airline tickets introduced in France in mid-2006 and implemented in multiple countries; funds finance UNITAID.
- Contributions to UNITAID’s budget for 2008, financed primarily through air ticket taxes, are expected to be $364 million.
- IFFIm established in 2006 with some $4 billion in assets (irrevocable donor grants paid over 20 years); first triple-A rated $1 billion bond issuance funded immunization programs of GAVI.
- Innovative financing can provide frontloading and short-term funding but overall DAC donor intentions remain short of promised increases—stronger and more expeditious donor response is needed.

### Expanding role of non-DAC donors
- Nearly 30 non-DAC countries now provide aid, including Brazil, China, India, Malaysia, the Russian Federation, Thailand, República Bolivariana de Venezuela, and oil-rich countries.
- Non-DAC donors now provide significant resources, totaling perhaps $8 billion annually.
- Non-DAC OECD countries are providing sizable amounts and planning to scale up; Korea provided $455 million in 2006 and has plans to provide $1 billion of ODA by 2010.
- Non-DAC OECD countries are expected to double ODA by 2015.

### Debt relief, vulnerability, and debt sustainability
- HIPC Initiative and MDRI have substantially lowered debt burdens.
- Vulnerability to terms-of-trade and climate-related shocks presents a challenge to long-term debt sustainability of several post-completion-point HIPCs.
- Policy responses include strong debt management as part of a sound macro framework and reforms to build resilience to exogenous shocks; creditors should take debt sustainability into account in lending decisions.

*Scaling Up Aid: Opportunities and Challenges in a Changing Aid Architecture*

### 2015. Middle Eastern countries provided $2.5

### _gmr - 2015. Middle Eastern countries provided $2.5

### Donor landscape: nontraditional bilaterals and private donors
- Middle Eastern countries provided $2.5 billion in assistance in 2006, with Saudi Arabia contributing $2.1 billion (as reported to the DAC).
- Estimates place aid from China and India at about $3 billion annually, and both countries are developing larger aid programs.
- Net grants from NGOs in DAC countries are estimated by the OECD at $14.6 billion in nominal terms in 2006.
- One estimate places private international giving from all sources in the United States alone at $33.5 billion; a survey estimates that a little over a third of this amount is related to emergency assistance.
- The Gates Foundation disbursed over $1 billion in 2006, with an outlook for ramping up disbursements to about $3 billion annually in a few years.
- By the end of 2007, contributions of corporate partners to (PRODUCT) RED totaled more than $50 million.
- New vertical funds have disbursed about $7 billion over the last five years.

### Aid to Sub-Saharan Africa: magnitude, composition, and priorities
- Aid flows from DAC and multilateral donors to Sub-Saharan Africa climbed to $40 billion in 2006, an increase of $6.9 billion in real terms over 2005 levels and $12.4 billion over 2004 amounts.
- DAC donors allocated over a third of ODA to Sub-Saharan Africa in 2006 compared to about a quarter in 2000.
- The expansion in net ODA to the region in 2006 was driven largely by debt relief; net ODA excluding debt relief and humanitarian assistance accounted for less than a third of the expansion in ODA to the region in 2006 and a fifth of the increase in aid during 2004–06.
- For low-income countries in the region, ODA accounts for almost two-thirds of all external financing on average.
- The Gleneagles commitment to increase ODA to Sub-Saharan Africa to $50 billion (a doubling from the 2004 level) will require sharp rises in non–debt-relief aid as debt relief operations taper off.

### Assistance to fragile and conflict-affected states: timing, duration, and coordination
- Development assistance to fragile states rose from $9.7 billion to $26.2 billion between 2002–06, a doubling in real terms.
- Bilateral donors, the source of about 90 percent of ODA flows to fragile states, accounted for most of this increase, much of it associated with debt relief.
- Between 60–70 percent of the aid to fragile states in 2005 and 2006 was concentrated in four countries—Afghanistan, Democratic Republic of Congo, Nigeria, and Sudan.
- Around 40 percent of countries relapse into conflict in the first decade of postconflict recovery; conflict risk is particularly high in the first four years of a peacekeeping operation and appears correlated with the timing of elections (risk increasing in the year following an election).
- Evidence from a sample of 54 cases shows both peacekeeping expenditures and development aid dropped sharply in the fourth year following deployment of a new peacekeeping operation.
- Policy implication: maintain both peacekeeping and development aid at a consistent level until the risk of conflict relapse has diminished; avoid sharp mid-decade aid declines that may miss opportunities to consolidate gains.
- Coordination steps: OECD Principles of Good International Engagement in Fragile States, UN Peace-Building Commission, MDB common goal and guiding principles for engagement, and OECD DAC guidance on state-building in fragile situations.

### Humanitarian aid and disaster risk reduction
- Estimated funding requirements met: 72 percent in 2006 compared with 59 percent in 2000.
- Global Humanitarian Assistance Report 2006 estimates global humanitarian assistance at $18 billion in 2005, compared with $10 billion in 2001.
- DAC bilateral emergency and disaster relief: $7.1 billion in 2005 and $6.6 billion in 2006.
- Private sources of humanitarian funding rose sharply in 2005 to nearly $4.5 billion, then fell back to lower pre-2005 levels.
- The European Union provided $3.7 billion of humanitarian aid in 2006 and has adopted principles emphasizing adequacy, equity, partnership, effectiveness, accountability, and rapid response.
- New approaches emphasize prevention and longer-term risk reduction, including promotion of disaster risk reduction strategies and preparedness; World Bank Global Facility for Disaster Reduction and Recovery (established in 2006) helps fund projects enhancing local capacities.

### Climate change financing: mitigation, adaptation, and funding gaps
- UNFCCC estimates: by 2030, financial flows to developing countries should be on the order of $100 billion annually to finance mitigation and between $28 billion and $67 billion for adaptation.
- Human Development Report estimate (adaptation only): additional cost of $86 billion a year by 2015, broken down as $44 billion for climate-proofing development investments, $40 billion for adapting poverty reduction programs to climate change, and $2 billion for strengthening the disaster response system.
- Carbon market: estimated $30 billion in value in 2006 (three times greater than in 2005); CDM cumulative transacted CERs exceed 1 billion with cumulative value exceeding $17 billion.
- CDM in 2006 leveraged approximately $9.2 billion in clean technology investments in developing countries (about 48 percent of their total investments in clean technologies).
- Adaptation Fund financed by a 2 percent share of proceeds on CERs could reach $100 million per year or more depending on carbon market activity.
- GEF allocated $2.3 billion for climate change projects during 1991–2007 but relies principally on voluntary contributions, reducing predictability.
- Bali Action Plan emphasizes mitigation, adaptation, technology development and transfer, provision of financial resources, mobilization of public and private funding, and incentives for developing countries; MDBs and partners exploring strategic climate investment funds for early transformational actions.

### Aid architecture, fragmentation, and integration of new players
- New donors and modalities increase resources but add complexity to the aid architecture; challenges include integrating new players, developing effective modalities, and improving aid delivery.
- Many new players bypass traditional channels, operate with narrower mandates (e.g., vertical funds), have limited country presence, and often implement outside government systems.
- Information gap: insufficient data on operations of new players and limited comparative analysis of cost-effectiveness of different approaches.
- Aid fragmentation: data for 61 PRS countries and fragile states show over 60 percent of countries had 20 or more donors and over 75 percent had 10 or more donors together accounting for 10 percent or less of aid.
- Policy response: “competitive pluralism” — harmonized, coordinated system complemented by openness to alternative approaches and innovation.
- Division of labor: EU voluntary Code of Conduct on Complementarity and Division of Labor encourages concentration in fewer sectors, support for lead donor arrangements, assurance of adequate donor support in poverty-relevant sectors, and establishment of priority countries.

### Predictability, selectivity, and aid volatility
- Paris Declaration monitoring (2006): donors provide 43 percent of their aid to governments through program-based approaches (target 66 percent).
- Joint missions: 18 percent of missions undertaken jointly (target 40 percent); 42 percent of country analytic work prepared jointly (target 66 percent).
- Short-term predictability: of $2.7 billion in general budget support committed by donors for 2006, 92 percent was disbursed within the year (compared with 85 percent in the 2006 survey and below 70 percent in the 2003 survey).
- Medium-term predictability: commitments fall off in outer years—69 percent for 2008 and 35 percent for 2009 (per Strategic Partnership with Africa survey).
- Aid volatility cost estimate: one study estimates the cost of volatility at 22 percent (value of aid flows may be discounted by as much as 22 percent on average to account for volatility effects); cost varies across countries and is particularly large for Cambodia, Democratic Republic of Congo, and Nigeria.
- Mechanisms improving predictability: European Commission MDG contract under EDF 10 (
22.7 billion over 2008–13) with 80 percent of funds committed to a country virtually guaranteed except in case of clear failure to meet key criteria; MDG contract monitoring annual with focus on results in health and education.
- Recipient mitigation measures: build reserve buffers, identify and safeguard priority spending programs, design flexible spending programs, and regularly stress test baseline projections.

### Innovative financing and results-based instruments
- IFC planned equity fund of $300 million–$350 million and a debt vehicle of $400 million–$500 million to invest in health care businesses (as part of Gates-IFC cooperation).
- Results-linked mechanisms include the U.S. Millennium Challenge Corporation, debt buy-downs tied to project success, and the $1.5 billion Advanced Market Commitment (AMC) pilot to subsidize pneumococcal vaccines.
- Output-based aid example: Uganda subsidy of $2.5 million to connect poor households in Kampala slum and peri-urban areas to water services.
- Output-based approaches provide explicit performance-based subsidies paid to service providers after delivery of agreed services.

### Health sector: scaling up, effectiveness, and system constraints
- Concessional financing for health more than doubled from $6.8 billion in 2000 to nearly $17 billion in 2006.
- External assistance accounts for 7 percent of health sector spending in developing countries and 15 percent in Africa.
- Fifteen of 23 countries where external assistance supports over 20 percent of all health spending are in Africa.
- Seven African countries receive HIV/AIDS funding larger than 30 percent of their total public health budget; in some countries this funding exceeds other public sector health spending.
- Sectoral imbalances: example Rwanda—$47 million for HIV/AIDS, $18 million for malaria, and $1 million for management of childhood diseases; Ghana—malaria is main cause of sickness but donor funding to fight malaria recently was 60 percent of amount allocated for HIV/AIDS.
- Absorptive capacity constraints: Ethiopia capital budget execution rate for external assistance between 15 and 20 percent compared with 80 percent for domestic resources.
- Short-term funding patterns: in Ethiopia and Rwanda 55 percent of foreign-financed projects are negotiated on an annual basis.
- Policy implications for health: strengthen coordination and harmonization of aid, increase funding flexibility, provide more predictable and sustainable assistance, align with country-owned health plans, and invest adequately in health systems.
- Initiatives for coherence: group of eight heads of health agencies (World Bank, WHO, UNAIDS, UNICEF, UNFPA, GFATM, GAVI Alliance, Gates Foundation) and the International Health Partnership to improve health systems, donor coordination, and country-led planning.

### Debt relief, HIPC, MDRI, and debt management
- 41 countries identified as eligible for, or having received, assistance under the HIPC Initiative.
- By end of March 2008, 33 HIPCs had reached the HIPC decision point and were receiving debt relief; 23 had reached the completion point and benefited from MDRI.
- Overall amount of debt relief to the 33 post-decision-point HIPCs under HIPC and MDRI is estimated at $72 billion in end-2006 net present value terms.
- Debt stock of the 33 post-decision-point HIPCs projected to decline by nearly 90 percent in present value terms (based on decision-point debt stocks).
- Debt service paid by these countries declined by about 2 percentage points of GDP between 1999 and 2006; HIPC Initiative and MDRI relief expected to reduce debt service payments by another 1 percentage point of GDP by 2009.
- Challenges: eight pre-decision-point HIPCs face difficulties qualifying due to conflict, governance issues, substantial arrears to multilaterals, and difficulty formulating macro and poverty reduction programs; several interim HIPCs face long interim periods.
- Additional donor resources required to cover projected costs of debt relief for countries with protracted arrears (Somalia and Sudan): as of end-February 2008, total arrears of these countries to the IMF amounted to SDR 1.3 billion.
- Participation of non–Paris Club official bilateral creditors averaged about one-third of their expected share of debt relief to post-completion-point HIPCs; commercial creditor participation even lower, with some litigation against HIPCs.
- Instruments: World Bank Debt Reduction Facility for IDA-only countries used to extinguish commercial debt via debt buybacks (examples extinguished nearly US$1.5 billion of commercial external debt for Mozambique and Nicaragua).
- Debt sustainability: only nine of 23 post-completion-point HIPCs found at low risk of debt distress; remainder at moderate or high risk per latest debt sustainability analyses.
- Policy actions: strengthen institutions and climate adaptation, maintain sound macro frameworks, implement strong debt management, borrow prudently in line with repayment capacity, use the joint Bank-Fund Debt Sustainability Framework (DSF) for creditor coordination, and extend outreach and engagement with other creditor classes.
- Debt management capacity tool: government Debt Management Performance Assessment (DeMPA) Tool with 15 indicators to assess performance; field-tested in five low-income countries (Albania, The Gambia, Guyana, Malawi, Nicaragua) to guide reforms and capacity building.

*Italic: Content derived from the supplied IMF chapter/section.*

### 1. Preliminary estimate; see OECD 2008b.

### _gmr - 1. Preliminary estimate; see OECD 2008b.

### Aid volumes and instruments
- Debt relief grants from DAC members peaked at $25 billion in 2005 and were $18.9 billion in 2006.
- Only net ODA (by DAC donors and multilaterals) that is provided at the country level is included in the calculations.
- Core development assistance also excludes in-donor country refugee costs. Core development aid is similar to the concept of programmable ODA used by DAC, which also excludes imputed student costs.
- The Global Fund: in September 2007 donors provided an initial $9.7 billion in pledges for the second replenishment cycle covering the period 2008–10. Many donors cannot make commitments beyond a year, so there is an expectation that commitments will increase over the cycle.
- Since its inception in 1989, the Debt Reduction Facility has implemented 24 operations in 21 IDA-only countries, extinguishing about US$9 billion of external commercial debt.
- Millennium Challenge Corporation is noted as a relevant institution.

### Climate finance and adaptation funding
- GEF adaptation-related vehicles and pledges (as of the source):
  - Least Developed Country Fund: pledges of $170 million.
  - Special Climate Change Fund: about $75 million in pledges.
  - Strategic Priority on Adaptation: allocated $50 million for pilot projects.
- Proposed suite of three funds (target sizes stated in source):
  - Clean Technology Fund: target size around $5 billion–$10 billion.
  - Forest Investment Fund: target size $300 million–$500 million.
  - Climate Resilience Pilot Program: target size around $200 million–$300 million.
- The GEF is undergoing a change that shifts away from projects toward a more programmatic approach.
- The proposed funds would provide concessional finance at significant scale in selected countries to encourage early action by private and public sectors and market-based solutions, and would build upon and enhance activities of existing instruments such as the GEF and financing products of the International Bank for Reconstruction and Development, and International Finance Corporation.

### Humanitarian, postcrisis, and fragile states financing
- Postcrisis financing may be fragmented across different funding sources, implementing agencies, and mandates; early humanitarian and peacekeeping activities require international mandates, whereas recovery, reconstruction, and development require strong national ownership.
- There is substantial evidence that UN peacekeeping operations can reduce the likelihood of renewed conflict by up to 50 percent in the immediate two to five years after the end of civil wars.
- Fragile states definition and count:
  - Fragile states comprise IDA-eligible countries with a country policy and institutional assessment (CPIA) score of 3.2 or below (or no CPIA score).
  - Thirty-five countries were identified as fragile in 2006.
- Gaps in funding for postconflict recovery may arise from fragmentation and differing mandates across donors and agencies.

### Aid management, planning, and modalities
- DAC bilateral donors have annual budgets; budgetary planning is often multiyear with at least half of DAC member countries including indicative spending plans three to four years forward. An annual budget process means funds can be disbursed only from approved annual budgets.
- Multilateral donors work with multiyear budget frameworks for core funding and policy and allocation priorities (example: IDA and the African Development Fund funding is set during replenishment negotiations and covers three years).
- DAC bilateral donors’ forward planning is generally limited to their priority partner countries; multilateral donors’ forward planning covers all recipients of their aid.
- Donor country allocation and budgetary processes survey results are incomplete in some respects.
- Program-based approaches and coordination mechanisms are designed to address coordination, harmonization, and alignment with country priorities; definitions of program-based approaches may vary across donors.
- When country leadership and capacity are strong, authorities can lead in defining priorities and channeling donor support—whether general budget support, project aid, or earmarked aid—to those priorities.

### Service delivery, sectoral approaches, and results orientation
- Output-based aid and related mechanisms:
  - The World Bank administers the Global Partnership on Output-Based Aid (GPOBA).
  - Output-based aid can include one-off capital subsidies for access to water, electricity, and the like; transitional subsidies to meet temporary gaps between cost-recovery and consumer affordability; and ongoing subsidies where the gap persists.
- Sectoral focus and findings:
  - For a group of 81 developing countries, Lane and Glassman (2007) find that health aid per capita is positively associated with aggregate disease burden as measured by DALYs, but health aid is more closely associated with certain disease types—namely, HIV/AIDS and TB.
  - Education and infrastructure are beginning to receive special attention for sectoral application of the Paris framework.
  - Progress-based aid proposals focus on results.

### Civil society, NGOs, and philanthropic actors
- NGO presence: by one count, at least 18,000 NGOs are active, of which 4,100 are in the United States alone.
- Gates Foundation cited as a philanthropic actor in 2007.

### Monitoring, evaluation, and surveys
- 2006 Survey on Monitoring the Paris Declaration: Overview of the Results. OECD 2007a referenced.
- The results of surveys and monitoring need careful interpretation given variation in definitions and incomplete reporting across donors.

_Italic: Content derived from the source document "_gmr - 1. Preliminary estimate; see OECD 2008b."_

### 60. http:

### Harnessing Trade for Inclusive and Sustainable Growth

### Overview
- Access to export markets matters, but “behind the border” trade policies and complementary public investments largely determine how trade contributes to achieving the Millennium Development Goal (MDG) poverty targets.
- A neutral and liberal trade regime, accompanied by policies that help firms and communities capture trade opportunities—including improving the quality and costs of services inputs—is central to inclusive and sustainable growth.
- Many countries are relatively open to trade and investment in services, but restrictions persist and undermine services-sector performance.
- Using the WTO to lock in unilateral trade reforms and to commit to future liberalization of trade in services can generate domestic gains and help advance the Doha Round.

### Recent developments in international trade (2007)
- World exports of merchandise reached $13.7 trillion in 2007, growing 14 percent in value, well above the average growth of 9 percent recorded in 1997–2006.
- Developing-country export growth in 2007 was 17 percent (down from 22 percent in 2006) and outpaced industrial-country export growth of 13 percent.
- Regional export growth in 2007:
  - Middle East and North Africa: 10 percent (higher energy prices contributed).
  - Asia: 21 percent (China 27 percent; India 18 percent).
  - Sub-Saharan Africa and Latin America and Caribbean: 12 percent.
  - Least-developed countries (as a group): 17 percent.

### Doha Round and WTO negotiations
- A successful Doha Round is critical to lowering barriers for products that poor people produce; agreement on agricultural modalities and NAMA is the gateway to completing the negotiations.
- Draft texts issued on February 8, 2008, by the chairpersons of the agriculture and NAMA negotiating groups provide the most specific blueprint since 2001, but include bracketed ranges for key numeric parameters.
- Agriculture negotiations focus on market access, domestic support, and export competition, including tariff cuts, permitted tariff rate quotas, overall domestic support levels, flexibilities for “special” and “sensitive” products, and a special safeguard mechanism.
- NAMA discussions include ranges for coefficients in a nonlinear tariff-cutting formula, coverage of the formula across members, and exceptions/flexibilities.
- In services, a plurilateral request-and-offer process continues; a chairman’s mandate to consult on a possible services text has been a recent focus.
- Rule-making discussions (domestic regulation, antidumping, subsidies including fisheries subsidies, countervailing measures) are advancing via chairman’s consolidated texts as a basis for trade-offs.
- The report emphasizes that a comprehensive WTO agricultural agreement could address global trade-distorting agricultural subsidies, reduce peak tariffs on labor-intensive goods, lower barriers in emerging markets to stimulate South–South trade, and reinforce the rules-based trading system.
- The report warns: “The cost of a deal not done would be paid by those who can least afford it.”

### Preferential Trade Agreements (PTAs) and EU–ACP Economic Partnership Agreements
- Approximately 194 still-active PTAs have been notified to the WTO; the actual number of agreements in effect is estimated at over 300.
- Barriers to effective use of PTAs include exclusion of sensitive products, complicated and costly rules-of-origin requirements (the cost of which can be as high as the equivalent of a 4 percent tariff), and low preference margins.
- Notable PTAs entering effect in 2007 included EU enlargement additions and several bilateral and regional agreements.
- EU–ACP context:
  - Since 2000, the EU extended favorable unilateral preferences to exports of 78 ACP developing countries under the Cotonou Agreement; this operated under a temporary waiver with expiration date of December 31, 2007.
  - Negotiations since 2002 aimed to produce WTO-compatible Economic Partnership Agreements (EPAs); only one full EPA covering goods, services, rules of origin, and development support was agreed before the end-of-year deadline (Caribbean cluster).
  - Partial interim agreements and framework (umbrella) agreements were initialed or signed with various clusters and individual countries.
  - As of January 1, 2008, countries with EPAs will have tariff- and quota-free access to EU markets, with short transitions for sugar and rice; liberalization in ACP countries to EU exports varies by region and country and will be implemented gradually with provisions to protect sensitive sectors.
  - Countries not reaching an EPA include 32 least-developed countries (LDCs) which continue to receive duty- and quota-free access under the EU’s “Everything But Arms” initiative, and 10 non-LDCs reverting to the EU’s Generalized System of Preferences.

### Measures of trade restrictiveness (OTRI, TTRI, MA-OTRI, MA-TTRI)
- The report uses two summary indicators:
  - Overall Trade Restrictiveness Index (OTRI): captures tariffs, specific duties, and nontariff measures (NTMs) reported to and by Geneva-based organizations; reflects net (overall) restrictiveness.
  - Tariff Trade Restrictiveness Index (TTRI): narrower; captures only tariffs (ad valorem and specific), and serves as a lower-bound estimate of protection.
- Market-access analogues:
  - MA-OTRI and MA-TTRI capture restrictiveness faced by a country’s exporters.
- Data limitations:
  - Coverage and timeliness of NTMs are limited; this motivates reporting both OTRI and TTRI since TTRI is more comparable across countries though downward-biased.
  - Specific duties converted to ad valorem equivalents using UNCTAD methodology.
- Key empirical observations:
  - Trade policies are generally more restrictive in developing countries than in high-income economies.
  - Trade restrictions on agriculture are on average highest in high-income countries.
  - NTMs are an important component of overall restrictiveness, especially for agricultural products and in high-income and upper-middle-income countries (NTMs account for about two-thirds of total restrictiveness in higher-income countries).
  - TTRI of high-income countries is approximately 12.4 percent for agriculture compared to 1.4 percent for manufactured products.
  - Manufacturing trade restrictiveness is relatively low: TTRI is less than 5 percent in China and around 1 percent in the EU, Japan, and United States.
  - Regional patterns: average restrictiveness is higher for South Asia, the Middle East and North Africa, and lower for East Asia and Europe & Central Asia; Sub-Saharan Africa and Latin America are intermediate.

### Changes in trade restrictiveness and market access (2000–06)
- Between 2000 and 2006 the OTRI declined in all country and income groups; developing economies, especially middle-income countries, saw the largest declines including in agriculture.
- By region, East Asia and Latin America reduced overall trade restrictiveness the most; Sub-Saharan Africa experienced the least reduction (though Sub-Saharan Africa’s OTRI is below that of South Asia and the Middle East and North Africa).
- Market access improved recently, with high- and upper-middle-income countries benefiting relatively more—largely due to export composition (manufactures faced larger declines in restrictiveness than agriculture).
- Sub-Saharan Africa benefits from relatively liberal market access to major economies because of preferential access and a larger share of commodity exports with low tariffs; market access to other low-income countries may be restricted by relatively high tariffs.

### Developments in agricultural support and nominal rates of assistance (NRAs)
- Historical pattern: richer countries have tended to maintain higher barriers to agricultural trade; Producer Support Estimates (PSEs) have been compiled by the OECD for OECD member countries.
- Trends in support:
  - PSEs have fallen in some OECD countries since 1999–2001 (e.g., Japan and the United States) but have increased in the EU, the Republic of Korea, and others.
  - World Bank–compiled NRAs for around 75 countries (covering about 90 percent of global population, GDP, and agricultural production) show:
    - Developing-country governments historically taxed farmers—taxation of the order of 20 percent from the mid-1950s to the mid-1980s.
    - Since then, taxation has diminished and, on average, developing countries have moved from taxing to subsidizing agriculture.
  - Regional NRA trends:
    - African countries showed the least tendency to reduce taxation of farmers—the average NRA remained negative in most five-year periods except the mid-1980s.
    - Asia and Latin America saw NRAs cross from negative to positive after the 1980s.
    - European transition economies moved from slightly negative NRAs in early reform years to rising assistance thereafter but as of 2004 still averaged about half the rate of Western Europe.
- Gross subsidy equivalents and global transfers:
  - From the mid-1950s through the mid-1970s, assistance to farmers in high-income countries almost exactly offset taxation of farmers in developing countries.
  - Since the early 1980s, the decline in taxation of developing-country farmers combined with growth in assistance to high-income country farmers has produced a net global transfer to farmers exceeding more than $250 billion per year.
  - The overall level of assistance in high-income countries has been virtually constant for the last 15 years (relative to the report), while assistance in developing countries has been rising.
- Policy implications highlighted:
  - The report argues for using the Doha Round opportunity to agree on far-reaching reductions in production support to farmers in high-income countries and to cap such support in developing countries, while locking in the relatively neutral sectoral trade policy stance that prevails in many developing economies.
  - Current high global food prices create a window to facilitate agreement: lower tariffs benefit poor households by reducing domestic prices while farmers are less affected given robust global demand for food and biofuel feedstocks.
  - The report cautions against the recent recourse by some major exporters to export taxes and other controls, noting these measures increase world price instability and harm poor net consumers and some net sellers.

### Trade policy, aid for trade, and environment
- Aid for trade progress:
  - The Integrated Framework for Trade-Related Technical Assistance for Least Developed Countries and donor commitments to the associated trust fund are examples of progress.
  - Regional and global WTO-facilitated meetings on aid for trade in 2007 raised awareness of the need to complement policy reform with assistance to help firms and farmers benefit from trade.
  - Delivery should target competitiveness-related areas (for example, trade logistics) and improve the ability of poor households and disadvantaged rural communities to harness trade to raise incomes.
- Trade and climate/environmental goods:
  - Trade policy and aid for trade can help fight and adjust to global warming by increasing incentives to use energy-efficient environmental goods and services.
  - Trade barriers confronting climate-friendly technologies tend to be highest in low-income countries, mirroring overall trade restrictiveness patterns.
  - Removing policies that restrain trade in energy-efficient environmental goods and services—ensuring that production of inefficient technologies is not supported and assisting producers in developing countries to benefit from initiatives such as carbon labeling—can help both inclusive and sustainable growth and environmental outcomes.

### Policy recommendations and priorities (summary)
- Conclude and lock in ambitious Doha Round outcomes, especially on agriculture and NAMA, to reduce trade-distorting agricultural subsidies, lower peak tariffs on labor-intensive goods, and enhance market access for developing-country exporters.
- Use the WTO to lock in unilateral reforms and to commit to future liberalization in services.
- Deliver aid for trade focused on competitiveness (trade logistics) and on enabling poor households and disadvantaged rural communities to benefit from trade.
- Remove trade barriers to energy-efficient environmental goods and services and avoid supporting inefficient technologies; assist developing-country producers to benefit from carbon labeling and related initiatives.
- Avoid using trade policy as the primary instrument for equity, food security, or rural development objectives; instead, complement liberalization with targeted productivity-enhancing and market-linking measures for rural communities.

*Italic: Source: IMF/World Bank–sourced chapter on trade (excerpt).*

### 2006. Countries for which per capita GDP

### 2006. Countries for which per capita GDP

### Trade liberalization, growth, and poverty
- Empirical finding: Countries for which per capita GDP has grown more have tended to have liberalized their trade more.
- Theoretical point: Trade liberalization should enhance national welfare but generates redistributive effects; some groups will lose and complementary reforms may be needed if transitional costs fall disproportionately on the poor.
- Evidence on poverty impacts:
  - Hertel and Winters collect studies estimating that the effect of complete tariff liberalization on poverty (as measured by the threshold of US$1 per day) in developing countries would be to reduce the poverty headcount index by 5.0 to 6.5 percentage points over a 10-year period.
  - Studies indicate diverse country effects; poverty could increase in some countries because of preference erosion and trade diversion.
  - Other recent studies focusing on small, low-income countries point to small but generally positive effects of multilateral trade liberalization on poverty.
- Complementary policies matter: the literature highlights the importance of complementary policies for realizing the full benefits of trade reforms for growth and poverty reduction.

### Behind-the-border policies and supply constraints
- Key constraint: Domestic supply constraints limit trade growth and diversification in many poorest developing countries; trade reform alone will not ensure new remunerative jobs or movement out of subsistence agriculture.
- Priority actions to realize trade gains:
  - Improve supply capacity, reduce transport costs for remote areas, increase farm productivity, and improve the investment climate.
  - Move households out of subsistence production and into market production via extension services, access to credit, and investments in infrastructure.
  - Address poor roads and ports, poorly performing customs, weaknesses in regulatory capacity, limited access to finance and business services.
- Trade facilitation and logistics:
  - Djankov, Freund, and Cong conclude that each day of delay caused by administrative hurdles (customs, tax procedures, clearance requirements, cargo inspections) reduces export volumes by 1 percent on average.
  - Countries with better performance on logistics experience higher growth in their openness (trade-to-GDP ratio).
- The Logistics Performance Index (LPI):
  - Launched in November 2007, the LPI is an interactive benchmarking tool to help countries identify challenges and opportunities in improving trade logistics.
  - The LPI is built on the following seven areas of performance:
    - Efficiency of the clearance process by customs and other border agencies
    - Quality of transport and information technology infrastructure for logistics
    - Ease and affordability of arranging international shipments
    - Competence of the local logistics industry
    - Ability to track and trace international shipments
    - Domestic logistics costs
    - Timeliness of shipments in reaching destination

### Services policies and competitiveness
- Importance: Many behind-the-border policies affecting firm and farmer competitiveness are services-related (telecommunications, transport and distribution, financial intermediation, business services, retail/wholesale distribution, health and education).
- Effects of services openness:
  - Permitting foreign firms to compete in services markets can facilitate technology diffusion, reduce costs, and raise quality.
  - Increased openness in telecommunications, combined with technological progress, has led to striking improvements in access, variety, and quality of services.
  - Liberalization in retail distribution and transport has produced significant benefits upstream and downstream.
  - Outsourcing of professional and business services generates cost savings for importing countries and employment in exporting countries, while also creating adjustment costs.
  - In financial services, premature liberalization can harm financial stability and access for the poor and small enterprises; complementary prudential and pro-competitive regulation and universal access mechanisms may be needed.
- Survey findings and policy patterns:
  - Developing countries have significantly liberalized many service sectors, but protection persists in areas such as transport and professional services.
  - Restrictions in telecommunications often limit number of providers and foreign ownership; in banking and insurance, license allocation can remain opaque and discretionary; zoning and domestic regulations can impede retail entry.
  - Transport and professional services remain relatively protected in both high-income and many developing countries (cabotage limits, restrictions on foreign presence in professional services).
- Multilateral and regional negotiations:
  - Services liberalization has largely been unilateral; multilateral/regional negotiations have increased policy certainty but produced little additional market opening to date.
  - A balanced, commercially relevant WTO outcome on services would include:
    - A promise not to impose new restrictions on trade in services
    - Commitment to eliminate barriers to FDI, immediately or gradually where necessary
    - Credible international assistance where needed for complementary reforms
    - Greater freedom for international movement of individual service providers for specific service contracts

### Aid for Trade: flows, composition, recipients, and institutional developments
- Institutional developments:
  - 2005 WTO Hong Kong ministerial called on donors to increase resources for aid for trade; Task Force on Aid for Trade emphasized recipient-country ownership and monitoring.
  - Enhanced Integrated Framework (EIF) established in May 2007 with a new executive secretariat; over US$100 million pledged by bilateral donors to the EIF trust fund to date.
- Measurement and methodology:
  - Reporting follows the OECD DAC Creditor Reporting System (CRS) categories, which capture three of six Task Force categories: trade policy and regulation, economic infrastructure (as proxy for trade-related infrastructure), and productive capacity building (including trade development). Reported amounts are an imperfect proxy and tend to overestimate trade-related infrastructure while excluding budget support associated with trade reforms.
- Quantitative highlights:
  - Aid-for-trade flows increased by some $2 billion in real terms during 2006, or 10 percent relative to the baseline for 2002–05 established by the Task Force.
  - Total aid for trade during the 2002–06 period, on the basis of the OECD CRS definition, was roughly 33 percent of total sector-allocable ODA (below the 35 percent registered in 2002).
  - Donor volumes in 2006:
    - Japan: $4.9 billion
    - United States: $4.4 billion (25 percent increase over the 2002–05 average; much devoted to reconstruction in Iraq and Afghanistan)
    - European Communities: $3.1 billion (15 percent of total aid for trade)
    - World Bank (IDA): $2,775 (fourth largest provider of concessional aid for trade in 2006; largest multilateral provider during 2002–06)
  - Total aid for trade, all donors (2006): 23,005 (US$ millions, 2005 constant prices)
  - Composition, 2002–06:
    - Economic infrastructure: 55 percent
    - Productive capacity building: 42 percent
    - Trade policy and regulations: 3.4 percent
  - Recipient and regional patterns:
    - Top five recipients in 2006: Iraq, India, Vietnam, Afghanistan, and Indonesia — combined nearly 30 percent of total.
    - Asia received almost half of all aid for trade ($10.6 billion on average during 2002–06).
    - Africa received 30 percent ($6.5 billion).
    - Ethiopia accounted for 2.4 percent of total aid for trade and was the only Sub-Saharan African country in the top 10 recipients.
    - Low-income countries, including LDCs, received about half of total aid-for-trade commitments in 2002–06; LDCs received slightly more than half of that portion.
- Monitoring and challenges:
  - Global monitoring of donor pledges is challenged by differing donor definitions of aid for trade and difficulty allocating infrastructure projects that serve both traded and nontraded sectors.
  - Follow-up events planned for 2008/09 aim to shift from mobilization to monitoring and assessment of implementation.

### Trade policy, climate change, and sustainable development
- Trade as channel for technology transfer:
  - International trade can help reduce greenhouse gas emissions and increase use of energy-efficient technologies by allowing firms to import environmentally friendly equipment and access adaptation technologies (genetically modified seeds, efficient irrigation).
  - Reducing trade restrictions on imports of environmental goods and services is a first step to encourage adoption of cleaner technologies; many such products face relatively high trade restrictiveness, especially in developing countries.
- Evidence on trade restrictiveness and clean technologies:
  - A study analyzing global trade in four technology groups (high-efficiency and clean coal technologies, efficient lighting, solar photovoltaics, wind power) finds that tariffs and non-tariff measures are significant impediments to diffusion in developing countries and concludes that liberalizing trade in these technologies could result in large increases in trade volumes. Illustrative increases in trade volumes from liberalization:
    - Clean coal technology: Eliminating tariffs only = 3.6 percent; Eliminating tariffs and nontariff measures = 4.6 percent
    - Wind power generation: Eliminating tariffs only = 12.6 percent; Eliminating tariffs and nontariff measures = 22.6 percent
    - Solar power generation: Eliminating tariffs only = 6.4 percent; Eliminating tariffs and nontariff measures = 13.5 percent
    - Efficient lighting technology: Eliminating tariffs only = 15.4 percent; Eliminating tariffs and nontariff measures = 43.6 percent
    - All four technologies: Eliminating tariffs only = 7.2 percent; Eliminating tariffs and nontariff measures = 13.5 percent
- Biofuels and environmental trade policy complexity:
  - First-generation biofuels: ethanol (from starch crops or sugar crops) and biodiesel (from vegetable oils or animal fats).
  - Emissions impacts vary by feedstock and process: ethanol from maize may result in at best only a small reduction in greenhouse gas emissions, while ethanol from sugarcane is more beneficial; some biodiesels may increase emissions depending on feedstock (e.g., palm oil on former tropical forest land).
  - Policy implications: trade policy should target the use of the most efficient biofuels, but full environmental costs and benefits (biodiversity loss, irrigation, fertilizer runoff, impacts on net food-importing countries) must be considered.
  - Emerging technologies (cellulose-to-biofuels) could shift production toward sugarcane and away from grain, fats, and oils, but are not expected commercially for at least a decade.
- Border tax adjustments and risks:
  - Border tax adjustments to mirror domestic carbon taxes could, in principle, help mitigation without affecting international competitiveness, but are second-best to origin taxes, difficult to calibrate, may violate WTO rules, and risk being used to hide tariffs or export subsidies.
- Potential adverse environmental effects of trade policy:
  - Agricultural support, fish subsidies, and protection of less-efficient biofuels can worsen environmental outcomes.
  - Penalizing imports for environmental reasons risks protectionist capture, retaliation, and weakening the rules-based multilateral trading system.
  - Alternatives such as labeling carbon footprints may be preferable but risk arbitrariness and discrimination if poorly designed.
- Mitigation versus adaptation:
  - Policy emphasis has been on mitigation; far less attention has been paid to adaptation needs of developing countries, which will be most vulnerable to climate variability and have the least adaptive capacity.
  - Stern Review quote: “adaptation is the only response available for the impacts that will occur over the next several decades before mitigation measures can have an effect.”
  - Adaptation yields local benefits with shorter lead times; some adaptation will be autonomous, but major infrastructure and public goods (climate information, climate-resilient crops) require planning and international support.
  - A UNFCCC compilation identified over 170 adaptation technologies, concentrated in agriculture and water sectors; technologies classified as hard (drought-resistant varieties, seawalls, irrigation), soft (crop rotation), and modern/high technology (ICT, earth observation, GIS).
  - Many adaptation technologies are services rather than goods, and liberalization may be complicated by non-environmental considerations (dual-use, political sensitivities, GMO risks), but many technologies can still be prioritized for liberalization and transfer.

_Italic: Source: Excerpts from the IMF chapter "2006. Countries for which per capita GDP" (from the supplied PDF content)._

### 1. WTO 2007.

### WTO 2007.

### LDC export performance
- LDC exports of oil grew by 20 percent; exports of other merchandise grew by 14 percent.
- Countries identified in the source list: Nigeria, Republic of Congo, Gabon, Cook Islands, Federated States of Micronesia, Nauru, Niue, Palau, Marshall Islands, and Tonga.

### Carbon labeling: implications for developing-country trade
- Carbon labeling provides information on total greenhouse gas emissions that a given product generates and is increasingly used by consumers and companies.
- Adoption examples cited:
  - U.K. supermarket Tesco announced it will use carbon labeling on all its products.
  - Wal-Mart is measuring the emissions of selected products and will rate suppliers by a carbon scorecard.
- Technical and development concerns:
  - Carbon labeling is "highly technical and data-demanding."
  - Measurement choices and control systems can materially affect the competitiveness of developing-country producers.
  - Schemes must accurately reflect developing countries’ advantages in low carbon emissions where they exist (example: developing-country workers walking to work or using communal transport versus car use in developed countries).
  - Decisions about which activities in the production chain to include are "crucial from both a scientific and a development perspective."
  - Schemes focusing on only specific parts of the production chain "will generally be very misleading."
  - Complexity of schemes may disproportionately burden small and poor producers in developing countries.
- Emission-efficiency competitiveness and supply-chain effects:
  - Emission efficiency will likely become a key parameter of competitiveness in a climate-constrained world.
  - Outcomes depend on country circumstances: some developing countries use few modern inputs like nitrogen-based fertilizer and little fuel but are located far from export markets requiring more fuel-consuming transportation.
  - "Emission-efficient supply chains demand that the advantages of labor-intensive techniques and sunshine (as opposed to developed-country mechanization and heated greenhouses) outweigh the disadvantage of transport-related emissions."
  - Analyses suggest that "in many cases products coming from far away may cause lower emissions than products sourced locally."
- Source for the carbon labeling discussion: Brenton, Edwards, and Jensen (2008).

### Tariff and excise data adjustments; indices
- Bank staff interacted with several governments that classified excise taxes as import duties in national tariff schedules; as a result, the data have been corrected.
- OTRI and TTRI construction:
  - The OTRI and TTRI are calculated as a weighted sum of ad valorem tariffs and ad valorem equivalents of specific duties, and non-tariff measures (for the OTRI), where weights are import volumes and import demand elasticities (Kee, Nicita, and Olarreaga 2008a, 2008b).
  - The OTRIs by country and the data used to calculate the OTRI are posted on the DECRG Trade Research Web site under “data and statistics”; see http://go.worldbank.org/C5VQJIV3H0.

### Agricultural price distortion measures
- National Rate of Assistance (NRA) description:
  - The NRA is similar to the PSE in that it includes the effects of both farm output and farm input price distortions, but it also includes exchange rate distortions, and it is expressed as a percentage of total farm production valued at undistorted rather than distorted prices.

### Services trade restrictiveness and measurement
- Sectoral disaggregation includes: banking (retail and merchant), insurance (life, nonlife, and reinsurance), road transport, railway shipping, maritime shipping and auxiliary services, air transport (freight and passengers), accounting, auditing, and legal services.
- Survey and restrictiveness index methodology:
  - For each sector and mode of supply the openness of policy toward foreign suppliers is mapped on a 5-point scale ranging from 0 (for no restrictions) to 1 (highly restricted), with three intermediate levels of restrictiveness (0.25. 0.50 and 0.75).
  - Sectoral results are aggregated across modes of supply using weights that reflect judgments of the relative importance of the different modes for a sector (example: mode 4 is important for professional services but not for telecommunications; mode 3 is the dominant mode of contesting a market).
  - Sectoral restrictiveness indexes are aggregated using sectoral GDP shares as weights.
  - Country income group indexes are derived using GDP weights for the countries in the sample.
- Literature and surveys referenced: Hoekman (2006); Hoekman and Mattoo (2008); contributions to Mattoo, Stern, and Zanini (2008); Gootiz and Mattoo 2008.

### Aid for Trade and capacity-building instruments
- The task force identified six categories for aid for trade:
  - (i) trade policy and regulations,
  - (ii) trade development,
  - (iii) trade-related infrastructure,
  - (iv) building of productive capacity,
  - (v) trade-related adjustment, and
  - (vi) other trade-related needs.
- The task force proposed a 2002–05 baseline to assess additionality and monitor the adequacy of provided funding.
- The Integrated Framework (IF):
  - The IF is described as a multiagency, multidonor program to assist the LDCs in addressing national competitiveness priorities.
  - The enhancement of the IF was recommended by a 2005 task force.

### Research projects and publications referenced
- A global overview volume (Anderson 2008) to be complemented by four regional volumes: Africa (Anderson and Masters 2008), Asia (Anderson and Martin 2008), Latin America and the Caribbean (Anderson and Valdés 2008) and Europe’s transition economies plus Turkey (Anderson and Swinnen 2008). The full set of results from this project will be published in the second half of 2008.
- Additional references and data sources cited include:
  - Francois, Hoekman, and Manchin 2006.
  - Findlay and O’Rourke 2007.
  - Kee, Nicita, and Olarreaga 2008a, 2008b.
  - Hertel and Winters 2006.
  - Hoekman and Olarreaga 2007.
  - Harrison 2006.
  - Djankov, Freund, and Cong 2006.
  - World Bank 2007a; World Bank 2007b; World Bank 2008; Mattoo and Payton 2007.
  - OECD documentation referenced at http://www.oecd.org/document/0/0,3343,en_2649_33773_39508672_1_1_1_1,00.html.
  - Research project methodology and working papers available at http://www.worldbank.org/agdistortions.
  - Environmental goods definition note: "Environmental goods are products that result in less use of energy or generate energy in more environmentally efficient ways." For the list of environmental products and technologies considered, see http://econ.worldbank.org/programs/trade.

*Source: WTO 2007. (Chapter content extracted from the provided IMF PDF content unit.)*

### 26.  Draft  climate  change  legislation in  the

### _gmr - 26.  Draft  climate  change  legislation in  the

### Draft climate change legislation and trade measures
- The EU draft includes proposals to impose restrictions on imports unless an international agreement subjecting all industrialized countries to similar climate change mitigation measures is reached.
- The proposal envisions a “carbon equalization system” that could require foreign companies doing business in Europe to obtain emissions permits alongside European competitors.
- Similar proposals have also been tabled in the U.S. Congress (Brewer 2008).

### Leveraging through the International Financial Institutions (IFIs)
- Context and challenges:
  - Some 40 countries, with one-fifth of the developing world’s population, have low incomes, slow growth, and poor progress on poverty reduction.
  - Developing countries generated 70 percent of global growth in 2007.
  - Eighty-six developing countries have ratings on their international bonds and have access to global capital pools.
  - The multilateral development banks (MDBs) now account for only 8 percent of net official development assistance (ODA).
- Role and assessment of IFIs:
  - IFI impact should be measured by leverage beyond financing: collective action on development, policy change at the country level, institutional learning, harmonization, and aid effectiveness.
  - IFIs support the MDGs by linking them with poverty reduction strategies, medium-term expenditure frameworks, annual budgets, specific investments, policies, and programs in each country.
- Operational shifts in 2007:
  - MDB operations increased in volume in 2007, with a record $49 billion in gross disbursements.
  - Of the $49 billion gross disbursements, $37 billion was in nonconcessional resources.
  - Total net nonconcessional flows turned slightly positive in 2007 after four years of being large and negative.
  - Supply of concessional lending regained momentum; replenishment of concessional windows in 2007 was a significant achievement.
  - Growth in MDB nonsovereign, nonguaranteed disbursements shows a shift toward greater support for the private sector.
  - Africa, Asia, infrastructure, and higher education saw the most rapid increases in financial support; IDA financing for primary education fell.
  - Evaluations suggest significant underinvestment in regional projects.
- Knowledge, decentralization, and country systems:
  - IFIs are devoting growing amounts of own and trust-fund resources to knowledge activities and decentralizing operations to strengthen dissemination.
  - Demand for IFI knowledge services is strong, but the business model for financing knowledge needs to evolve as IFI revenues are traditionally lending-based.
  - In 2007, 13 percent of low-income countries are deemed to have fully developed operational strategies, while another 67 percent have taken action to develop such strategies.
  - Roughly 20 percent of countries—including most fragile states—have only rudimentary elements of operational development strategies, constraining absorption capacity.
- Organizational adaptation:
  - New organizational structures in 2007 included departments for regional activities, dedicated climate change teams, and international partnerships for health and trade.
  - Climate change and environmental management issues are being mainstreamed into country strategies.

### Strategic frameworks and common themes across IFIs
- Three broad strategic shifts:
  - A shift in client and business focus to promote inclusive and sustainable globalization.
  - An orientation toward knowledge and learning services.
  - A greater emphasis on global and regional public goods.
- Selectivity and instruments for vulnerable clients:
  - IFIs emphasize selectivity in choosing clients most in need of assistance.
  - The IMF introduced the Policy Support Instrument for supporting countries that have become mature stabilizers.
  - The IMF proposed a systematic medium-term approach under an economic recovery assistance program for postconflict and fragile states.
  - The World Bank established a framework for sustained engagement in fragile states and an action plan for Africa. The AfDB is focusing on postconflict and postcrisis countries.
- Private sector and infrastructure focus:
  - MDBs are strengthening private sector development programs; IFC launched a pilot with IDA to promote small and medium enterprises in Sub-Saharan Africa.
  - Several MDBs (ADB, World Bank Group, AfDB, IDB) underscored infrastructure as a priority, with instruments such as the IDB’s Infrastructure Investment Fund and the World Bank’s Infrastructure Action Plan.
- Social protection and disaster response:
  - MDBs have become more active in disaster response; IDB established a Disaster Prevention Fund; World Bank Group established a new Caribbean disaster insurance fund.

### Knowledge and learning: reforms and challenges
- IFIs aim to become more knowledge-based institutions, incorporating lessons from middle-income countries, private foundations, international NGOs, and non-DAC official donors.
- Governance and anticorruption:
  - The World Bank, ADB, and AfDB elevated governance and anticorruption as top development issues.
  - World Bank objectives: promoting capable and accountable states and institutions; providing public services; combating corruption.
  - The World Bank launched the Stolen Assets Recovery Initiative (StAR).
  - ADB completed the first year of its second governance and anticorruption plan, focusing on public financial management, procurement, and corruption risks.
- Surveillance, policy advice, and conditionality:
  - IMF adopted a new Decision on Bilateral Surveillance over Members’ Policies in June 2007, organizing surveillance around the concept of external stability.
  - The IMF is strengthening analysis of linkages between macroeconomic developments and financial markets and multilateral perspectives in bilateral surveillance.
  - Reviews show IMF structural conditionality has become more focused on macrocritical issues, more clearly formulated, and more closely linked to the IMF’s core mandate, with scope for further progress.
- Evaluation, data, and statistics:
  - IFIs are increasing use of evaluation and data collection: IDB’s new evaluation instrument for knowledge work; World Bank Group’s development impact monitoring and evaluation program; EBRD’s Life in Transition Survey.
  - IMF leads with Special Data Dissemination Standards and tools like the DataMapper; ADB’s FASTCAP assists countries with weak capacity.

### Regional and global public goods priorities
- Climate change and energy efficiency are receiving greater priority across IFIs:
  - EBRD: Sustainable Energy Initiative and Energy Efficiency and Climate Change Team.
  - IDB: Sustainable Energy and Climate Change Initiative to promote alternative energy sources and clean fuels.
  - IMF: stepped up analysis of macroeconomic effects of climate change and fiscal policy contributions to mitigation and adaptation.
  - World Bank Group, IMF, ADB, and AfDB give greater priority to these issues.
- Regional integration and infrastructure:
  - ADB and AfDB emphasize regional economic integration; ADB focuses on regional financial market development; AfDB emphasizes infrastructural linkages for landlocked countries.
  - ADB supports regional collaboration on common threats such as HIV/AIDS and avian influenza.
- IMF’s global role:
  - IMF continues to promote financial stability through Global Financial Stability Reports, bilateral and multilateral surveillance, and analysis of macrofinancial linkages.

### New collaborative approaches and harmonization
- Vertical funds and donor coordination:
  - Vertical funds disbursed about $7 billion over the last five years but have limited field presence and headquarters-set priorities, complicating coherence.
  - MDBs are working to improve country capacity to articulate national plans and embed vertical fund programs into these plans.
- Division of labor and comparative advantage:
  - The World Bank’s health sector strategy emphasizes combining disease-focused vertical funds with strengthening health systems; financing no longer drives the relationship—policy and technical dialogue defines contribution.
- IMF–World Bank collaboration:
  - The External Review Committee (Malan report) recommended strengthening Bank-Fund collaboration in crisis management, fiscal and financial sector work, and technical assistance coordination.
  - A Joint Management Action Plan (JMAP) was developed with steps to improve country team coordination, enhance communications via electronic platforms, and reflect collaboration in staff and managerial performance reviews.
  - The JMAP was endorsed by both boards in October 2007 with implementation begun; most new systems aimed to be operational in time for FY09 budgets, and the first progress report was to be prepared in time for the 2009 Annual Meetings.

### Operational trends and financial resources for development
- Aggregate flows and demand:
  - Private flows to developing countries may have approached $1 trillion in 2007.
  - In 2007 repayments to MDBs were almost the same size as nonconcessional gross flows.
  - MDB gross disbursements in 2007 reached a record volume of almost $49 billion.
  - Of the 2007 gross disbursements, $37 billion was in nonconcessional resources, up from $25 billion in 2005.
  - The share of MDB concessional flows in total ODA fell to 8 percent in 2007.
- Four stylized facts from recent MDB flows:
  - Demand for new nonconcessional sovereign loans remains generally flat, with large fluctuations depending on individual country circumstances.
  - Demand for nonconcessional loans and guarantees to nonsovereign entities (mainly private sector) has increased substantially.
  - Supply of concessional lending has regained momentum in 2007, supported by record donor pledges for IDA 15 and AfDF XI and promising replenishment discussions for AsDF X.
  - Resources are increasingly flowing to Africa and Asia.
- IMF-specific financial trends:
  - Developing countries repaid the IMF over $7 billion in 2007, for a total of about $135 billion over the last five years.
  - The IMF’s outstanding financial support to developing countries declined to about $15 billion at the end of 2007, its lowest level in 25 years and well below its all-time peak of $101 billion in 2003.
  - Despite about 15 countries experiencing major terms-of-trade deterioration from oil and other commodity price shocks, there was no activity in the IMF’s Exogenous Shocks Facility in the period discussed.
- MDB sovereign disbursements:
  - MDB gross nonconcessional disbursements to sovereign borrowers were roughly flat in 2007, at a total of $23.4 billion.

*Italicized source attribution line: IMF chapter content as provided in the supplied PDF excerpt.*

### part is the shifting regional and organiza-

### _gmr - part is the shifting regional and organiza-

### Shifts in MDB lending and regional distribution
- Lending by the International Bank for Reconstruction and Development (IBRD), especially its loans to Latin America, declined.
- Regional development banks (RDBs) and other regions saw rising demand.
- For the first time ever, the regional development banks disbursed more than the IBRD in nonconcessional sovereign loans.
- MDBs leverage other resources: guarantees, cofinancing, and parallel financing bring in funds from private sector and other official lenders.

### Guarantees and leverage
- World Bank Guarantee Program mainstreamed in 1994; offers two basic types of guarantees:
  - Partial Risk Guarantees: cover debt service defaults on a loan, normally for a private sector project, when defaults are caused by a government’s failure to meet contractual obligations related to the project.
  - Partial Credit Guarantees (IBRD only): cover debt service defaults on a specified portion of a loan, normally for a public sector project, principally to extend maturities and improve market terms.
- Since 1994: 34 guarantee operations for 31 projects in 25 countries approved, total financing about US$27 billion, average leverage ratio of almost 10 to 1.

### Cofinancing
- Cofinancing raises additional financing to fill unfunded project/program gaps and calibrate concessionality; covers joint and parallel financing.
- World Bank leveraged an incremental $6.8 billion in cofinancing in fiscal 2007; almost half ($3 billion) went for projects in Africa.
- IBRD cofinancing by type (selected donors, 1998–2007): total cofinancing figures listed include annual totals, with 2007 estimates shown. Selected donors 2007 estimates:
  - JBIC (selected entries over period, example figures include 580, 1,746, 100, 533, 359, 000, 611, 10)
  - DfID (selected entries include 331, 278, 739, 110, 061, 360, 942, 195, 2)
  - KfW (selected entries include 766, 658, 259, 853, 740, 597, 515, 0)
  - EC (selected entries include 691, 743, 298, 865, 764, 118, 049, 449)

### IMF lending and net flows to developing countries
- IMF General Resources Account (GRA) provides nonconcessional support; concessional loans to low-income countries under PRGF.
- At end-2007: 23 countries had a PRGF-supported arrangement.
- Net flows from the IMF to developing countries (US$ millions), Type of flow, 2001–2007 est. (table excerpt):
  - Net concessional flows (PRGF loans): 106, 567, 9, –179, –715, –3,587, 29
    - Disbursements: 1,111, 1,741, 1,187, 1,204, 597, 744, 485
    - Repayments: 1,005, 1,174, 1,178, 1,383, 1,312, 4,332, 457
  - Net nonconcessional flows (GRA): (disbursement and repayment series provided in the source table; disbursements examples include 30,249, 32,678, 28,429, 6,181, 3,381, 3,486, 1,463; repayments examples include 11,219, 19,569, 26,427, 20,495, 43,183, 30,868, 6,593)
  - Total, net flows: 19,137, 13,676, 2,010, –14,493, –40,517, –30,970, –5,102
  - Total net flows, Sub-Saharan Africa: –181, 161, –393, –318, –738, –3,051, 117
  - Gross emergency assistance disbursements: n.a., 351, 845, 318, 910, 139

### Nonconcessional flows to nonsovereign borrowers and instruments
- MDB nonsovereign flows (lending and equity investments) grew from $3.1 billion in 2000 to $13.3 billion in 2007.
  - About half accounted for by the IFC and the other half by the RDBs, mainly the EBRD.
- IIC disbursements in 2007 almost 10 times their 2000 level; EBRD quadrupled its disbursements in U.S. dollar terms.
- Regional distribution for nonsovereign business:
  - Europe: 56 percent of nonsovereign business.
  - Highest growth rate in Asia, which surpassed Latin America for the third straight year.
  - Nonsovereign flows to Africa more than doubled since 2000.
- Subnational lending:
  - Ten operations with total exposure of $350 million have mobilized over $1 billion for subnational governments/public service providers in specified countries.
- Innovations and instruments:
  - MDBs offer swaps, interest and exchange rate hedging instruments.
  - October 2007: World Bank Board endorsed IBRD-IFC initiative to stimulate domestic bond markets—Global Emerging Markets Local Currency Bond Fund (GEMLOC).

### GEMLOC initiative (Global Emerging Markets Local Currency Bond Fund)
- Expected to raise $5 billion by early 2008 for investment in up to 40 emerging bond markets.
- Up to 30 percent of assets could be invested in subsovereign and corporate bonds.
- Fund is part of a three-part program including:
  - An index (Global Emerging Markets Bond Index, GEMX) weighted by market size and “investability.”
  - Technical assistance funded by a “development fee” from the fund manager.
- No capital commitment from either the IBRD or the IFC in the project overall; sunset provision after 10 years.

### MIGA guarantees and coverage
- MIGA offers risk insurance up to 20 years for currency transfer restrictions, expropriation, war and civil disturbance, breach of contract.
- Since inception in 1988: 885 guarantees for projects in 96 developing countries, totaling $17.4 billion in coverage.
- Two-fifths of MIGA’s gross outstanding portfolio is in IDA-eligible countries.
- Through first half of fiscal 2008: MIGA issued $1.2 billion in new coverage; total active portfolio $5.9 billion.
- Equity investments can be covered up to 90 percent and debt up to 95 percent. MIGA may insure up to $200 million per project; more can be arranged through syndication.

### Concessional flows, replenishments, and MDRI
- 2007 gross concessional flows from MDBs reached a record high, totaling over $12 billion, an increase of 11 percent after two years of stagnation.
  - IDA traditionally accounts for 75–80 percent of total concessional flows and was responsible for all of the increase in 2007.
  - Asia continued to receive almost half of total concessional gross flows; fastest rate of increase in Africa.
  - Africa receives 45 percent of total MDB concessional flows in 2007, up from 37 percent in 2000.
- IDA15 replenishment (concluded December 2007) resulted in a 30 percent increase over IDA14.
  - IDA15 will allow for $41.6 billion of new commitments during fiscal 2009–11.
  - New donor pledges: $25.1 billion, an increase of $7.4 billion compared with IDA14.
  - Internal transfers from World Bank Group: $3.9 billion.
  - Donor pledges for MDRI debt forgiveness: $6.3 billion.
  - Credit reflows: $6.3 billion.
  - China became a donor for the first time among IDA contributors; number of non-DAC contributors reached 23.
  - United Kingdom became the largest single contributor for the first time.
- AfDF-XI negotiations (December 2007): donors agreed to $8.9 billion in support for 2008–10, an increase of 52 percent over AfDF-X.
- MDRI:
  - At end-2007, 25 countries (including two non-HIPC countries) benefited from MDRI relief provided by the IMF.
  - IDA expects to forgo credit reflows of SDR 24.7 billion ($37.6 billion) between 2006 and 2044 because of MDRI.
  - By September 30, 2007, IDA provided irrevocable debt reduction commitments to 22 HIPC countries amounting to SDR 19.2 billion; donors had provided unqualified firm commitments of SDR 2.9 billion ($4.4 billion) and qualified commitments of SDR 14.6 billion ($22.2 billion).
  - AfDF forgone credit reflows estimated at Unit of Account (UA) 5.68 billion ($8.5 billion). AfDF has cancelled debt of UA 4.48 billion for 18 countries and received UA 4.36 billion ($6.5 billion) in commitments from donors (15 percent unqualified).
  - IDB has four client countries qualified for MDRI debt relief of $4.4 billion and will rely on internal resources of its Fund for Special Operations (FSO); governors agreed to consider replenishment for the FSO by 2013.

### Trust funds and nonlending activities
- Trust funds are the most rapidly growing MDB business segment.
- In 2007 the World Bank trust fund directory listed 100 active arrangements.
- In 2006 World Bank trust fund disbursements rose to $4.4 billion.
  - IDB disbursed $215 million in trust funds.
  - AfDB and ADB committed $85 million and $264 million respectively.
- By end-2007 trust funds under MDB management reached over $20 billion, with the World Bank having the largest share.
- Trust funds focus on:
  - Country-level programs to help achieve MDGs, especially in Sub-Saharan Africa (health, natural disaster relief, postconflict recovery).
  - Global public goods, especially the environment (beyond the Global Environment Facility).

### Knowledge services and capacity building
- Knowledge services (country analytical work, technical assistance, global data and research) are a critical pillar supporting MDGs and aid effectiveness.
- World Bank produced 440 pieces of economic and sector work in fiscal 2007.
- Country Analytical Work Web site contributors: World Bank (1,370 reports), IMF (445), ADB (96), AfDB (48), EBRD (26), IDB (20). Total posted reports: 3,722; World Bank provides about one-third.
- World Bank budgetary spending on explicit knowledge-related services rose to almost $450 million in 2007 (figure 5.2); imputing knowledge in other functions suggests knowledge inputs could be double that amount.
- World Bank Doing Business project documented 200 reforms in 98 countries between April 2006 and June 2007; top five reformers identified: Croatia, the Arab Republic of Egypt, Ghana, Georgia, and Macedonia.
- Enterprise Surveys have become mainstream instruments for measuring investment climate reform priorities.

### Partnerships and knowledge sharing examples
- World Bank Group participates in 125 partnerships, mostly in environment and human development; World Bank hosts fewer than half.
- Malaysia-Africa Knowledge Exchange Seminar (MAKES) brought together 110 officials from 24 African countries on September 21–22, 2006; topics included managing natural resources, export-led growth, national planning, role of government-linked companies.
- MAKES included offers such as free tuition for up to 100 qualified African students a year to pursue graduate studies at three Malaysian universities.

### Harmonization, decentralization, and Paris Declaration targets
- MDBs committed to harmonization through Paris Declaration with targets to improve aid effectiveness by 2010.
- 2006 baseline survey showed MDBs ahead of many bilateral agencies but with weaknesses: overreliance on parallel implementation units, unpredictability of disbursements, difficulty implementing program approaches and joint missions. Positive: use of country public financial management and procurement systems progressing.
- Country-based platforms core to MDB harmonization efforts; decentralization advanced:
  - IDA placed 55 percent of its high-level staff in the field; 30 of 40 country directors in the field.
  - Local recruits rose to 23 percent of staff complement.
- Progress toward operational development strategies in low-income countries:
  - 13 percent of countries have fully developed operational frameworks; 67 percent have taken action to develop such frameworks.
  - Fragile states lag: over half do not yet have sound operational frameworks.
- Cost and incentives: harmonization involves real costs in time and resources; incentives and resources within agencies do not yet fully reflect harmonization requirements.

### Managing for Development Results (MfDR) and tracking results
- MfDR initiative uses tools for strategic planning, risk management, progress monitoring, and outcome evaluation.
- MfDR Sourcebook on Emerging Good Practice finalized May 2007; Hanoi Roundtable held February 2007.
- MDB actions:
  - IDB launched project performance monitoring report for sovereign guaranteed operations.
  - ADB implementing MfDR Action Plan 2006–08 and development effectiveness country briefs.
  - AfDB introduced new results-oriented supervision report format.
  - World Bank Group mainstreamed Results-Based Country Assistance Strategies.
- Results orientation shifting to risk-based management frameworks.

### Selectivity of financial resources and allocation systems
- MDB resource allocation systems combine financial need (population and income per capita) and policy performance (CPIA).
- IDA15 and AfDF show trend toward greater selectivity.
- Figure 5.5 (policy and poverty selectivity indices) shows MDBs more selective on need and policy than many bilateral agencies.
- Concessional flows to fragile states: share in total ODA flows from MDBs relatively stable despite absolute increase in MDB lending.
- MDBs harmonized CPIA questionnaires to align policy performance measures.

### Sectoral composition and trends
- Infrastructure reemerged as a major sector: World Bank Group commitments almost doubled from around $7 billion in fiscal 2003 to around $12.5 billion in fiscal 2007.
- IDA reported increases in commitments for education overall, but basic education commitments fell by 13 percent in nominal terms in fiscal 2005–07 compared with fiscal 2002–04, while lending for other levels of education rose by 25 percent.
- Nonsovereign business and private sector instruments allow differential pricing to reflect country and project risk; almost half of World Bank Group business in investment-grade countries now consists of IFC and MIGA activities.

### Performance measurement, evaluation, and comparative assessments
- MDB internal systems: IDA Results Measurement System monitors 14 indicators grouped into four areas and second-tier project/sector/country indicators.
- COMPAS (Common Performance Assessment System) self-assessment:
  - 2007 COMPAS report: MDBs improved on four of seven indicators since 2006; stable on three others.
  - Highlights include increases in projects with baseline data and monitoring indicators, and increases in projects rated satisfactory or better in independent ex post evaluations (e.g., World Bank projects with satisfactory or better ratings increased by 41 percent).
- Shareholder comparative assessments: MOPAN, DANIDA, CIDA, DFID framework, Netherlands multilateral monitoring survey system exist with varying focus and methods.
- Civil society monitoring focuses on trade and economic management, conditionality, debt and finance for development, aid, and voice.

### Environmental sustainability, safeguards, and climate change
- IFIs expanded environmental activities: projects, policy guidance, research, training; integrating climate concerns into development policy and poverty reduction strategies.
- World Bank developing strategic framework to scale up climate change mitigation and adaptation.
- Regional IFI approaches:
  - ADB Clean Energy and Environment Program, energy efficiency initiative and carbon market initiatives.
  - EBRD Sustainable Energy Initiative aimed to more than double investment to 
1.5 billion over 2006–2008; by end-2007 investment exceeded the three-year target.
  - IDB Sustainable Energy and Climate Change Initiative approved March 2007.
  - AfDB strategy for climate risk management and adaptation under development; discussions on carbon financing facility and biofuel support facility.
- World Bank environment and natural resources management investment lending (2002–2007): $10.2 billion, about 10.4 percent of total Bank lending.
  - Thematic distribution of active World Bank environment portfolio as of June 30, 2007:
    - Pollution management and environmental health: 35 percent
    - Water resource management: 29 percent
    - Other categories include biodiversity, natural resource management, climate change, environment policy and institutions, etc.
- Global Environment Facility (GEF) World Bank–implemented portfolio at end of fiscal 2007: 219 projects, total net GEF grant commitments of $1.6 billion; cumulative approvals since 1991: climate change focal area $1.5 billion, biodiversity $1.3 billion, international waters $0.5 billion.
- Compliance and mainstreaming:
  - Country Environmental Analyses (CEAs) required by ADB and EBRD for country assistance strategies; World Bank and IDB have prepared CEAs though not mandatory.
  - World Bank pilot (March 18, 2005) to use borrower country systems for environmental and social safeguard issues; pilot evaluated after two years with mixed results and January 2008 Board approval to provide more incentives and support for use of country systems.
- Carbon finance and facilities:
  - Umbrella Carbon Facility fully funded in August 2006 with total capital of $1 billion.
  - Two new carbon facilities launched December 2007: Carbon Partnership Facility (CPF) and Forest Carbon Partnership Facility (FCPF).

_Italic source attribution: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/gmr/2008/eng/_gmr.pdf_

### 1.  IMF  2007  (revised  with  new  purchasing

### Special Theme: Environmental Sustainability — Framework for Monitoring Environmental Sustainability

### Conceptual framework
- Environmental goods are simultaneously an integral part of ecological cycles, inputs to production processes, and a source of enjoyment for households and individuals.
- Wealth in the framework goes beyond physical and monetary assets to include natural assets and intangibles such as human capital.
- Production and consumption:
  - May entail depletion or depreciation of assets.
  - Lead to flows of pollution and waste, which alter the quality of natural assets.
- Key monitoring motivations:
  - Environmental resources are often unpriced inputs (e.g., fisheries, forests, groundwater).
  - Open access resources and lack of property rights lead to overuse and externalities.
  - Correcting environmental externalities requires public action and institutions.
- Monitoring must include:
  - Environmental externalities (local air pollutants, greenhouse gas stocks).
  - Stocks of natural capital (forests, fish populations).
  - Capacity of local and national governments to allocate and manage environmental resources.
  - Capacity of nations to use global commons efficiently.

### Ensuring environmental sustainability at the national level — major observations
- Achieving environmental sustainability underpins progress on many Millennium Development Goals (MDGs).
- Developing countries are highly dependent on natural resources; mineral and oil-based economies may be consuming national wealth.
- Deforestation is a fact in many low-income countries; middle-income and several low-income economies face high levels of pollution.
- Water scarcity is a growing problem in already water-stressed countries.
- These trends heighten the need for developing countries to manage environment and natural resources effectively.

### Links between MDG 7 and other MDGs
- MDG 7 includes four targets; overarching Target 7.A is neither quantitative nor time-bound and poses major challenges for global monitoring.
- Examples of linkages (environmental action ↔ policy input):
  - Eradicate extreme poverty and hunger:
    - Improve natural resource management where natural resources contribute a high share of household income.
    - Policy inputs: Land titling; Market creation.
  - Achieve universal primary education:
    - Reduce education costs of malnutrition by improving environmental conditions.
    - Policy inputs: Access to water and sanitation.
  - Promote gender equality and empower women:
    - Reduce time spent collecting water and biomass; reduce female exposure to pollutants; involve women in natural resource management.
    - Policy inputs: Access to water and sanitation; Electrification.
  - Reduce child mortality and improve maternal health; Combat HIV/AIDS, malaria, and other infectious diseases:
    - Reduce environmental risk factors.
    - Policy inputs: Access to water and sanitation; Access to electricity; Reduce exposure to indoor air pollution; Water resource management in mosquito-infested areas.
  - Foster global partnerships:
    - Agree on a global plan of action to combat climate change.
    - Policy inputs: Targets for greenhouse gas emission reduction; Development and diffusion of new technologies; Development of carbon markets.

### Measurable impacts on education, gender, health, and livelihoods
- Education:
  - Water-related infections cause an annual loss in education performance equivalent to 4.9 and 4.2 percent of GDP in Ghana and Pakistan, respectively.
- Gender:
  - Time and health burdens of collecting clean water and energy fall mostly on women and young children, limiting market participation and increasing exposure to indoor smoke.
- Health:
  - WHO estimates:
    - An estimated 24 percent of the 2004 global burden of disease can be attributed to environmental factors.
    - 23 percent of all deaths can be attributed to environmental factors.
    - Among children 0-14 years of age, the proportion of deaths attributable to environmental risk factors is 36 percent.
- Livelihoods and poverty:
  - Wild or uncultivated natural resources can contribute significantly to the welfare of the poor; resource income can contribute over 40 percent of overall household income in some rural areas (not generalizable to all households).
  - Climate change may increase the number of undernourished people by between 40 million and 170 million by 2050, with severe impacts in regions such as Sub-Saharan Africa.

### Measuring progress — indicators and monitoring priorities
- The complete set of MDG 7 indicators (Target 7.A and related targets) includes:
  - 7.1 Proportion of land area covered by forest
  - 7.2 CO2 emissions, total, per capita and per $1 GDP (PPP), and consumption of ozone-depleting substances
  - 7.3 Proportion of fish stocks within safe biological limits
  - 7.4 Proportion of total water resources used
- Target 7.B (biodiversity, Chapter 7 focus):
  - 7.5 Proportion of terrestrial and marine areas protected
  - 7.6 Proportion of species threatened with extinction
- Target 7.C (water and sanitation, Chapter 2 focus):
  - 7.7 Proportion of population using an improved drinking water source
  - 7.8 Proportion of population using an improved sanitation facility
- Target 7.D:
  - By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers

### Policy and institutional implications highlighted
- Property rights, institutions, and governance are crucial to prevent overuse of open access resources and to internalize externalities.
- Public action is necessary to correct externalities from pollution (local air pollutants, CO2).
- National monitoring should focus on pollution, depletion of natural resources (forests, water, land), and capacity to address local and national environmental problems.
- Global monitoring (Chapter 7) should focus on global commons: climate change mitigation, biodiversity protection, and marine fisheries sustainability.
- Global partnerships and coordinated international action are essential for provision of global public goods and for combating climate change.

*Source: IMF 2007 (revised with new purchasing power parity data, January 2008) — Chapter excerpts on Environmental Sustainability, MDG 7 indicators, and related analysis.*

### 7.9 Proportion of urban population living in slums

### 7.9 Proportion of urban population living in slums

### Forests and land resources
- World average forest endowment in 2005: 0.61 hectares of forest per capita.
- Distribution:
  - Two-thirds of global forest area concentrated in 10 countries; nearly 140 countries together have less than 5 percent of the world’s forests.
  - South Asia: less than 0.06 hectares of forest per capita.
  - Europe and Central Asia: 1.94 hectares per capita.
  - High-income countries (2005): 0.93 hectares per capita.
  - Low-income countries (2005): 0.29 hectares per capita.
- Trend and loss:
  - Net loss of forest area, 2000–05: 73,000 square kilometers a year.
  - Deforestation was very high in low- and middle-income countries, especially Latin America and the Caribbean and Sub-Saharan Africa.
  - East Asia and the Pacific experienced net forest area growth between 2000 and 2005 (major afforestation program in China), masking continuing high deforestation in Indonesia (1.6 percent a year between 2000 and 2005).

### Water resources and scarcity
- Data caveat: Cross-country comparisons should be made with caution owing to differing measurement methods and base years.
- Regional water endowments and stress:
  - Middle East and North Africa and South Asia: internal freshwater resources below 2,000 cubic meters per capita.
  - Under current projected population growth, water resources per capita in the Middle East are expected to fall below 500 cubic meters per capita by 2050.
- Usage and pressures:
  - Worldwide total annual freshwater withdrawals amount to about 9 percent of freshwater resources available.
  - Agriculture accounts for 70 percent of total withdrawals worldwide.
  - Agriculture share by income group:
    - Low- and middle-income countries: 78 percent.
    - High-income countries: 43 percent.
  - In the Middle East and North Africa region, freshwater withdrawals are estimated to be above the level of resources available.
  - Countries consuming more than five times the level of annual available resources include Kuwait, Qatar, Saudi Arabia, United Arab Emirates, and Libya.

### Energy and mineral resources
- Projected demand growth:
  - World primary energy demand projected to grow at an annual rate of 1.8 percent a year over the next two decades.
  - China: consumption expected to grow by 3.2 percent a year.
  - India: consumption expected to grow by 3.6 percent a year.
- Fuel mix projections (2005–2030):
  - Coal demand expected to increase by 73 percent between 2005 and 2030.
  - Oil expected to increase by 37 percent.
  - Gas expected to increase by 17–22 percent.
- Resource-exporting countries and sustainability:
  - Depleting exhaustible resources (e.g., crude petroleum) represents liquidation of an asset; sustainability depends on investing resource rents rather than consuming them.
  - Many large resource-extracting economies exhibit negative adjusted net saving rates; examples include low-income Sub-Saharan African countries (Angola, Nigeria) and middle-income resource exporters (Syrian Arab Republic, Islamic Republic of Iran, Russian Federation).
  - Contrasting examples of sustainable extractive economies: Malaysia and Vietnam (net savings and investments in education offset depletion and degradation).

### Pollution, urban air quality, and water pollution
- Urban air pollution and particulates:
  - PM10 concentrations have declined since 1990 across income groups.
  - Low-income countries: PM10 concentration dropped from 130 micrograms per cubic meter (μg/m3) to 77 μg/m3 between 1990 and 2005 (a 40 percent decline).
  - PM10 concentrations in low-income countries remain nearly three times higher than in high-income countries.
- Industrial water pollution (organic pollutant BOD emissions, 2001) — Top 10 emitters (kilograms per day; grams per day per worker):
  - 1 China: 6,088,663 kg per day; 14 g/day per worker
  - 2 United States: 1,897,480 kg per day; 13 g/day per worker
  - 3 India: 1,515,683 kg per day; 20 g/day per worker
  - 4 Russian Federation: 1,398,496 kg per day; 21 g/day per worker
  - 5 Japan: 1,279,503 kg per day; 15 g/day per worker
  - 6 Germany: 982,313 kg per day; 13 g/day per worker
  - 7 Indonesia: 753,657 kg per day; 18 g/day per worker
  - 8 France: 616,092 kg per day; 16 g/day per worker
  - 9 United Kingdom: 599,088 kg per day; 16 g/day per worker
  - 10 Italy: 493,551 kg per day; 12 g/day per worker

### Energy access, health, and biomass dependence
- Electricity access and population without electricity:
  - About a quarter of the world population (1.6 billion people) has no access to electricity.
  - Access patterns by region and selected aggregates (2005):
    - Africa: Population 891 million; Population without electricity 554 million; Electrification rate 37.8%; Urban electrification rate 67.9%; Rural electrification rate 19.0%.
      - North Africa: Population 153 million; Population without electricity 7 million; Electrification rate 95.4%; Urban electrification rate 98.7%; Rural electrification rate 91.8%.
      - Sub-Saharan Africa: Population 738 million; Population without electricity 547 million; Electrification rate 25.9%; Urban electrification rate 58.3%; Rural electrification rate 8.0%.
    - Developing Asia: Population 3,418 million; Population without electricity 930 million; Electrification rate 72.8%; Urban electrification rate 86.4%; Rural electrification rate 65.1%.
      - China and East Asia: Population 1,951 million; Population without electricity 22 million; Electrification rate 88.5%; Urban electrification rate 94.9%; Rural electrification rate 84.0%.
      - South Asia: Population 1,467 million; Population without electricity 770 million; Electrification rate 51.9%; Urban electrification rate 69.7%; Rural electrification rate 44.7%.
    - Latin America: Population 449 million; Population without electricity 4 million; Electrification rate 90.0%; Urban electrification rate 98.0%; Rural electrification rate 65.6%.
    - Middle East: Population 186 million; Population without electricity 41 million; Electrification rate 78.0%; Urban electrification rate 86.7%; Rural electrification rate 61.8%.
    - Developing Countries aggregate: Population 4,944 million; Population without electricity 1,570 million; Electrification rate 68.2%; Urban electrification rate 85.2%; Rural electrification rate 56.4%.
    - Transition economies and OECD: Population 1,510 million; Population without electricity 8 million; Electrification rate 99.5%; Urban electrification rate 100.0%; Rural electrification rate 98.1%.
    - World: Population 6,454 million; Population without electricity 1,578 million; Electrification rate 75.6%; Urban electrification rate 90.4%; Rural electrification rate 61.7%.
- Trends and bottlenecks:
  - Excluding China, the share of the developing world population without access to electricity has increased since 1990.
  - International Energy Agency estimate: if no new policies are put in place, in 2030 there will still be 1.4 billion people without access to electricity.
  - Sub-Saharan Africa (excluding South Africa) installed capacity: 28 gigawatts (GW); about 25 GW of new generation capacity will be needed in the region over the next decade to make up the present shortfall and meet future demand growth.
- Biomass dependence:
  - Use of biomass products and waste as a percent of total energy use in low-income countries: dropped from 55 percent in 1990 to 48 percent in 2004.
  - Top users of biomass products and waste (percentage of total energy use, 1990–2004):
    - Congo, Dem. Rep. of: 1990 84.0; 2004 92.5
    - Tanzania: 1990 91.0; 2004 91.6
    - Ethiopia: 1990 92.8; 2004 90.4
    - Nepal: 1990 93.4; 2004 86.8
    - Mozambique: 1990 94.4; 2004 84.1
    - Nigeria: 1990 79.8; 2004 80.2
    - Sudan: 1990 81.7; 2004 79.2
    - Zambia: 1990 73.4; 2004 79.1
    - Cameroon: 1990 75.9; 2004 77.8
    - Kenya: 1990 78.4; 2004 74.1

### Measuring sustainability: adjusted net savings and natural capital
- Adjusted net savings:
  - Concept: depletion of natural resources, pollution damages, and investments in human capital are components of national savings; adjusted net savings measures changes in the economy’s total wealth.
  - Example (Bolivia):
    - 2002: policy mix broadly sustainable (net savings and human capital investments roughly equal depletion; pollution damages made adjusted net saving rate slightly negative).
    - 2005: high natural gas prices led to a windfall, but gross savings did not adjust fully; result: net wealth creation in 2005 turned sharply negative (consuming natural wealth).
  - Note: many developing countries may have positive total adjusted net savings but declining wealth per person due to population growth.
- Natural capital decomposition and importance:
  - World Bank disaggregation of natural assets: agricultural land (crops and pastures), forests (timber and nontimber forest resources), protected areas, and subsoil assets (oil, natural gas, coal, and minerals).
  - Natural capital share of total wealth:
    - Average citizen in low-income countries derives 42 percent of total wealth from some form of natural capital.
    - In most developing regions (except Latin America and the Caribbean), natural capital accounts for more than a third of total wealth.
    - Middle East and North Africa: share of natural capital particularly high because of subsoil assets.

*Source: _gmr - 7.9 Proportion of urban population living in slums*

### chapter 1, the value of natural capital per

### chapter 1, the value of natural capital per

### Natural capital per capita: levels and composition
- Natural capital per capita generally rises with income level, reflecting higher land productivity, abundant subsoil assets, and relative population sizes.
- Low-income countries are more dependent on natural resource endowments as a share of total wealth:
  - Example: a person from Sub-Saharan Africa has total wealth of nearly US$10,000, of which US$2,000 is agricultural land.
  - On average in low-income countries, the sum of cropland and pastureland accounts for nearly 25 percent of total wealth and 60 percent of natural wealth.
- Regional natural wealth per capita (2005, as reported in the chapter):
  - Latin America and the Caribbean: US$17,000 per capita (text); figure lists US$16,539 per capita. Natural wealth composition: mostly subsoil assets (50 percent) and agricultural land (30 percent).
  - Middle East and North Africa: US$12,000 per capita, mostly in the form of oil.
  - Europe and Central Asia: natural wealth per capita US$11,412 (figure) with subsoil assets accounting for 68 percent of natural wealth.
  - East Asia and the Pacific: natural wealth per capita US$5,600 (text) / US$5,577 (figure) with distribution similar to Latin America and the Caribbean.
  - Sub-Saharan Africa: natural wealth per capita US$3,900 (text) / US$3,883 (figure); agricultural land is 62 percent of total natural wealth.
  - South Asia: natural wealth per capita US$2,600 (text) / US$2,646 (figure); composition: agricultural land 51 percent, subsoil assets 26 percent, forests 20 percent.
- Subsoil assets play a major role in natural wealth in Europe and Central Asia, the Middle East and North Africa, and Latin America and the Caribbean.

### Evolution of natural capital values (1995–2005)
- Global pattern:
  - The value of the world’s natural capital per capita (measured in 2000 U.S. dollars and deflated using a GDP deflator) increased from 1995 to 2000, largely because of the increase in real energy prices, then declined slightly to 2005 (energy price rises were more than offset by declines in food prices).
- Low-income countries:
  - Natural capital per capita fell from US$3,400 per capita in 1995 to US$3,100 per capita in 2005 (a 10 percent drop).
  - The decline resulted partly from population growth and partly from falling agricultural yields and declining real crop prices.
  - The real value of agricultural land in low-income countries fell 31 percent over the same period.
  - Agricultural land values in these countries are particularly vulnerable to potential climate change impacts.

### Measuring environmental governance and institutions
- Two broad types of indicators:
  - Policy outcome indexes (example: Environmental Performance Index, EPI) that measure results by distance-to-target for indicators.
  - Policy input indexes (example: World Bank Country Policy and Institutional Assessment, CPIA) that track policies and institutional quality to enforce them.
- The Environmental Performance Index (EPI):
  - Identifies targets for a set of 25 indicators and ranks 149 countries across six policy categories: environmental health, air pollution, water resources, biodiversity and habitat, productive natural resources, and climate change.
  - Divided into two subcomponents: environmental health and ecosystem vitality.
  - In 2008, countries in Sub-Saharan Africa, South Asia, and parts of East Asia and the Pacific tended to have the lowest performance; higher-income countries on average have higher EPI scores, but there is wide within-group variation.
- Country Policy and Institutional Assessments (CPIA) — environmental score:
  - CPIA rates policies on a scale from 1 to 6 (higher is better); 3.5 is a neutral score.
  - Regional and temporal results:
    - Excluding South Asia, all regional averages were below the 3.5 midpoint in 1999.
    - By 2006, Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North Africa had exceeded 3.5.
    - Europe and Central Asia moved from an average score of 3.1 in 1999 to 3.8 in 2006.
  - Cross-country and within-region variation:
    - Sub-Saharan Africa regional average reported as 3.1 (lowest regional average cited).
    - Sub-Saharan Africa country CPIA environment scores range from a minimum of 1.1 to a maximum of 4.5.
    - Low-income countries average 3.0; upper-middle-income countries average 4.1.
  - CPIA environment score components (post-2003 methodology): average of two major categories and 10 sub-categories:
    - Assessment of the national institutional context:
      - Adequacy of prioritization
      - Quality of environmental assessment
      - Cross-sectoral coordination
      - Public information and participation
    - Assessment of specific sectors:
      - Air pollution
      - Solid and hazardous waste management
      - Freshwater resources
      - Marine and coastal resources
      - Ecosystems and biodiversity
      - Commercial natural resources
  - Findings on institutional performance:
    - Countries perform poorly on public information and participation (particularly East Asia and the Pacific) and on cross-sectoral coordination (particularly East Asia and the Pacific and the Middle East and North Africa).
    - Countries are relatively better at identifying priorities (Europe and Central Asia top performer).
    - Upper-middle-income countries outperform low- and lower-middle-income countries on sector-specific policies, especially in waste management and water resources.
    - Low-income countries show weak performance in air quality management and marine and coastal resources management.
    - Countries generally score better on the quality of standards, regulations, and incentives than on implementation and enforcement capacity.

### Subsidies, targeting performance, and environmental implications
- Government policy failure, especially subsidies, can threaten environmental sustainability.
  - Utility subsidies (water, energy) often keep tariffs below operational and maintenance costs, promoting inefficient resource use and poor targeting of the needy.
- Benefit-targeting performance indicator for subsidies:
  - Formula:
    - Benefit-targeting performance indicator (7) = (Subsidy that reaches the poor / Total subsidy) / (Population below poverty line / Total population)
  - Empirical findings (Komives and others 2005): quantity-targeted utility subsidies (including water and electricity) often have performance indicator regularly less than 1, meaning the poor capture a smaller portion of the subsidy than they would under random distribution.
  - Example consequences:
    - Those without access to electricity belong to the poorest sectors and therefore are excluded from electricity subsidies; increasing block tariffs exclude more than 70 percent of the poor in Sub-Saharan Africa.
    - The performance of subsidies tends to increase with the connection rate, but even with universal coverage, subsidies at best reach neutrality (7 = 1) because wealthier households consume more and capture a larger share of the subsidy.
  - Selected benefit-targeting performance of electricity subsidies (table of country examples):
    - Guatemala — Type: VDT — Benefit-targeting performance indicator (7): 0.205 — Error of exclusion (%): 55.4
    - Honduras — VDT — 0.495 — 56.0
    - Peru — IBT — 0.825 — 59.9
    - Cape Verde — IBT — 0.487 — 75.6
    - São Tomé and Principe — IBT — 0.417 — 76.8
    - Hungary — IBT — 0.981 — 1.7
    - Rwanda — IBT — 0.358 — 87.2
    - India (average) — IBT — 0.702 — 21.0
  - Tariff types in table:
    - VDT = volume-differentiated tariffs
    - IBT = increasing block tariffs
  - Environmental trade-off: subsidies favor overconsumption, inefficient use of scarce resources, and increased pollution.

### Monitoring sustainability: indicators and adjusted net savings
- A good indicator should be policy relevant, analytically sound, and measurable. Policy relevance implies sensitivity to policy actions and ease of interpretation against targets.
- Types of sustainability indicators:
  - Indexes and indicator sets:
    - Weighted indexes (explicit relationships and relative importance; example: summing emissions of different greenhouse gases weighted by global warming potentials).
    - Unweighted indexes (combine indicators without explicit weights; example: Living Planet Index, Environmental Performance Index).
    - Indicator sets (present indicators separately or grouped; example: UN Commission for Sustainable Development indicator set).
  - Indicators based on biophysical relationships (example: Ecological Footprint).
  - Indicators based on economic accounts (use national accounting framework): examples include UN System of Environmental and Economic Accounts, adjusted net savings, Genuine Progress Index, Index of Sustainable Economic Welfare.
- Aggregate indicators:
  - Aggregation is essential to assess whether social welfare is likely to increase or decrease, but users are wary of “black box” aggregates where subaggregate weights are arbitrary.
  - National accounts–based indicators have advantages: use money as numeraire, prices as welfare-related weights, and a rigorous aggregation framework.
- Adjusted net savings:
  - Emphasized in the report as a national accounts–based measure of sustainability and used in the chapter to assess mineral-based economies (detailed discussion referenced in box 6.4).
- Indicator sets such as MDG 7 indicators play an important role but have limits: they measure pieces of the puzzle (deforestation, protected areas, energy use, carbon intensity) without providing an aggregate measure of progress toward sustainability. Urban air pollution is noted as a particular gap.

*Source: chapter 1, the value of natural capital per (excerpt).*

### 6.4 has suggested, adjusted net savings is by

### ADJUSTED NET SAVINGS AS A SUSTAINABILITY INDICATOR

### Framework and definition
- Adjusted net (or “genuine”) savings measures the change in the real value of the portfolio of assets (produced capital, natural capital, human capital, and other less tangible forms of wealth such as knowledge, social capital, and quality of institutions) from one year to the next.
- Economic theory indicates that this change is precisely equal to the change in social welfare.
- The metric is derived from an asset-accounting framework and is presented as arguably the only sound framework for measuring sustainability.

### Empirical evidence
- Adjusted net savings has been tested empirically using the "30+ year" time series of estimates published by the World Bank.
- Ferreira and Vincent show that adjusted net savings is correlated with changes in social welfare for developing countries, but not for developed ones.
- Ferreira, Hamilton, and Vincent show that the result for developing countries is robust when population growth is taken into account.
- Interpretation: accumulation of physical assets matters for poorer countries, whereas knowledge creation and innovation (not measured directly in adjusted net savings) drive growth in rich countries.

### Limitations, measurement issues, and substitutability concerns
- Adjusted net savings is "by no means a perfect indicator."
- Important assets are omitted for methodological and empirical reasons, leading to potential overstatement of saving rates. Examples of missing data include: subsoil water, land degradation, fish stocks, and diamonds.
- Methodological weaknesses include difficulties valuing biodiversity.
- Measurement errors are acknowledged.
- Questions about substitutability between produced capital and natural capital limit confidence in the link between positive saving and sustainability. Example: "There is no technological substitute for the ozone layer as a whole," though marginal losses can be valued.
- The step from saving to investment is crucial: if savings are not channeled to productive investments, they will not promote development. This is an important factor in many developing countries where public sector investments have often been wasteful and absorptive capacity may be constrained.

### Policy links and recommendations
- Policy levers to achieve positive adjusted net savings operate at levels of the different assets that constitute total national wealth:
  - Macro policies influencing saving effort.
  - Sectoral policies on natural resource management, human resource development, and environmental protection.
- Continued tracking of total natural capital country by country is recommended.
- Measure a range of biophysical indicators pertaining to the quality or quantity of critical natural capital.
- Investments in better data and methodology can strengthen adjusted net savings as an indicator of sustainable development.

### Chapter conclusions and key findings relevant to MDG 7 and environmental management
- MDG 7 is described as "arguably the most cross-cutting of the MDGs" because managing the environment and natural resources is fundamental for the sustainability of MDG outcomes.
- Findings:
  - "Natural capital constitutes a major component of wealth in developing countries. The average citizens in low-income countries derive over 40 percent of their wealth from some form of natural capital."
  - "Owing to falling relative prices, the value of natural capital—including agricultural land, forests, and subsoil assets—has declined over the recent past in those countries that most heavily rely on nature for their well-being. Climate change is likely to exacerbate this situation in the future."
  - "An area of forest equivalent to the size of Sierra Leone is lost every year to land use changes, particularly in Latin America and the Caribbean and in Sub-Saharan Africa. Most of the world’s forest loss takes place in Brazil and Indonesia."
  - "Population growth will cause per capita water resources to fall below critical levels in the very near future in the Middle East and North Africa and in South Asia. Underground water abstraction is already unsustainable in many Middle Eastern countries, in parts of South Asia, and in Mexico."
  - "Countries rich in subsoil assets risk being on an unsustainable development path if they primarily consume the rents from natural resource extraction rather than investing them in other forms of capital."
  - "Low- and lower-middle-income countries are characterized by high levels of urban air pollution (as measured by particulate matter concentrations)."
  - "Progress in improving electricity access in the last 15 years has been slow. In most developing countries, population growth has offset the gains in energy investment. As a consequence of low levels of access, the consumption of biomass fuels is still very high in developing countries."
  - "Progress in institutional and policy performance has been uneven across world regions. The Europe and Central Asia region has been characterized by the sharpest improvements, while South Asia and Sub-Saharan Africa have lagged behind."
- Policy instruments and priorities highlighted:
  - Strengthening private or communal property rights to local natural resources.
  - Improving governance for open-access resources (forests and fish).
  - Explicit resource rent policies and the chain from rent capture to management and use of resource rents.
  - Water rights and treating water as an economic good to manage scarcity.
  - Finding efficient solutions to pollution problems where marginal damages far exceed marginal costs of abatement.
  - Avoiding policies such as energy subsidies that encourage inefficient use, exacerbate pollution problems, and strain fiscal resources.
- Institutional capacity and data:
  - Building stronger institutions is a principal difficulty in meeting MDG 7.
  - Better and more comprehensive data are essential; public access to environmental data supports public demand for environmental quality and supports policy decisions and implementation.
  - The MDG process emphasizes data and indicators; the chapter highlights both strengths and deficiencies in environment and natural resource data.
  - The Global Monitoring Report 2007 analyzed CPIA data for 2005 to show that environment CPIA scores significantly lag overall CPIA scores.

_Italic: Content derived from chapter text provided._

### 30. World Bank 2007a.

### Global Environmental Sustainability: Protecting the Commons

### Climate change — the impact of human activity
- Deforestation and the burning of fossil fuels produce greenhouse gases that trap incoming solar radiation, leading to a rise in global average surface temperature.
- Measured change: "over the last hundred years, the average temperature has risen 0.74°C."
- Eleven of the last twelve years rank among the warmest years on record since 1850.
- Sea level rise:
  - Since 1961 global sea levels have risen at an average rate of 1.8 millimeters (mm) a year.
  - Since 1993 global sea levels have risen at an average rate of 3.1 mm a year.
- Snow cover has decreased, and Arctic and Antarctic ice fields have shrunk drastically.
- Arctic average temperatures are rising twice as fast as elsewhere.
- Satellites show the area of permanent ice cover is contracting at a rate of 9 percent each decade; continued melting could lead to summers in the Arctic becoming nearly ice-free by the end of the century.
- Sustainable management of the earth’s climate, ocean fisheries, and biodiversity is essential to achieving the Millennium Development Goals (MDGs) and continued economic progress.
- Failure to mitigate GHG emissions may lead to disastrous changes in temperature and precipitation and increases in extreme weather events; pollution, overexploitation, and habitat destruction threaten fisheries and biodiversity.

### Evidence that human activity contributes to warming
- Atmospheric CO2 concentration increased from approximately 277 parts per million volume (ppm) in 1744 to 384 ppm in 2007.
- Models that include anthropogenic GHG emissions provide much more accurate estimates of historical temperature trends than models that ignore these emissions.

### Relationship of GHG concentrations to climate change
- In 2005 the concentration of all GHGs was approximately 375 ppm CO2e (carbon dioxide equivalents).
- Likelihoods of exceeding specified increases in global mean surface temperature for given stabilization levels (in ppm CO2e):  
  - Stabilization level 450 ppm: 2°C = 78 percent; 3°C = 18 percent; 4°C = 3 percent; 5°C = 1 percent; 6°C = 0 percent; 7°C = 0 percent.  
  - Stabilization level 500 ppm: 2°C = 96 percent; 3°C = 44 percent; 4°C = 11 percent; 5°C = 3 percent; 6°C = 1 percent; 7°C = 0 percent.  
  - Stabilization level 550 ppm: 2°C = 99 percent; 3°C = 69 percent; 4°C = 24 percent; 5°C = 7 percent; 6°C = 2 percent; 7°C = 1 percent.  
  - Stabilization level 650 ppm: 2°C = 100 percent; 3°C = 94 percent; 4°C = 58 percent; 5°C = 24 percent; 6°C = 9 percent; 7°C = 4 percent.  
  - Stabilization level 750 ppm: 2°C = 100 percent; 3°C = 99 percent; 4°C = 82 percent; 5°C = 47 percent; 6°C = 22 percent; 7°C = 9 percent.
- Stern (2008) cited: stabilization at 450 ppm CO2e "would still carry a risk of an increase in mean surface temperature of at least 3°C."
- Equilibrium GHG concentrations of 650 or 750 ppm CO2e carry a significant risk of an increase in mean global surface temperature of 5°C.
- A mean increase of 5°C could trigger:
  - Heat waves, increased heavy precipitation in northern latitudes, drought in most subtropical regions.
  - Melting of Himalayan snowpack and risk of total disappearance of the West Antarctic ice sheet, potentially increasing global sea level by six meters.
  - Risk of "tipping points" and positive feedbacks (methane release from permafrost; carbon release from deep oceans; increased solar absorption as polar ice caps melt) that could drive rapid rises in atmospheric GHG concentrations and temperature.

### Geographic and temporal dimensions of projected warming
- IPCC Fourth Assessment nonmitigation scenarios (examples and outcomes):
  - B1 scenario: increase in mean global temperature of 1.8°C in 2090 (relative to 1980–99).
  - A1B scenario: increase in mean global temperature of 3.3°C in 2090.
  - A2 scenario: increase in mean global temperature of 3.9°C in 2090.
- Geographic distribution: temperature increases greatest in northern latitudes; in A1B and A2 scenarios, parts of Latin America and Sub-Saharan Africa, as well as India and the Middle East, experience rises above 4°C.
- Regional hydrological and weather impacts:
  - Arid and semi-arid regions become drier; mid-to-high latitudes generally become wetter.
  - Increased frequency of heavy precipitation events in mid-to-high latitudes; increased drought likelihood in currently dry areas.
  - Increased frequency of storm surges, cyclones, and hurricanes globally.
  - Glacier melt leads to higher springtime water flows and reduced summertime flows.
- Timing and mitigation implications:
  - Significant temperature changes in Africa and Latin America are likely as early as 2020–29 under the A1B nonmitigation scenario.
  - To avoid large temperature changes by 2090–99: world GHG emissions would have to decline by 50 to 85 percent of their 2000 levels by 2050 to stabilize concentrations at 450 ppm (depending on mitigation path).
  - To stabilize at 550 ppm, world GHG emissions would have to decrease by as much as 30 percent from 2000 levels by 2050 (depending on mitigation path).

### Projected temperature change and sea level rise by scenario (IPCC 2090–99 relative to 1980–1999)
- Constant year 2000 concentrations: Best estimate temperature change = 0.6°C; Likely range = 0.3–0.9°C; Sea level rise = Not applicable.
- B1 scenario: Best estimate temperature change = 1.8°C; Likely range = 1.1–2.9°C; Sea level rise = 0.18–0.38 meters.
- A1T scenario: Best estimate temperature change = 2.4°C; Likely range = 1.4–3.8°C; Sea level rise = 0.20–0.45 meters.
- B2 scenario: Best estimate temperature change = 2.4°C; Likely range = 1.4–3.8°C; Sea level rise = 0.20–0.43 meters.
- A1B scenario: Best estimate temperature change = 2.8°C; Likely range = 1.7–4.4°C; Sea level rise = 0.21–0.48 meters.
- A2 scenario: Best estimate temperature change = 3.4°C; Likely range = 2.0–5.4°C; Sea level rise = 0.23–0.51 meters.
- A1FI scenario: Best estimate temperature change = 4.0°C; Likely range = 2.4–6.4°C; Sea level rise = 0.26–0.59 meters.
- Source: Summary for Policy Makers, Fourth Assessment Report, IPCC 2007b.

### Impacts of climate change and opportunities for adaptation
- General:
  - Magnitude of impacts depends on adaptation and mitigation efforts.
  - Effects vary greatly among developing countries; adaptation must be tailored to specific country needs.
- Agriculture:
  - Developing countries likely to lose more from climate impacts on agriculture than developed countries.
  - Temperatures in developing countries are already close to thresholds where further increases lower productivity.
  - Losses affect larger numbers of people in developing countries because of agriculture’s importance to livelihoods.
  - Cline's estimates for a 4.4°C mean global temperature increase with 2.9 percent mean precipitation increase during 2070–99:
    - Largest agricultural losses in parts of Africa, South Asia, and parts of Latin America.
    - United States and Canada, Europe, and China generally benefit under the nonmitigation scenario.
  - Adaptation notes:
    - Yields on irrigated farmland decrease less than on rain-fed land; in some areas yields increase.
    - Ricardian approach assumes unchanged future prices; water shortages raising irrigation prices could worsen yield losses.
    - Impacts should be measured on net revenues after adaptation plus adaptation costs: example—southwest India output falls ~37 percent under the nonmitigation scenario, but net revenues fall by 55 percent.
  - Agricultural impact categories (with carbon fertilization) for 2079–99 shown in Cline 2007: ranges include 12.5 to 28.1 percent (positive), –1.9 to 12.5 percent, –18.1 to –1.9 percent, –38.9 to –18.1 percent, and –54.1 to –38.9 percent.
- Health:
  - Climate change affects health directly (temperature-related mortality) and indirectly (effects via agriculture, water, and disease vectors).
  - Warming in cold climates may reduce cardiovascular and respiratory deaths; heat waves likely increase cardiovascular deaths in warm and cold climates.
  - Changes in temperature and precipitation affect diarrheal disease (second-leading cause of death among children aged one to five).
  - Extreme weather events increase accidental deaths and injuries.
  - Indirect effects: reduced food security and malnutrition from lower agricultural yields; increased malaria and other vector-borne diseases with higher temperatures and precipitation in low latitudes.
  - Largest health impacts (mortality and morbidity) occur through malnutrition, diarrhea, and malaria, with greatest geographic effects in Sub-Saharan Africa, South Asia, and the Middle East.
  - Children of the developing world bear the largest health burden.

### Sectoral examples of projected mid-to-late-21st century impacts (selected)
- Over most land areas: warmer and fewer cold days/nights; warmer and more frequent hot days/nights — Virtually certain.
  - Agriculture: increased yields in colder environments; decreased yields in warmer environments; increased insect outbreaks.
  - Water resources: effects on water resources relying on snow melt; effects on some water supplies.
  - Human health: reduced mortality from decreased cold exposure.
  - Industry/settlement: reduced energy demand for heating; increased demand for cooling; declining urban air quality; effects on winter tourism.
- Warm spells/heat waves: Frequency increases over most land areas — Very likely.
  - Agriculture: reduced yields in warmer regions from heat stress; increased danger of wildfire.
  - Water: increased water demand; water quality problems such as algal blooms.
  - Health: increased risk of heat-related mortality, especially for the elderly, chronically sick, very young, and socially isolated.
  - Society: reduction in quality of life for people in warm areas without appropriate housing.
- Heavy precipitation events: Frequency increases over most areas — Very likely.
  - Agriculture: damage to crops; soil erosion; inability to cultivate waterlogged soils.
  - Water: adverse effects on surface and groundwater quality; potential contamination of water supply.
  - Health: increased risk of deaths, injuries, infectious, respiratory and skin diseases.
  - Society: disruption of settlements, commerce, transport; pressure on infrastructure; loss of property.
- Drought: Area affected increases — Likely.
  - Agriculture: land degradation; lower yields; crop failure; increased livestock deaths; increased wildfire risk.
  - Water: more widespread water stress.
  - Health: increased risk of food and water shortages; increased malnutrition; increased water- and food-borne diseases.
  - Society: reduced hydropower potential; potential for migration.
- Intense tropical cyclone activity: Increases — Likely.
  - Agriculture: damage to crops; windthrow of trees; coral reef damage.
  - Water/energy: power outages causing public water supply disruption.
  - Health: increased risk of deaths, injuries, water- and food-borne diseases; post-traumatic stress disorders.
  - Society: disruption by flood and high winds; potential for population migrations; loss of private insurance coverage in vulnerable areas.
- Increased incidence of extreme high sea level (excludes tsunamis): Likely.
  - Agriculture/coasts: salinization of irrigation water, estuaries, and freshwater systems.
  - Water: decreased freshwater availability from saltwater intrusion.
  - Health: increased risk of deaths and injuries by drowning in floods; migration-related health effects.
  - Society: costs of coastal protection versus land-use relocation; potential movement of populations and infrastructure.
- Note: "In all scenarios, the projected global average sea level in 2100 is higher than in the reference period."

### Policy implications and urgency
- Avoiding the risk of large temperature changes in 2090–99 requires action now: substantial reductions in world GHG emissions are necessary by 2050 depending on stabilization targets (examples: 50 to 85 percent reductions from 2000 levels to stabilize at 450 ppm; up to 30 percent reductions to stabilize at 550 ppm, depending on mitigation paths).
- Adaptation strategies must be country-specific and account for adaptation costs; estimates of impacts should incorporate damages after adaptation plus adaptation costs.

*Source: World Bank 2007a (chapter on Global Environmental Sustainability: Protecting the Commons, as excerpted).*

### 7.3 shows the distribution of deaths. Climate

### _gmr - 7.3 shows the distribution of deaths. Climate

### Mortality attributable to climate change in 2000 (global summary)
- Climate change in 2000 is associated, worldwide, with 166,000 deaths.
  - 77,000 associated with malnutrition
  - 47,000 associated with diarrhea
  - 27,000 associated with malaria
- The highest number of deaths (per 100,000 persons) occurs in Africa, parts of South Asia (SEAR-D), and the Middle East.
- The impact of climate change on the United States, Canada, and Europe is negligible, with cardiovascular deaths associated with heat waves cancelling out the benefits of milder winter temperatures.

### Projected impacts (2030) under specified emissions scenario
- In 2030, assuming that GHG emissions are stabilized at 750 ppm by 2210:
  - The risk of malnutrition is predicted to be 11 percent higher in Latin America than it was in 1990.
  - The risk of malnutrition is predicted to be 17 percent higher in South Asia (SEAR-D) than it was in 1990.
  - The risk of diarrhea is predicted to be 6 percent higher in Sub-Saharan Africa than in 1990.
  - The risk of diarrhea is predicted to be 7 percent higher in South Asia (SEAR-D) than in 1990.
- Note: These increased risks apply to large exposed populations.

### Estimated DALYs attributed to climate change in 2000, by cause and WHO subregion
(thousands, unless otherwise indicated)
- AFR-D: Malnutrition 293; Diarrhea 154; Malaria 178; Floods 1; All causes 626; (per 1 million population) 2,186
- AFR-E: Malnutrition 323; Diarrhea 260; Malaria 682; Floods 3; All causes 1,267; (per 1 million population) 3,840
- AMR-A: Malnutrition 00; Diarrhea 0; Malaria 4; Floods 412
- AMR-B: Malnutrition 00; Diarrhea 3; Malaria 67; Floods 71; All causes 167
- AMR-D: Malnutrition 0; Diarrhea 17; Malaria 0; Floods 5; All causes 23; (per 1 million population) 324
- EMR-B: Malnutrition 0; Diarrhea 14; Malaria 0; Floods 6; All causes 20; (per 1 million population) 148
- EMR-D: Malnutrition 313; Diarrhea 277; Malaria 112; Floods 46; All causes 748; (per 1 million population) 2,146
- EUR-A: Malnutrition 00; Diarrhea 0; Malaria 3; Floods 37
- EUR-B: Malnutrition 06; Diarrhea 0; Malaria 4; Floods 10; All causes 48
- EUR-C: Malnutrition 03; Diarrhea 0; Malaria 1; Floods 415
- SEAR-B: Malnutrition 0; Diarrhea 28; Malaria 0; Floods 6; All causes 34; (per 1 million population) 117
- SEAR-D: Malnutrition 1,918; Diarrhea 612; Malaria 0; Floods 8; All causes 2,538; (per 1 million population) 2,081
- WPR-A: Malnutrition 00; Diarrhea 0; Malaria 1; Floods 19
- WPR-B: Malnutrition 0; Diarrhea 89; Malaria 43; Floods 37; All causes 169; (per 1 million population) 111
- World: Malnutrition 2,846; Diarrhea 1,459; Malaria 1,018; Floods 193; All causes 5,517; (per 1 million population) 925

### Assumptions and role of adaptation
- Calculations assume little adaptation to climate change.
- Examples of adaptation measures that would reduce risks:
  - A program that eliminated the anopheles mosquito from Sub-Saharan Africa would reduce malaria risks.
  - The development of an effective malaria vaccine would reduce malaria risks.
  - A program to improve food security in the region would reduce deaths caused by malnutrition.

### Sea level rise (excerpt)
- Although the mean increases in sea level rise associated with the IPCC nonmitigation scenarios are modest—ranging from 0.2 to

*Source: McMichael and others 2004.*

### 0.5 meters during this century (see table

### Adaptation to Climate Change

### Sea Level Rise: projected impacts and country vulnerability
- Estimated global sea level rise of 0.5 meters during this century (see table 7.2)—these estimates exclude future rapid dynamic changes in ice flow.  
- Velicogna and Wahr have measured variations in the Antarctic ice sheet during 2002–05; their results indicate that the mass of the West Antarctic ice sheet decreased significantly, at a rate several times greater than assumed by the IPCC in its Third Assessment Report.  
- Climate change could possibly cause the West Antarctic ice sheet to slide into the ocean, which would raise average sea level by approximately five to six meters, even if the ice sheet did not melt.  
- Dasgupta and others estimate impacts for 84 coastal developing countries using Geographic Information System techniques to calculate fractions of land area, agricultural land, wetlands, urban land area, population, and GDP affected by increases in sea level of one to five meters (current land uses, assume no adaptation).  
- Regional ranking of impacts (share of land area, population, GDP affected): greatest in East Asia and the Pacific, followed by the Middle East and North Africa; effects vary significantly among countries within each region.  
- Ten countries most affected by a one meter rise in sea level (selected figures preserved exactly as presented):  
  - Vietnam: Population (10.79), GDP (10.21), Urban areas (10.74), Wetlands (28.67)  
  - Egypt, Arab Rep. of: Population (9.28), GDP (9.35), Urban areas (6.44), (also would lose 13 percent of its agricultural land)  
  - Mauritania: Population (7.95), Urban areas (7.50)  
  - Suriname: Population (7.00)  
  - Guyana: Population (6.30)  
  - The Bahamas: Urban areas (5.42); Twelve percent of the Bahamas would be submerged (noted in text as "Twelve percent of the Bahamas would be submerged").  
  - Additional country figures in table 7.5 include Benin, Libya, Tunisia, United Arab Emirates, Ecuador, Taiwan, China, French Guiana, Jamaica, Belize, Qatar, Uruguay, Mexico (see table 7.5 for full list and exact percentages).  
- With no adaptation: Vietnam would lose 10 percent of its GDP; the Arab Republic of Egypt, over 6 percent. Vietnam would lose 28 percent of its wetlands.

### Extreme weather events and vulnerability indices
- Weather variability (and likely extreme events) is expected to increase; damages from past events provide an index of vulnerability.  
- Buys and others compiled a Weather Damage Index (WDI) for 1960–2002 that weights persons killed at 1,000; persons rendered homeless at 10; persons affected at 1; sum divided by 1980 population to create per-capita population-impact index.  
- Table 7.6 / WDI highlights (selected exact values):  
  - Sub-Saharan Africa: Ethiopia WDI 1809; Mozambique 1134; Sudan 999; Djibouti 586; Botswana 536; Somalia 497; Mauritania 433; Malawi 411; Zimbabwe 394; Swaziland 352.  
  - East Asia & Pacific: Tonga 698; Samoa 589; Laos PDR 573; Solomon Islands 416; Philippines 392; Vanuatu 340; Fiji 310; Vietnam 235; China 223; Cambodia 213.  
  - Latin America & Caribbean: Honduras 819; Antigua & Barbados 387; Belize 385; Haiti 254; Nicaragua 242; Nicaragua/others listed down to Bolivia 124.  
  - Middle East & North Africa: Iran, Islamic Rep. of WDI 183; Jordan 32.9; Tunisia 29.3; Yemen, Rep. of 27.5; Algeria 17.6; Oman 14.5; Morocco 13.3; Iraq 11.1; Lebanon 5.6.  
  - South Asia: Bangladesh WDI 1940; India 566; Sri Lanka 318; Pakistan 172; Maldives 151; Nepal 84.4; Afghanistan 73.5; Bhutan 64.5.  
- Yohe and Tol find the fraction of the population affected by natural disasters decreases with increases in per-capita income (elasticity = –1); increases with increases in income inequality (elasticity = 2.2); and increases with increases in population density (elasticity = 0.24).

### Adaptation measures: private and public roles
- Development as adaptation: reducing malnutrition, eliminating diarrhea as a leading cause of child mortality, and eradicating malaria (MDGs 1, 4, and 6) are effective adaptation to the most adverse health effects of climate change. Economic diversification reduces vulnerability compared with agricultural dependence.  
- Private adaptation examples: crop choice adjustments (Africa: sorghum, maize-millet in cooler regions; maize-beans in moderately warm regions; cowpea mixes in hot regions); adoption of flood-resistant rice strains in Orissa; dike construction in the Mekong Delta; community microinsurance in Andhra Pradesh.  
- Public roles to strengthen private adaptation:  
  - Provide public goods for adaptation: information about climate impacts, early warning systems for heat waves and floods, and defensive public infrastructure.  
  - Incorporate climate impacts into design of roads, bridges, dams, and other public infrastructure (climate-proofing).  
  - Correct market failures impeding adaptation (promote insurance markets, ensure credit availability, especially for the poor).  
  - Provide social safety nets to sustain the poor through natural disasters.  
- Information and monitoring: Mali’s national meteorological service distributes precipitation and soil moisture information through farmers’ organizations and local governments; adequate monitoring stations and budgets are necessary and can be supported by donor contributions and technology transfer.  
- Defensive infrastructure evidence: expenditures of $3.15 billion on flood control in China between 1960 and 2000 avoided losses of $12 billion; flood control projects in Rio de Janeiro yielded an internal rate of return of over 50 percent. Benefit–cost analyses in Bangladesh and South Africa indicate it pays to increase reservoir size to accommodate increased runoff. World Bank and Asian Development Bank studies identify cost-effective measures to climate-proof infrastructure in small island states.  
- Insurance and credit: In high-income countries, one-third of losses from natural disasters are insured, compared with only 3 percent of losses in developing countries. Governments can promote weather insurance when private markets fail.  
- Weather-index insurance (WII): pays based on objective weather indices (e.g., precipitation deficits, cyclone wind speed/trajectory) and reduces adverse selection, moral hazard, and administrative costs; success depends on availability of meteorological stations. Pilot or research projects in Ethiopia, India, Kenya, Malawi, Mexico, Morocco, Nicaragua, Peru, Thailand, Tunisia, and Ukraine. India: BASIX and ICICI Lombard introduced rainfall insurance in 2003; Malawi WII bundled with credit for maize and groundnuts.  
- Social protection and disaster-relief institutions: examples include the Maharashtra Employment Guarantee Scheme (1970s) and employment creation programs in Indonesia in 1997.

### Planning, studies, and financing for adaptation
- Need for country-level impact studies and benefit–cost analyses due to heterogeneous impacts; many studies underway. National Adaptation Programmes of Action (NAPAs) incorporate grassroots coping strategies; currently 46 countries are preparing (or have prepared) NAPAs with financial assistance from the UNFCCC’s Least-Developed Countries Fund (UNFCCC 2008).  
- Multilateral development banks and regional studies: World Bank preparing adaptation strategies for each World Bank region; Asian Development Bank and World Bank initiated climate impact studies for four Asian coastal cities (Bangkok, Ho Chi Minh City, Kolkata, Manila) tied to regional “mini-Stern” reviews.  
- Adaptation financing beyond traditional aid: UNFCCC Special Climate Change Fund (SCCF) established in 2001; UNFCCC Adaptation Fund established in December 2007 to provide funds by taxing emission reduction credits under the Clean Development Mechanism—fund sizes currently small: SCCF approximately $60 million and the Adaptation Fund $45 million.

### Emissions trends and sectoral sources (summary points)
- Broad agreement that GHG emissions must be reduced to avoid serious alteration of the earth’s climate; emissions have continued to increase since 1990 though the rate of increase has slowed for some sectors.  
- World GHG emissions in 2000 by sector: approximately 65 percent from energy consumption and industrial processes; 18 percent from land use change (deforestation); 17 percent from agriculture and waste.  
- Within energy emissions: over one-third from power generation; approximately 22 percent from industry; 22 percent from transportation.  
- For the very poorest (IDA) countries, only 29 percent of GHG emissions come from energy use; agriculture and land use change dominate.

*Source: Excerpt from IMF Global Monitoring Report chapter on climate change impacts and adaptation (figures, tables, and numeric values reproduced exactly as presented in the source content).*

### 10. When emissions from land use change

### _gmr - 10. When emissions from land use change

### Global emissions and top emitters
- When emissions from land use change are included, the top 10 emitters account for two-thirds of CO2 emissions.
- Three developing countries—Brazil, Indonesia, and Malaysia—join China and India in the list of top 10 emitters.

### Per capita emissions (2004, including land use change)
- World emissions per capita: 4.5 tons of CO2 per person from the burning of fossil fuel.
- Average emissions per income group:
  - High-income countries: 13.3 tons per person
  - Middle-income countries: 4.0 tons per person
  - Low-income countries: 0.9 tons per person

### Emissions trajectories and scenarios
- Historic CO2 emissions from fossil fuel combustion are projected under the IPCC A1FI scenario (high reliance on fossil fuels and rapid economic and population growth).
- Under the A1FI scenario:
  - Carbon emissions are predicted to increase by over 60 percent by 2035 from 2004 levels.
  - Developing countries’ CO2 emissions from fossil fuel will soon equal those of high-income countries (figure 7.7).
  - By 2035 developing countries will equal high-income countries in their contribution to the stock of CO2 in the atmosphere if the world follows the A1FI trajectory (figure 7.8).
- If all sources of GHGs are included, non-Annex I countries already emit more GHGs than Annex I countries.

### GHG emissions by sector and region (2000) — selected totals from table
- World total (metric tons of CO2e): 43,058
  - World breakdown (metric tons): 26,980 (Industrial), 1,369 (Land use change), 5,729 (Energy processes), 7,619 (Agriculture and forestry), 1,361 (Waste)
  - Percentages in parentheses are percentages of total emissions (as presented in the source).
- High-Income countries total (metric tons of CO2e): 18,830
  - Breakdown shown: 15,481 (Industrial), 622 (Land use change), 2,043 (Energy processes), 93 (Agriculture and forestry), 591 (Waste)
- Regional examples (metric tons of CO2e and parentheses denote percentages of regional total as shown):
  - East Asia & Pacific: 9,613 (4,009 Industrial) (428 Land use change) (1,402 Energy processes) (3,536 Agriculture and forestry) (239 Waste)
  - Latin America & the Caribbean: 4,943 (1,361 Industrial) (82 Land use change) (1,009 Energy processes) (2,357 Agriculture and forestry) (134 Waste)
  - Sub-Saharan Africa: 2,307 (553 Industrial) (23 Land use change) (294 Energy processes) (1,379 Agriculture and forestry) (59 Waste)
- Source attribution in table: Source: WRI. Note: The figures in parentheses are percentages of total emissions.

### Comparison of Annex I and non-Annex I (selected indicators as presented)
- GHG emissions in 2000 (CO2, CH4, N2O, PFCs, HFCs, SF6, including land use change): Annex I 42.0 Percent of total emissions; Non-Annex I 58.0 Percent of total emissions
- Tons of CO2e per person: Annex I 13.9; Non-Annex I 4.9
- Cumulative CO2 emissions, 1950–2000 (including land use change) Percent of total emissions: Annex I 52.5; Non-Annex I 47.5
- Tons of CO2 per person457103
- Carbon intensity of electricity production Grams of CO2/kilowatt hour436679
- CO2 intensity of economy (excluding land use change) Tons of CO2/ million $PPP GDP491569
- Source: WRI 2007.

### Decomposition of CO2 emissions growth (1994–2004, 70 largest emitters)
- For the 70 countries (about 95 percent of global CO2 emissions from fossil fuel in 2004), CO2 emissions from fossil fuel increased by approximately 5,000 million metric tons between 1994 and 2004.
- Decomposition of that change:
  - Per capita GDP effect: 5,735 metric tons
  - Population effect: 2,665 metric tons
  - Carbon intensity effect: –3,400 metric tons
- Interpretation:
  - The largest factor behind CO2 growth was growth in per capita incomes.
  - Effect of population growth was about half as large as per capita income effect.
  - Improvements in carbon intensity offset 40 percent (–3,400/8,400) of the growth in CO2 from growth in population and per capita incomes.

### Cross-country variation in carbon intensity changes (1994–2004)
- Country grouping by percent of emissions increase from GDP growth offset by decline in carbon intensity of output:
  - Right bar (offset >100 percent): 15 countries (examples: Denmark, Germany, Russian Federation, Sweden and some former Soviet Union countries). In these countries CO2 emissions actually declined between 1994 and 2004.
  - Middle bar (offset between 0 and 100 percent): 36 countries — carbon intensity declined but not enough to fully offset GDP-driven emissions increases.
  - Left group (no offsetting): 19 countries — carbon intensity increased.
- Aggregate impacts (1994–2004):
  - Middle group increased carbon emissions by nearly 4 billion tons a year in the aggregate.
  - Countries whose carbon intensity increased caused world emissions to rise by 1.24 billion tons a year.
  - Countries in the right bar caused annual emissions to drop by only 200 million tons a year.

### Required carbon-intensity reductions to accommodate growth
- Example projection: If carbon emissions of developing countries double over the next 20 years (implying annual growth rate in emissions of 3.5 percent), and GDP grows at 10 percent a year (rates experienced recently by India and China), then carbon per dollar of GDP must fall at a rate of 6.5 percent a year.

### Balancing economic growth and reductions in carbon intensity
- Reductions in carbon intensity of GDP must come from one or a combination of:
  - Reducing the energy intensity of GDP (energy used per unit of output)
  - Reducing the fossil fuel intensity of energy (fossil fuel used per unit of energy)
  - Reducing the carbon intensity of fossil fuel (amount of carbon in a unit of fossil fuel)
- Between 1994 and 2004 the reduction in carbon intensity of GDP came almost entirely from reductions in the energy intensity of GDP. The carbon intensity of fossil fuel decreased slightly (shift from coal to natural gas) but this was offset by an increase in the fossil fuel intensity of energy.

### Energy efficiency potential and sectoral focus
- Energy intensity observations:
  - Eastern Europe and Central Asia had the highest energy intensity in 2004, driven by old, inefficient production equipment, dilapidated heating systems, high transmission and distribution losses, and inefficient household appliances.
  - China: widespread use of inefficient, coal-based power plants and small boilers for heating has offset efficiency gains in other sectors.
  - China and India: large proportion of small- and medium-scale industries use old and inefficient technologies, contributing to high energy-intensity levels.
  - Sub-Saharan Africa used only 4 percent of global energy supply in 2004; as industrial sector develops, adoption of new technologies will be needed to improve energy intensity.
- International Energy Agency manufacturing analysis:
  - Manufacturing accounts for about a third of world energy consumption.
  - Three industries—chemicals and petrochemicals, iron and steel, and non-metallic minerals—account for over half of manufacturing energy use and over 70 percent of CO2 emissions from manufacturing.
  - Table 7.9 comparison (as described) shows clear variation in energy efficiency across countries (example: China less efficient in cement production than India or Japan).
  - IEA estimates that between 18 and 26 percent of world industrial energy use could be reduced by using best-practice technologies. This would reduce CO2 emissions by between (text truncated in source).

*Source: _gmr - 10. When emissions from land use change*

### 1.9 billion and 3.2 billion tons a year.

### _gmr - 1.9 billion and 3.2 billion tons a year.

### Energy efficiency and power generation
- The average thermal efficiency of power plants in India and China is between 29 and 30 percent, compared with 36 percent in developed countries.
- Super-critical plants can achieve efficiencies up to 45 percent.
- In China, installed capacity is expected to double—from 500 to 1,000 gigawatts (GW) between 2007 and 2015.
- India is expected to add 100 GW of capacity over the same period.
- Installing thermal power plants with an efficiency of 38 percent in China would reduce carbon emissions at a typical plant by 22 percent.
- Emission reductions of up to 92 percent could be achieved by building supercritical plants with carbon capture and storage.
- “No regrets,” win-win energy-efficiency options that would pay for themselves in fuel savings if energy subsidies were removed include:
  - reducing losses in the transmission and distribution of electricity,
  - some improvements in power plant efficiency,
  - insulation of buildings,
  - improvements in appliance and vehicle efficiency.
- In many developing countries, demand-side incentives to improve energy efficiency are weak because electricity is not priced to recover the costs of generation; failure to reform the electricity sector may hamper access to financing more efficient power plants.

### Carbon markets, financing, and low-carbon investments
- Low-carbon investments that would not pay for themselves could be financed by selling emission reduction credits if long-term commitments establish a price path for carbon.
- The Kyoto Protocol’s Clean Development Mechanism (CDM) currently allows such credits; however, because the Kyoto Protocol ends in 2012, the CDM does not currently provide long-term financing opportunities.
- The World Bank manages nine carbon funds totaling more than $2.5 billion.
- The International Finance Corporation and European Bank for Reconstruction and Development manage three additional carbon funds.
- These funds support more fuel-efficient thermal power generation as well as renewable energy sources.

### Reducing carbon intensity and renewable energy potential
- The carbon intensity of energy used by the top 70 emitters of CO2 did not improve over the 1994–2004 period—although the carbon intensity of fossil fuel decreased slightly, the share of fossil fuel in energy increased.
- Substituting renewable energy sources for fossil fuels represents another means of reducing the carbon intensity of GDP.
- A World Bank study estimated potential for developing five sources of renewable energy—solar power, wind power, hydro power, geothermal energy, and biofuels—in developing and developed countries; potential energy supply is expressed as a fraction of current energy consumption.
- Table 7.10 (text) indicates greatest opportunities for renewable energy in Sub-Saharan Africa and parts of Latin America.
- Of the top 35 countries with the most solar energy potential, 17 are in Sub-Saharan Africa and 7 in Latin America.
- Of the top 35 countries with the most biofuel potential, 25 are in Sub-Saharan Africa.
- Note: table measures technical potential; economic feasibility requires a significant commitment to GHG reduction and attention to land use and food security in the case of biofuels.

### Reducing deforestation
- Land use change currently accounts for 18 percent of GHG emissions.
- Since the early 20th century, emissions from land use change in developing countries have dominated emissions from Annex I countries.
- In recent years two countries—Brazil and Indonesia—have produced over half of all world emissions from land use change.
- Annual hectares deforested in Indonesia were approximately the same between 2000 and 2005 as between 1990 and 2000.
- In Brazil hectares deforested increased from 2.7 million annually between 1990 and 2000 to 3.1 million annually between 2000 and 2005.
- The present value of a hectare of crop- or pastureland in the Brazilian Amazon is worth between $100 and $200.
- Clearing a hectare of dense rainforest could release 500 tons of CO2; at a carbon price of $10 per ton of CO2, an asset worth $5,000 is being destroyed for a land use that is one-twentieth as valuable.
- The Clean Development Mechanism does not allow creating emission reduction credits from avoided deforestation; it allows afforestation and reforestation projects.
- A new carbon credit program under negotiation within the UNFCCC—Reducing Emissions in Deforestation and Forest Degradation (REDD)—would compensate countries with carbon credits for avoided deforestation.
- Donor efforts and World Bank facilities include the Forest Carbon Partnership Facility and the Bank’s BioCarbon Funds to help estimate forest carbon stocks and fund pilot projects to reduce deforestation.

### International institutions, policy progress, and the Kyoto Protocol
- The UNFCCC was signed in Rio de Janeiro in 1992, went into force in 1994, and has been ratified by 190 countries.
- The UNFCCC established principles including:
  - a long-term goal of stabilizing GHG concentrations at a level to prevent dangerous interference with the climate system;
  - a short-term goal for developed (Annex I) countries to stabilize emissions at 1990 levels by 2000;
  - the principle of “common but differentiated responsibilities”;
  - opportunities for joint implementation to realize cost-effective reductions.
- The Kyoto Protocol came into force in February 2005 and committed Annex B countries to reduce total emissions over 2008–12 to 5 percent below 1990 levels.
- The Protocol allows buying emission rights between Annex B countries and assisting non–Annex B countries through the CDM.
- Criticisms of the Kyoto Protocol include that it does not limit emissions of three of the world’s five largest emitters—the United States, China, and India—and that the United States did not ratify the treaty.
- Progress criteria for future international agreements include:
  - achieving a desirable environmental outcome (emissions/concentration or temperature target),
  - efficiency (least-cost timing and allocation of abatement across countries),
  - equity across countries and generations,
  - flexibility to accommodate new scientific information,
  - encouragement of wide participation and compliance.
- Emissions must be priced—through a carbon tax, permit market, or combination—to provide incentives to reduce GHG emissions.
- International agreements will need provisions to accelerate development and diffusion of clean technologies (clean energy technologies, carbon capture and storage, geo-engineering) and to finance adaptation in developing countries.

### Biodiversity and marine fisheries
- MDG 7 target: reduce biodiversity loss; indicators include proportion of terrestrial and marine areas protected and proportion of species threatened with extinction.
- Approximately 15 percent of territorial area is protected worldwide on average.
- The WWF Living Planet Index (LPI) decreased from a value of 1.0 in 1970 to 0.71 in 2003, suggesting a downward trend in vertebrate populations overall; each component index (terrestrial, marine, freshwater) declined by approximately 30 percent.
- The terrestrial index masked regional change: a 55 percent decrease in populations of tropical species.
- Marine subindex declined overall by 27 percent between 1970 and 2003; regional variation:
  - Atlantic-Arctic monitored populations increased,
  - Pacific monitored populations approximately unchanged between 1970 and 2003,
  - Indian Ocean marine populations declined by 55 percent,
  - Southern Ocean populations decreased by 30 percent.
- Freshwater index declined by 30 percent between 1970 and 2003: bird populations stable, fish species declined by 50 percent.
- More than 70 percent of large river systems (measured by catchment area) in virtually all biomes have been disrupted, primarily for irrigation.
- Fish provide 2.6 billion people with over 20 percent of their protein intake.
- Two-thirds of world fisheries production comes from marine and freshwater fish capture; the remainder comes from aquaculture.
- Developing countries are among the top 10 in fish capture: China, Peru, Chile, Indonesia, and India together accounted for 45 percent of inland and marine fish catches in 2004.
- The number of fishers has been declining in most high-income countries but has increased in China, Peru, and Indonesia since 1990.

*Source: Excerpts from IMF chapter in _gmr - 1.9 billion and 3.2 billion tons a year.*

### 7.16 reveals, about half of all stocks are fully

### _gmr - 7.16 reveals, about half of all stocks are fully

### Trends in fish stock exploitation
- About half of all stocks are fully exploited, implying that production is close to maximum sustained yield.
- The share of fish stocks that are moderately exploited or underexploited has fallen from 40 percent in 1974 to 25 percent in 2006.
- The share of overexploited fish populations has increased from 10 percent in 1974 to 25 percent (year not restated in the excerpt).
- The increase in the number of overexploited stocks occurred primarily during the 1970s and 1980s; the share overexploited has stabilized since 1990.
- Production from marine and inland fisheries:
  - increased rapidly from 1950 until 1970,
  - grew more slowly from 1970 until 1990,
  - has stabilized since then.
- The world’s fishing fleet has been approximately stable between 1990 and 2004; the stable catch over that period is consistent with fish populations that are, in the aggregate, stable.
- Yearly variation in production between 1990 and 2004 is due almost entirely to variation in production from the Peruvian anchovy fishery and is associated with El Niño. (Note: this explanatory point appears as note 61.)

### Regional variation and vulnerable species
- The most commercially successful species are all fully exploited or overexploited.
  - Examples of overexploited species cited: the blue whiting in the Northeast Atlantic; the Chilean jack mackerel; some anchoveta stocks in the Southeast Pacific.
- Areas with the highest proportion (46–60 percent) of overexploited species are:
  - the Southeast Atlantic,
  - the Southeast Pacific,
  - the Northeast Atlantic,
  - the high seas.
- FAO suggests that deep water species in the high seas are at particular risk of exploitation because of their slow growth rates and late age at first maturity.

### Implications for fisheries production and management
- A high share of fully exploited stocks implies limited scope for increasing catch from those stocks without risking depletion; production close to maximum sustained yield leaves little margin for expansion.
- The stabilization of overexploited shares since 1990 and the stabilization of aggregate catches and fleet size between 1990 and 2004 suggest a broadly stable global fisheries situation in aggregate, but this masks species- and region-specific crises.
- Deep water and commercially valuable species face heightened risk due to biological characteristics (slow growth, late maturity) and high fishing pressure.

### Chapter conclusions with broader climate and policy context (selected key points)
- The world has been warming since the industrial revolution as a result of human emissions of greenhouse gases; this effect accelerated in the second half of the 20th century and especially since 1990. If past trends in emissions continue, the world could experience mean global temperature increases of 2 to 6 degrees centigrade by the end of the century.
- Temperature and precipitation changes, sea level rise, and extreme weather events will not be evenly distributed; temperatures will rise more in northern latitudes than in subtropical regions, but subtropical regions may reach levels where agricultural productivity is likely to decline.
- Poor countries will suffer the most from, and are able to adapt the least to, the effects of climate change; vulnerability varies widely among developing countries, so adaptation planning must be country-specific.
- For developing countries, promoting inclusive development is the best way to adapt to climate change; achieving MDGs 1, 4, and 6 would constitute effective adaptation to the health effects of climate change.
- Governments have roles in fostering adaptation by providing information (including weather forecasts), facilitating infrastructure investments, promoting efficient market responses (such as weather-index and flood insurance), and building institutions for disaster relief and social programs to cushion households from income shocks.
- Preventing dangerous changes in climate will necessarily involve mitigation of GHGs, including CO2 from fossil fuel use and deforestation, and reductions of methane and nitrous oxide from agriculture; better data are needed on GHG emissions from land use and agriculture, which currently account for one-third of GHG emissions.
- CO2 emissions from fossil fuel can be reduced by reducing the energy intensity of output and the carbon intensity of energy; studies indicate considerable scope for improving energy efficiency and for replacing fossil fuels with renewable energy sources.
- Carbon pricing and carbon finance can support low-carbon investments and emissions reductions from deforestation, but will require long-term commitments and the development of national institutions to monitor and protect forests.
- The UNFCCC and Kyoto Protocol have established principles and a foundation for global collective action; future agreements will be judged on their ability to limit GHG emissions significantly, cost-effectively, equitably, and to ensure widespread compliance.

*Source: FAO 2007; excerpted chapter findings and conclusions as presented in the source content.*

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### Health, Child Development, and Nutrition
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### Aid, Donor Behavior, and Aid Effectiveness
- Birdsall, Nancy, William D. Savedoff, and Katherine Vyborny. 2007. “Progress-Based Aid for Education: A Hands-Off Approach.” Center for Global Development, Washington, DC.
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- Celasun, Oya and Jan Walliser. 2008. “Predictability of aid: Do fickle donors undermine the predictability of aid?” Forthcoming in Economic Policy.
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- Government of Ethiopia, Irish Aid, UNICEF, USAID, and the World Bank. 2007. “Reaching the Health MDGs in Ethiopia: Facing or Escaping the Scaling Up Challenge.”
- IDA (International Development Association). 2006. “A Review of Output-Based Aid Approaches.” World Bank, Washington, DC.
- IMF (International Monetary Fund). 2007. “Fiscal Policy Response to Scaled-Up Aid.” IMF, Washington, DC.
- IMF and World Bank. 2007. “Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI). Status of Implementation.” IMF and World Bank, Washington, DC.
- International Health Partnership. 2007. “Scaling up for better health. IHP+ work plan of the eight international health agencies.”
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### Trade, Agricultural Policy, and Services
- Anderson, Kym, ed. Forthcoming. Distortions to Agricultural Incentives: A Global Perspective. London: Palgrave Macmillan; Washington, DC: World Bank.
- Anderson, Kym, and Will Martin, eds. Forthcoming. Distortions to Agricultural Incentives in Asia. Washington, DC: World Bank.
- Anderson, Kym, and William Masters, eds. Forthcoming. Distortions to Agricultural Incentives in Africa. Washington, DC: World Bank.
- Anderson, Kym, and Johan Swinnen, eds. Forthcoming. Distortions to Agricultural Incentives in Europe’s Transition Economics. Washington, DC: World Bank.
- Anderson, Kym, and Alberto Valdés, eds. Forthcoming. Distortions to Agricultural Incentives in Latin America and the Caribbean. Washington, DC: World Bank.
- Brenton, Paul, Gareth Edwards-Jones, and Michael Friis Jensen. 2008. “Carbon Labeling and Low Income Country Exports: A Look at the Issues.” Mimeo. World Bank, Washington, DC.
- Djankov, Simeon, Caroline Freund, and Cong Pham. 2006. “Time Costs as a Barrier to Trade.” Policy Research Working Paper No. 3909, World Bank, Washington, DC.
- Findlay, Ronald, and Kevin O’Rourke. 2007. Power and Plenty: Trade, War and the World Economy in the Second Millennium. Princeton, NJ: Princeton University Press.
- Francois, Joseph, Bernard Hoekman, and Miriam Manchin. 2006. “Preference Erosion and Multilateral Trade Liberalization.” World Bank Economic Review 20 (2): 197–216.
- Gootiz, Batshur, and Aaditya Mattoo. 2008. “Restrictions on Services Trade and FDI in Developing Countries.” Mimeo. World Bank, Washington, DC.
- Harrison, Ann, ed. 2006. Globalization and Poverty. Chicago: University of Chicago Press.
- Hertel, Thomas, and Alan Winters, eds. 2006. Poverty and the WTO. Impacts of the Doha Development Agenda. Washington, DC: World Bank.
- Hoekman, Bernard. 2006. “Liberalizing Trade in Services: A Survey.” Policy Research Working Paper No. 4030, World Bank, Washington, DC.
- Hoekman, Bernard, and Aaditya Mattoo. 2008. “Services Trade and Growth.” Policy Research Working Paper 4461. World Bank, Washington, DC.
- Kee, Hiau Looi, Alessandro Nicita, and Marcelo Olarreaga. Forthcoming. “Estimating Trade Restrictiveness Indices.” The Economic Journal.
- Mattoo, Aaditya, and Lucy Payton, eds. 2007. Services Trade and Development: The Experience of Zambia. Washington, DC: Palgrave Macmillan/World Bank.
- Mattoo, Aaditya, Robert M. Stern, and Gianni Zanini, eds. 2008. A Handbook on International Trade in Services. Oxford, U.K.: Oxford University Press.
- WTO (World Trade Organization). 2007. World Trade Report 2007: Six Decades of Multilateral Trade Cooperation.

### Environment, Natural Resources, and Climate Change
- Cavendish, W. 2000. Empirical Regularities in the Poverty-Environment Relationship of Rural Households: Evidence from Zimbabwe. World Development 28 (11): 1979–2003.
- Cohen, A. J., H. R. Anderson, B. Ostro, K. D. Pandey, M. Krzyzanowski, N. Kuenzli, K. Gutschmidt, A. Pope, I. Romieu, J. M. Samet, and K. Smith. 2005. “The Global Burden of Disease Due to Outdoor Air Pollution.” Journal of Toxicology and Environmental Health, Part A, 68: 1301–07.
- Dasgupta, S., K. Hamilton, K. D. Pandey, and D. Wheeler. 2006. “Environment During Growth: Accounting for Governance and Vulnerability.” World Development 34 (9): 1597–1611.
- FAO (Food and Agriculture Organization of the United Nations). 2005. Forest Resource Assessment. Rome: FAO.
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a, S., and J. Vincent. 2005. “Genuine Savings: Leading Indicator of Sustainable Development?” Economic Development and Cultural Change 53: 737–54.
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- IEA (International Energy Agency). 2006. World Energy Outlook 2006. Paris: IEA.
- IPCC (Intergovernmental Panel on Climate Change). 2007. “Climate Change 2007—Impacts, Adaptation and Vulnerability.” Contribution of Working Group II to the Fourth Assessment Report of the IPCC. Cambridge University Press, Cambridge, U.K.
- Komives, K., V. Foster, J. Halpern, and Q. Wodon. 2005. Water, Electricity, and the Poor: Who Benefits from Utility Subsidies? Washington, DC: World Bank.
- Narain, Urvashi, Klaas vant Veld, and Shreekant Gupta. 2005. “Poverty and the Environment: Exploring the Relationship Between Household Incomes, Private Assets, and Natural Assets.” Resources for the Future Discussion Paper 05-18, Washington, DC.
- Pearce, D. W., and G. Atkinson. 1993. “Capital Theory and the Measurement of Sustainable Development: An Indicator of Weak Sustainability.” Ecological Economics 8 (2): 103–08.
- Samuelson, P. 1961. “The Evaluation of Social Income: Capital Formation and Wealth.” In The Theory of Capital, ed. F.A. Lutz and D. C. Hague. New York: St. Martin’s Press.
- UNEP (United Nations Environment Programme). 2007. Global Environment Outlook 4: Environment for Development. Nairobi: UNEP.
- Vedeld, Paul, Arild Angelsen, Espen Sjaastad, and Gertrude K. Berg. 2004. “Counting on the Environment: Forest Incomes and the Rural Poor.” Environment Department Paper 98, World Bank, Washington, DC.
- World Bank. 2006b. Where Is the Wealth of Nations? Measuring Capital for the XXI Century. Washington, DC: World Bank.
- World Bank. 2008a. Environmental Health and Child Survival: Epidemiology, Economics, and Experiences. Washington, DC: World Bank.

### Climate Change, Adaptation, and Mitigation
- ADB (Asian Development Bank). 2005. “Climate Proofing: A Risk-Based Approach to Adaptation.” Asian Development Bank, Manila.
- Aldy, Joseph E., and Robert N. Stavins, eds. 2007. Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World. Cambridge, U.K.: Cambridge University Press.
- Bacon, Robert W., and Soma Bhattacharya. 2007. “Growth and CO2 Emissions: How Do Different Countries Fare?” Environment Department Paper, Climate Change Series, No. 113, World Bank, Washington, DC.
- Barrett, Scott. 2005. “The Theory of International Environmental Agreements.” In Handbook of Environmental Economics; vol. 3, 1457–1516, ed. K. G. Mäler and J. Vincent. Amsterdam: Elsevier.
- Bettencourt, Sofia, Richard Croad, Paul Freeman, John Hay, Roger Jones, Peter King, Padma Lal, Alan Mearns, Geoff Miller, Idah Pswarayi-Riddihough, Alf Simpson, Nakibae Teuatabo, Ulric Trotz, and Maarten Van Aalst. 2006. “Not If, But When: Adapting to natural hazards in the Pacific Islands Region.” Policy Note, World Bank, Washington, DC.
- Buys, Piet, Uwe Deichmann, Craig Meisner, Thao Ton That, and David Wheeler. 2007. “Country Stakes in Climate Negotiations: Two Dimensions of Vulnerability.” Policy Research Working Paper No. 4300, World Bank, Washington, DC.
- Capoor, Karan, and Philippe Ambrosi. 2007. “State and Trends of the Carbon Market 2007.” World Bank, with IETA (International Emissions Trading Association), Washington, DC.
- Chomitz, Kenneth M. 2002. “Baseline, Leakage, and Measurement Issues: How Do Forestry and Energy Projects Compare?” Climate Policy 2 (1): 35–49.
- Chomitz, Kenneth M., Piet Buys, Giacomo De Luca, Timothy S. Thomas, and Sheila Wertz-Kanounnikoff. 2007. “At Loggerheads? Agricultural Expansion, Poverty Reduction, and Environment in the Tropical Forests.” World Bank, Washington, DC.
- Cline, William R. 2007. “Global Warming and Agriculture: Impact Estimates by Country.” Peterson Institute, Washington, DC.
- Dasgupta, Susmita, Benoit Laplante, Craig Meisner, David Wheeler, and David Jianping Yan. 2007. “The Impact of Sea Level Rise on Developing Countries: A Comparative Analysis.” Policy Research Working Paper No. 4136, World Bank, Washington, DC.
- Dinar, Ariel, Robert Mendelsohn, Robert Evenson, Jyoti Parikh, Apurva Sanghi, Kavi Kumar, James McKinsey, and Stephen Lonergan. 1998. “Measuring the Impact of Climate Change on Indian Agriculture.” Technical Paper No. 402, World Bank, Washington, DC.
- FAO (Food and Agriculture Organization of the United Nations). 2007. The State of World Fisheries and Aquaculture 2006. Rome: FAO.
- Houghton, R. A. 2003. “Revised Estimates of the Annual Net Flux of Carbon to the Atmosphere from Changes in Land Use and Land Management 1850–2000.” Tellus 55B: 378–90.
- IPCC (Intergovernmental Panel on Climate Change). 2007a. “Climate Change 2007: The Physical Science Basis.” Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, U.K., and New York.
- IPCC (Intergovernmental Panel on Climate Change). 2007b. “Climate Change 2007: Synthesis Report.” Summary for Policymakers, Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
- Kurukulasuriya, Pradeep, and Robert O. Mendelsohn. 2007. “Crop Selection: Adapting to Climate Change in Africa.” Policy Research Working Paper No. 4307, World Bank, Washington, DC.
- Lecocq, Franck, and Philippe Ambrosi. 2007. “The Clean Development Mechanism: History, Status, and Prospects.” Review of Environmental Economics and Policy 1 (1): 134–51.
- McMichael, Anthony J., Diarmid Campbell-Lendrum, Sari Kovats, Sally Edwards, Paul Wilkinson, Theresa Wilson, Robert Nicholls, Simon Hales, Frank Tanser, David Le Sueur, Michael Schlesinger, and Natasha Andronova. 2004. “Global Climate Change.” In Comparative Quantification of Health Risks: Global and Regional Burden of Disease Due to Selected Major Risk Factors, ed. M. J. Ezzati, et al. 1543–1649. Geneva, Switzerland: World Health Organization.
- NOAA (National Oceanic and Atmospheric Administration). 2008. “Trends in Atmospheric Carbon Dioxide.” Earth System Research Laboratory, Global Monitoring Division. http://www.esrl.noaa.gov/gmd/ccgg/trends/.
- Parry, M., C. Rosenzweig, A. Iglesias, M. Livermore, and G. Fischer. 2004. “Effects of Climate Change on Global Food Production under SRES Emissions and Socio-Economic Scenarios.” Global Environmental Change 11 (3): 1–3.
- Stern, N. 2006. “Stern Review on the Economics of Climate Change.” HM Treasury, London.
- UNDP (United Nations Development Programme). 2007. Human Development Report 2007/2008—Fighting Climate Change: Human Solidarity in a Divided World. New York: UNDP.
- UNFCCC. 2008. http://unfccc.int/2860.php

*Compiled from the bibliographic listings in the source content provided.*

### 1999. The Benefits and Costs of the Clean Air Act:

### 1999. The Benefits and Costs of the Clean Air Act:

### References excerpt
- 1990–2010. Washington, DC: Office of Policy Analysis, U.S. EPA.
- Velicogna, Isabella, and John Wahr. 2006. “Measurements of Time-Variable Gravity Show Mass Loss in Antarctica.” Science 311 (5768): 1754–56.
- Watson, Jim, Gordon MacKerron, David Ockwell, and Tao Wang. 2007. “Technology and Carbon Mitigation in Developing Countries: Are Cleaner Coal Technologies a Viable Option?” Occasional Paper 2007/16, Human Development Report Office, UNDP, New York.
- Weitzman, Martin L. 2007. “Role of Uncertainty in the Economics of Catastrophic Climate Change.” Working Paper No. 07-11, AEI Center for Regulatory and Market Studies (formerly AEI-Brookings Joint Center), Washington, DC.
- Wheeler, David. 2007. “Greenhouse Emissions and Climate Change: Implications for Developing Countries and Public Policy.” Mimeo. Center for Global Development, Washington, DC.
- Wheeler, David, and Kevin Ummel. 2007. “Another Inconvenient Truth: A Carbon-Intensive South Faces Environmental Disaster, No Matter What the North Does.” CGD Working Paper 134, Center for Global Development, Washington, DC.
- Woods Hole Research Center. 2007. “Reducing Emissions from Deforestation and Forest Degradation (REDD): The Costs and Benefits of Reducing Carbon Emissions from Deforestation and Forest Degradation in the Brazilian Amazon.” A Report for the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP), Thirteenth Session, Bali, Indonesia, December 3–14, 2007.
- World Bank. 2006. Clean Energy and Development: Towards an Investment Framework. April 23, 2006.
- World Bank. 2007a. World Development Indicators

*Source: 1999. The Benefits and Costs of the Clean Air Act: 1990–2010. Washington, DC: Office of Policy Analysis, U.S. EPA.*

### 2007. Washington, DC: World Bank.

### _gmr - 2007. Washington, DC: World Bank.

### Goals and Targets (Millennium Development Goals)
- TARGET 1.A  Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day
- TARGET 1.B  Achieve full and productive employment and decent work for all, including women and young people
- TARGET 1.C  Halve, between 1990 and 2015, the proportion of people who suffer from hunger
- TARGET 2.A  Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling
- TARGET 3.A  Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels of education no later than 2015
- TARGET 4.A  Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate
- TARGET 5.A  Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio
- TARGET 5.B  Achieve by 2015 universal access to reproductive health
- TARGET 6.A Have halted by 2015 and begun to reverse the spread of HIV/AIDS
- TARGET 6.B Achieve by 2010 universal access to treatment for HIV/AIDS for all those who need it
- TARGET 6.C Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases
- TARGET 7.A  Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources
- TARGET 7.B Reduce biodiversity loss, achieving by 2010 a significant reduction in the rate of loss
- TARGET 7.C  Halve by 2015 the proportion of people without sustainable access to safe drinking water and basic sanitation
- TARGET 7.D Have achieved a significant improvement by 2020 in the lives of at least 100 million slum dwellers
- TARGET 8.A  Develop further an open, rule-based, predictable, nondiscriminatory trading and financial system (including a commitment to good governance, development, and poverty reduction, nationally and internationally)
- TARGET 8.B  Address the special needs of the least-developed countries (including tariff- and quota-free access for exports of the least-developed countries; enhanced debt relief for heavily indebted poor countries and cancellation of official bilateral debt; and more generous official development assistance for countries committed to reducing poverty)
- TARGET 8.C  Address the special needs of landlocked countries and small island developing states (through the Programme of Action for the Sustainable Development of Small Island Developing States and the outcome of the 22nd special session of the General Assembly)
- TARGET 8.D  Deal comprehensively with the debt problems of developing countries through national and international measures to make debt sustainable in the long term
- TARGET 8.E  In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries
- TARGET 8.F  In cooperation with the private sector, make available the benefits of new technologies, especially information and communications

### Eradicate Extreme Poverty and Hunger (MDG 1) — findings and projections
- Most recent global poverty projections anticipate that the proportion of people living in extreme poverty—on less than $1 a day—will fall from 29 percent in 1990 to 10 percent in 2015.
- Recently estimated purchasing parities for 2005 will inevitably affect calculation of poverty levels in developing countries but are not expected to change them significantly.
- Regional progress:
  - Sub-Saharan Africa is lagging far behind other regions in attaining MDG 1; on current trends this region will reduce poverty by only 33 percent between 1990 and 2015.
  - In 1990 South Asia had 43 percent of people living on less than $1 a day and has made substantial progress; India’s rapid growth over the past decade accounts for most progress in the region.
- Coverage and definitions:
  - Extreme poverty defined as proportion of individuals in developing countries who live on less than $1 a day (based on purchasing power parity 1993 constant prices).
  - Poverty estimates computed based on data covering 93 percent of developing countries’ population.
- Country tracking:
  - Of the 71 countries with available data (out of 149), 24 have already achieved or are on track to meet the poverty reduction target, but 47 are either off track or seriously off track.
  - Fifteen of 18 countries in Europe and Central Asia, and 11 of 20 countries in Latin America and the Caribbean, are seriously off track.
  - All 5 fragile states with available data are seriously off track; there is no evidence to suggest that even 1 fragile state will meet MDG 1.

### Achieve Universal Primary Education (MDG 2) — findings
- TARGET 2.A  Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling
- Regional status:
  - Sub-Saharan Africa is off track for both males and females.
  - South Asia is on track for females but off track for males.
  - East Asia and the Pacific, Europe and Central Asia, and Latin America and the Caribbean are on track; 46 countries in these regions have already achieved full primary completion.
- Trends:
  - Net enrollment rates for male and female children have been steadily increasing since 1990 in most regions.
  - Youth literacy (ages 15–24) and primary completion rates have improved notably in Middle East and North Africa, Sub-Saharan Africa, and South Asia.
- Data coverage:
  - Regional primary completion rates computed from country data covering 65 percent of developing countries’ population; literacy and enrollment indicators referenced to World Development Indicators.

### Promote Gender Equality and Empower Women (MDG 3) — findings
- TARGET 3.A  Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education no later than 2015
- Progress:
  - Significant progress since 1990 in reducing gender disparity in primary and secondary education; all regions except Sub-Saharan Africa broadly on track to meet MDG 3 by 2015.
  - Gender disparity in enrollment achieved in Latin America and the Caribbean; East Asia and the Pacific came close.
- Remaining gaps:
  - Gender gaps in wages and labor participation rates remain substantial with little statistical evidence of narrowing.
  - Labor force participation rates (population ages 15–64) are lower for females in all regions; gender gaps in 2006 were widest in the Middle East and North Africa (47 percent) and South Asia (46 percent).
- Wage inequality:
  - Women generally receive lower wages than men across primary, secondary, and tertiary sectors; examples provide wage ratios such as Chad’s primary sector wage ratio of 0.11 in 2002 and instances of wage ratios greater than 1.0 in some countries (Arab Republic of Egypt, Malawi, Maldives).

### Reduce Child Mortality (MDG 4) — findings
- TARGET 4.A  Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate
- Global numbers:
  - In 1990, 13 million children in developing countries died before age five; by 2006 that number had dropped to 10 million.
- Regional rates:
  - Sub-Saharan Africa had the highest under-five mortality rate in 2006, at 158 per 1,000.
  - Ten of the 11 developing countries with rates above 200 are in Sub-Saharan Africa (including Sierra Leone 270 and Angola 260).
  - South Asia is off track for the child mortality target.
- Interventions and coverage:
  - Measles vaccination coverage increased in all six regions since 1992; Sub-Saharan Africa increased from 50 percent in 1992 to 71 percent in 2006.
  - Inexpensive interventions (oral rehydration, antibiotics, mosquito nets, measles vaccination) have contributed to reductions.
- Country tracking:
  - One hundred and seven out of 145 developing countries with available data are either off track or seriously off track to reduce under-five mortality by two thirds by 2015.
  - No country in Sub-Saharan Africa is on track or has reached the target.
  - Only 2 of the 33 fragile states have achieved or are on track to reduce under-five mortality by two thirds since 1990.

### Improve Maternal Health (MDG 5) — findings
- TARGET 5.A  Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio
- TARGET 5.B  Achieve by 2015 universal access to reproductive health
- Global numbers and regional disparities:
  - An estimated 536,000 maternal deaths occurred worldwide in 2005, over 99 percent of them in developing countries.
  - Sub-Saharan Africa has the highest maternal mortality rate—more than twenty times higher than Europe and Central Asia.
- Health service indicators:
  - Percentage of births attended by skilled health staff remains low in South Asia (41 percent) and Sub-Saharan Africa (46 percent).
  - Since 1990 the proportion of births attended by skilled health personnel has increased across all regions; East Asia and the Pacific increased from 47 percent in 1992 to 87 percent in 2006, while Sub-Saharan Africa increased only one percentage point over the period reported.
- Fertility and contraception:
  - Adult fertility rates have declined over the past 10 years in all regions.
  - 87 percent of countries with available data have increased contraceptive prevalence rates.
  - Adolescent fertility: 2007 rate in Sub-Saharan Africa is 119 (births per 1,000 women ages 15–19), more than seven times greater than East Asia and the Pacific (16).

### Combat HIV/AIDS, Malaria, and Other Diseases (MDG 6) — findings
- TARGET 6.A  Have halted by 2015 and begun to reverse the spread of HIV/AIDS
- TARGET 6.B  Achieve by 2010 universal access to treatment for HIV/AIDS for all those who need it
- TARGET 6.C  Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases
- HIV/AIDS:
  - In 2007, 33 million individuals were living with HIV, 2.5 million were newly infected, and 2.1 million died from AIDS.
  - Global HIV prevalence stabilized since 2001 and has started to decline moderately; Sub-Saharan Africa’s prevalence declined by a full percentage point since 2000.
  - Sub-Saharan Africa’s prevalence decreased from 6.36 in 2003 to 5.76 in 2005.
  - From 2003 to 2005, 69 countries had positive annual changes in HIV prevalence rates, while 51 had annual decreases.
- TB and malaria:
  - TB incidence and prevalence rates have either remained level or declined from 1990 to 2005 in every region except Sub-Saharan Africa and Europe and Central Asia, where rates have been leveling off since the early 2000s.
- Prevention and knowledge:
  - Condom use for females’ partners increased in most Sub-Saharan African countries with available data (notably South Africa: 25 percent in 1999 to 60 percent in 2004); Zimbabwe declined from 11 to 10 percent between 1999 and 2004.
  - Female HIV knowledge increased in most Sub-Saharan African countries with available data (Rwanda: 26 to 48 percent between 1990 and 2004), though reversals occurred (e.g., Malawi).

### Ensure Environmental Sustainability (MDG 7) — findings (introductory)
- Access to clean potable water and basic sanitation are key indicators for human development.
- Over 1 billion individuals lack access to safe drinking water.
- 2.6 billion individuals lack access to basic sanitation.
- Improvements in water and sanitation could dramatically reduce the burden of disease, particularly diarrhea.

*Source: World Development Indicators and World Bank staff estimates as presented in the World Bank’s Global Monitoring Report content excerpt.*

### 1.8 million deaths annually. In addition, deforestation

### _gmr - 1.8 million deaths annually. In addition, deforestation

### Environmental degradation and human health
- "1.8 million deaths annually."
- Deforestation and greenhouse gas emissions, such as carbon dioxide, threaten biodiversity and drive climate change through global warming.
- In most regions adjusted net savings is negative or on the decline, indicating that countries are not saving enough to offset resource depletion and environmental degradation, thus clouding prospects of sustainable development.

### Water, sanitation, and MDG 7 targets
- TARGET 7.A  Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources
- TARGET 7.B  Reduce biodiversity loss, achieving by 2010 a significant reduction in the rate of loss
- TARGET 7.C  Halve by 2015 the proportion of people without sustainable access to safe drinking water and basic sanitation
- TARGET 7.D  Have achieved a significant improvement by 2020 in the lives of at least 100 million slum dwellers
- Thirty-five percent of the developing countries (with available data) have achieved or are on track to achieve the improved water target, while 24 percent have achieved or are on track to achieve the improved sanitation target.
- Fifty-seven percent of countries (with available data) in the Middle East and North Africa and in Europe and Central Asia are seriously off track in improving access to safe drinking water.
- For the improved sanitation target, 12 of 19 European and Central Asian countries and 36 of 45 Sub-Saharan African countries (with available data) are seriously off track.
- Definitions from the source:
  - Access to sanitation: percentage of population with at least adequate access to excreta facilities (private or shared, but not public) that can effectively prevent human, animal, and insect contact with excreta.
  - Access to improved sources of water: percentage of population with reasonable access to a permanent source of safe water in their dwelling or within a reasonable distance from it.

### Deforestation, forests as carbon sinks, and regional contributions
- Forests act as carbon sinks and absorb carbon dioxide in the atmosphere; deforestation hinders sustainable development by increasing greenhouse gas emissions and causing loss of biodiversity.
- Between 1990 and 2005 the global surface of forests was reduced by 1.3 million square kilometers, or 3 percent of its total.
- Forty percent of the world’s forests are located in Latin America and Sub-Saharan Africa, which were the two most important regional contributors to global deforestation.
- Latin America and the Caribbean lost 7 percent of its forests in 15 years; Sub-Saharan Africa, 9 percent.
- Regions explicitly listed as contributors include: Latin America and the Caribbean; Sub-Saharan Africa; Europe & Central Asia; East Asia & Pacific; South Asia; Middle East & North Africa.

### Adjusted net savings and sustainability indicators
- Adjusted net savings measures the saving rate in an economy after adjustments for educational expenditure, capital depreciation, natural resource depletion, and carbon dioxide and particulate emissions damage.
- A negative saving rate indicates an economy is on an unsustainable future path of economic growth.
- Europe and Central Asia, the Middle East and North Africa, and Sub-Saharan Africa have all exhibited a downward trend in adjusted net saving since 1995 and had negative adjusted net saving rates in 2005.
- Latin America and the Caribbean had a positive 2005 adjusted net saving rate but also had declining adjusted net saving levels.
- In recent years, only the Asian regions seem to have both an upward trend in adjusted net savings and a positive saving rate.

### Carbon dioxide emissions and regional patterns
- Carbon dioxide (CO2) emissions are derived from fossil energy use and cement manufacture, which tends to rise with incomes.
- Per capita CO2 emissions are greatest in high-income countries, which record levels more than five times those of developing countries.
- The Middle East and North Africa, East Asia and the Pacific, South Asia, and Sub-Saharan Africa have recorded increases in CO2 emissions per capita.

### Aid, trade, technology, and MDG 8
- TARGET 8.A  Develop further an open, rule-based, predictable, nondiscriminatory trading and financial system
- TARGET 8.B  Address the special needs of the least developed countries
- TARGET 8.C  Address the special needs of landlocked developing countries and small island developing states
- TARGET 8.D  Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term
- TARGET 8.E  In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries
- TARGET 8.F  In cooperation with the private sector, make available the benefits of new technologies, especially information and communications
- Official development assistance (ODA) from DAC countries has increased steadily in the last decade, with a large jump in 2005, mostly attributable to debt-relief initiatives.
- The ODA-to-GNI ratio for DAC donors stood at 0.31 percent in 2006, below the level of the early 1990s.
- Programmable aid has increased since 1990, but the percentage of ODA considered programmable aid has fallen.
- One of the indicators for MDG 8 is the ratio of total net ODA to DAC donors’ GNI.
- The amount of ODA disbursed by DAC donors to low-income countries grew by 124 percent from 2000 to 2006.
- Owing to debt-relief initiatives, ODA to lower-middle-income countries rose by 175 percent from 2002 to 2005 but sharply decreased, by 47 percent, in 2006.
- Non-DAC ODA is estimated to be growing rapidly but has not yet been monitored systematically.
- Trade access and restrictiveness:
  - Low- and middle-income countries benefited from a slight improvement between 2000 and 2006 in market access for their products.
  - Low-income countries still face the lowest levels of access to export markets and impose larger restrictions on imports than any other group, despite progress between 2000 and 2006.
  - Trade liberalization in middle-income countries was more pronounced over the same period.
- Internet access and affordability:
  - A one-year subscription cost was equivalent to 62 percent of GNI per capita in low-income countries in 2005.
  - The proportion of users doubled in low-income countries between 2003 and 2005 but remains low, at 4 percent of the population.
  - The proportion of users in high-income countries increased from 46 to 56 percent between 2003 and 2005.

### Debt sustainability and risk classification
- With MDGs and multilateral debt-relief initiatives, external and domestic debt-sustainability indicators are being monitored more closely in low-income and lower-middle-income countries.
- Debt-stress risk classification:
  - Low risk: all debt-burden indicators are far below the baseline scenario threshold.
  - Moderate risk: indicators currently below threshold could increase from external shocks or policy changes.
  - High risk: at least one debt-burden indicator has surpassed the threshold.
  - Debt distress: a country is already having repayment difficulties.
- For the 56 countries with reliable data, eight low-income countries were in debt distress as of early 2008.

### Key implications and policy directions (as presented in the source)
- Urgent action is needed to help the world get back on track to achieve the MDGs; urgent action is also needed to combat climate change.
- The goals of development and environmental sustainability are closely related, and the paths to those goals have important synergies.
- Priorities implied by the evidence:
  - Reverse deforestation trends to preserve carbon sinks and biodiversity.
  - Improve access to safe drinking water and sanitation, with attention to regions and countries that are seriously off track.
  - Strengthen national saving and investment in human and natural capital to reverse negative adjusted net savings.
  - Continue efforts to make aid more programmable, aligned to national priorities, and responsive to policy quality and institutional capacity.
  - Address debt vulnerabilities through continued monitoring and comprehensive national and international measures.
  - Expand affordable access to information technologies to narrow the digital divide.

*Source: Global Monitoring Report 2008 (excerpts).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/gmr/2008/eng/_gmr.pdf_