PRESENTATION

This book examines the synergy between financing and policies in addressing the complex problems faced by Latin American countries in their quest for sustainable development. It explores some innovative financing mechanisms and highlights useful experiences that can be replicated and be of value to policymakers in the region. It brings together several papers presented at a meeting organized by the OAS as part of its efforts to address a mandate in the area of financing of sustainable development received from the Summit of the Americas on Sustainable Development, held in Bolivia in December of 1996. The papers were produced by technical experts from academia, a government research institute, and—in a personal capacity—the Inter-American Development Bank.

The paper by Gil Nolet contributes to the debate on how to achieve cost-effective environmental compliance. It reviews recent relevant developments in environmental enforcement in Latin America, assesses the potential of fines for violators as a possible source of revenues for preventing further environmental degradation, and examines alternative approaches to enforcement such as private enforcement and voluntary compliance programs.

The paper by Ramón López and Claudia Ocaña highlights the benefits that Latin America could obtain in the trade of carbon emission permits. As a result of the Kyoto meeting, several schemes to reduce emissions and encourage carbon trading are being developed. The authors point out that if all carbon emissions, including those associated with deforestation and forest burning, were included in determining the emission quotas for the Latin America and Caribbean region, the region could obtain permits equivalent to twice its current emissions from industrial sources. This would increase the value of standing forests dramatically and create a powerful financial incentive to reduce deforestation. The paper stresses that the region could obtain several billion dollars a year if it became fully involved in a global trading system of carbon emission rights.

The complex issue of financing biodiversity conservation in Latin America is discussed in Kari Keipi’s paper. Because biodiversity is viewed as a public good whose socioeconomic value is hard to measure, it is difficult to mobilize financing for its preservation. The paper reviews and evaluates alternative sources of financing, including funding from governments, the private sector, nongovernmental organizations, and international institutions.

The concern for reducing water pollution problems in Latin America is addressed by Sergio Ardila from a theoretical as well as from a practical point of view. He examines water pollution control efforts in Colombia and Venezuela and draws some valuable conclusions that can guide other efforts in the region in approaching the difficult challenges of financing solutions to improve water and sewer service provision.

In his paper, Ronaldo Serôa da Motta provides policymakers with important guidelines for the design and use of economic instruments for environmental management, placing great value on the importance of careful design and institutional performance. He stresses the importance of selecting “viable” instruments rather than looking for the best ones. His paper also examines the main experiences of Latin America in the use of economic instruments and in particular with respect to water charges.

In a world characterized by dynamic change, globalized production, and large and rapid shifts of financial capital, Latin America and the Caribbean must be a global player, but must also make sure that their development is sustainable-sustainable economically, socially, and environ mentally, as emphasized by the countries when they signed the Declara tion of Santa Cruz at the Summit of the Americas on Sustainable Development. This book, which examines financing and policies for sustainable development, should assist policymakers in their journey toward that goal.

Finally, special thanks should be extended to all those who have made suggestions that improved the papers, to Betty Robinson, the editor for the Unit for Sustainable Development and Environment of the OAS, and to Andrea Lalinde, who provided invaluable assistance to Juan Carlos Jordan and Ramón López, the editors of this book.

Richard A. Meganck
Director
Unit for Sustainable
Development and Environment