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Climate change affects the world’s poorest first and worst. Yet it is a problem the whole world shares that can only be addressed through international cooperation. CGD’s work on climate finance looks at economic incentives that benefit us all—by helping developing countries work together with other governments, institutions, and corporations to reduce emissions.
How well do your country's policies make a positive difference for people in developing nations? That’s the question CGD seeks to answer each year in our Commitment to Development Index (CDI). It’s a ranking of 27 of the world’s richest nations based on seven policy areas: aid, finance, technology, environment, trade, security, and migration.
The team behind the CDI, deputy director of CGD Europe Ian Mitchell and policy analyst Anita Käppeli, join me this week on the CGD podcast to discuss why these rankings matter and how countries stack up.
In first place this year is Denmark, followed by Sweden, Finland, France, and Germany. Greece, Japan, and South Korea rank at the bottom—though South Korea actually ranks first on the technology component.
Among the countries in the middle are the UK, tying with the Netherlands for 7th place, and the US, all the way down at 23rd. In the future, how might these scores be impacted by the changing politics of the two nations?
“On Brexit, there’s real potential for this to affect the CDI score,” Mitchell tells me in the podcast. “The UK will take control of its own migration policy more fully and it will have its own trade policy and it will take control of agricultural policy form the EU. All of those things feature in the Commitment to Development Index.”
As for the the Trump Administration’s America-first approach, Mitchell says, “It’s surely in the interest of countries to see other countries developing to reduce the security risk, to make sure there’s lower risk of disease emerging . . . and the CDI is a framework for prioritizing action on that.”
Overall, Käppeli tells me, the CDI is a reminder to countries that “policy coherence is an issue; that they should not pursue policies in [only] one field—for instance, give a lot of aid, but then close the boarders for products from developing countries.”
“The CDI is holistic,” Mitchell adds, pointing out that the CDI’s focus on policy is “complementary” to the Sustainable Development Goals’ focus on outcomes: “If you think about how we’re going to achieve the SDGs, then looking at the CDI [is] a great way to do that.”
How well do your country's policies make a positive difference for people in developing nations? That’s the question CGD seeks to answer each year in our Commitment to Development Index (CDI). The team behind the CDI, deputy director of CGD Europe Ian Mitchell and policy analyst Anita Käppeli, join me to discuss why these rankings matter, how countries stack up, and how their scores may be impacted by the shifting political environment.
Today, we published this year’s Commitment to Development Index (CDI), which ranks 27 of the world’s richest countries in how well their policies help to spread global prosperity to the developing world.
We will be presenting the Index and our recommendations at the high-level period of the UN General Assembly (UNGA) later this month. As political leaders prepare to meet for UNGA, here are some key takeaways from our research that should help guide their policies and discussions.
1. Leadership on global development isn’t only for the richest!
The CDI analyzes the policies of 27 of the world’s richest countries in seven key areas: aid, finance, technology, environment, trade, security, and migration. The indicators adjust for size and economic prosperity—and the results demonstrate that country wealth does not determine the results. The wealthiest countries—represented by the G7—rank anywhere between fourth and twenty-sixth. Income per person averages half that of the United States in Visegrád countries (Czech Republic, Hungary, Poland, and the Slovak Republic), but all four now rank higher in their commitment to development. Portugal, who ranks sixth, performs well in most components despite being less prosperous than many of the CDI countries. Smart policy design is not a matter of prosperity only. Therefore, our first key message to all the leaders of the 27 CDI-countries:
Domestic economic challenges needn’t prevent leadership on smart policies to increase global prosperity.
2. Development is about much more than aid
The CDI draws attention to the fact that global development is about so much more than the amount or quality of foreign development assistance provided. Policymaking in various policy fields directly affect the lives of poor people around the globe.
For example, the design of our policies on technology or finance affect the prospect for people living in poorer countries. Both research and development policies and investment policies are mainly pursued for domestic goals. However, they have a lasting effect on developing countries. Smart intellectual property rights can enable knowledge sharing and technology transfer. Also, bilateral investment agreements with developing countries recognising specific public policy goals such as labour rights, environmental standards, or human rights can have an important effect on the prospect for development.
The commitment to implementing balanced and sustainable policies domestically also sends a strong signal about their importance globally and irrespective of countries borders. Money spent on foreign development assistance does not have the same lasting effect if countries don’t recognise the international impact of their actions in other policy areas. Therefore:
In our integrated world, your policies and decisions as a leader of a rich country have an important bearing on the lives of people in developing nations.
3. Even the bottom-ranked country has smart policies we all can learn from
Like the Sustainable Development Goals (SDGs), the CDI recognizes development has many angles. But while the SDGs cover all nations and their outcomes, the CDI concentrates on the richest countries and emphasizes how policies can make a huge difference to development globally. The fact that we limit our evaluation to high income countries means that policy recommendations are more tailored and relevant. Even the best-ranked countries have weaknesses where they can learn from their peers. Overall leader Denmark performs weaker on migration and could learn from the migration policy designs from countries as varied as Luxembourg, New Zealand, or neighbouring Sweden. Similarly, bottom-ranked South Korea could advise all other 26 CDI countries on how to build long-lasting support for research and development. Accordingly:
Use the CDI as a tool to learn from others and to inspire change through your own best-practice policies.
4. Some overall progress on the Environment component but stronger commitments are needed
Tragically, Hurricane Harvey has reminded the United States how vulnerable we all are when natural disasters hit. Further, people in South Asia were left suffering after massive flooding and devastation affected millions, while earlier this year we saw how the unprecedented drought in Africa affected the lives of millions facing malnutrition. These tragic events, sadly far from unique, remind us that we all need to do more to combat climate change.
This year’s CDI points out that progress has been made—CDI countries report progress in curbing new greenhouse gas emissions and the amount of Ozone-depleting substances has been cut significantly. However, many environmental challenges remain. We need to see an even bigger commitment to development from the CDI countries in the future, such as a complete support for the Paris Agreement and the willingness to tackle issues such as overfishing and deforestation. Thus, our final recommendation:
While progress has been made, many global challenges remain. We ask this generation of world leaders to strengthen and deepen their commitment to development.
These findings show that we and our governments can do so much more to spread prosperity to poorer countries. The CDI serves as a useful tool to identify which national policies still have potential to be designed in a more development friendly way. We hope world leaders use the opportunity of UNGA to discuss ways to make further progress in all policy fields, inspiring each other to achieve more on global development.
In the past decade, Ghana has experienced severe electricity supply challenges even though installed generation capacity has more than doubled over the period. The electricity supply challenges can be attributed to a number of factors, including a high level of losses in the distribution system as well as non-payment of revenue by consumers. Solving Ghana’s electricity challenges would require a range of measures.
This post originally appeared on theguardian.com, as part of CGD’s sponsorship of the Guardian’s Global Development Professionals Network. Frances Seymour is now a distinguished senior fellow at the World Resources Institute.
If tropical deforestation were a country, it would rank third after China and the United States as a source of emissions. Currently a large part of the problem, forests can be an even bigger part of the solution because trees offer the potential to achieve negative emissions. For example, ending tropical deforestation and allowing damaged forests to recover could reduce global net emissions by up to 30 percent.
The 2015 Paris agreement recognises the importance of forests in achieving climate goals. The agreement incorporates a framework of reducing emissions from deforestation and forest degradation (Redd+). The “plus” connotes the enhancement of forest carbon stocks.
Here are three reasons why Redd+ is a valuable tool in the fight against climate change.
1. It offers a low-cost path to climate stability
Paying developing countries to reduce deforestation is one of the cheapest emission mitigation strategies available to industrialised countries. It allows them to take on more aggressive climate targets at a lower additional cost. Bilateral Redd+ agreements have been drawn up with commitments of only $5 (£4) per tonne of avoided emissions, compared to the $100 per tonne estimates for “clean coal” technologies.
Brazil has led the world in cutting emissions by reducing deforestation in the Amazon. And it did so at an out-of-pocket cost of only one-third the amount spent on hosting the 2016 Olympic Games. And that reasonable expenditure does not take into account all the other benefits produced by standing forests such as generating fresh water for drinking, irrigation, and hydropower.
2. It encourages better international cooperation
While funding for developing assistance is always under pressure, it is particularly so in times of economic austerity and resurgent nationalism. An inconvenient truth is that decades of aid to the forestry sector has not turned the tide on tropical deforestation. But due to its novel payment-for-performance feature, Redd+ promises to be different by focusing on ultimate outcomes rather than proximate inputs.
If the desired results are not achieved, no payment is made. This feature of Redd+ is also politically attractive to developing country governments. A focus on results frames payments as a business transaction among equal partners rather than a paternalistic relationship between donors and recipients.
3. It helps developing countries be part of the global climate solution
Developing countries increasingly recognise that protecting forests is in their own interest, above and beyond the opportunity to obtain results-based finance. Many have signalled their intention to reduce emissions from deforestation as part of their national contributions to reaching the global climate goals, and have pledged to do more with international support.
The map below indicates the dozens of countries that are taking part in internationally-funded Redd+ programmes. Only those highlighted in orange have so far been promised any performance-based reward for success.
Only those highlighted in orange have so far been promised any performance-based reward for success. Source.
If Redd+ is so attractive to industrialised and developing countries alike, why hasn’t more funding been promised? Here are three criticisms put forward by aid agencies, and why they no longer hold up.
1. “It’s hard to measure forest-based emission reductions”
It used to be extremely difficult to monitor forest loss. Before images from satellites became widely available and affordable, it was almost impossible to know if remote areas of forest had been protected or cleared. But now advances in remote sensing technologies have made it possible to detect forest cover change in areas the size of a baseball diamond every few days. In addition to this, our ability to estimate the carbon stock contained in forests is constantly improving. These tools make it feasible to estimate the carbon emissions that result from forest loss with sufficient accuracy to provide a sound basis for results-based payments.
2. “There’s a high risk of corruption”
Some aid agencies have been reluctant to assign funds on a payment-for-performance basis due to fears of corruption. But compared to traditional funding for project participation, results-based finance offers fewer opportunities for diverting funds because payments are not made unless agreed outcomes are achieved.
3. “It has adverse impacts on communities”
To address possible risks to the rights and interests of local communities when a value is placed on forest carbon, principles for safeguards and benefit-sharing have been built into Redd+. Indeed, indigenous groups have used Redd+ policy forums at national and international levels to advance their agendas, and have begun to access a share of Redd+ finance directly.
The main complaint of Redd+ opponents is that buying the carbon protection services of developing countries lets rich, heavily polluting nations off the hook in reducing their own emissions. Let’s be clear: we need both to end deforestation and reduce emissions in rich countries. As Why Forests? Why Now?, the new book that I’ve written with Jonah Busch details, payment-for-performance for protecting tropical forests can be structured in ways to ensure that emission reductions are real and additional. By doing so, rich countries are “buying their way up” rather than “buying their way out”.
The science, economics, and politics of Redd+ are finally aligned. It’s time for results-based finance to follow.
Tropical forests help people live safer, healthier, and more productive lives in many ways, not least by reducing climate change. In fact, tropical forests contribute to achieving more than half of the 17 sustainable development goals agreed by world leaders in 2015.
Goal 1: No poverty
Communities living in or near tropical forests get an average of 21 percent of their income from forest products other than timber, according to a survey of 24 countries. However, there is often more money to be made by clearing forests for beef pastures, soy fields, or oil palm plantations—though often by different people than those who benefit from rainforests. So the challenge for forest conservation is to find ways to make them worth more alive than dead. Eco-tourism and international carbon payments are just two of the ways this can be done.
Goal 2: Zero hunger
Tropical forests’ contributions to food security go far beyond the fruits, nuts, vegetables, mushrooms, and meats that account for 7 percent of the income of households living in and around them. The birds, bees, and bats that live in forests improve the productivity of nearby fields by providing free pollination and pest control. Forests also recycle moisture as cool, wet air that is better for downwind farming, while their cover contributes to the health of inland fisheries. They even support breadbaskets at continental scales by creating vapour clouds or “flying rivers” that carry atmospheric moisture from the Amazon to the fertile growing regions of southern Brazil.
Goal 3: Good health and wellbeing
Tropical forests are a source of both traditional and modern medicines. People living in and around Makira National Park in Madagascar use 241 local plants as medicines to treat 82 types of illness. Modern medicines derived from rainforest plants include vinblastine (an anti-cancer drug), progesterone (an ingredient used in contraceptives), quinine (an anti-malarial), and tubocurarine (a muscle relaxant). Mature tropical forests also suppress malaria due to cooler temperatures, less standing water, and more species that eat or compete against mosquitoes.
Forests keep water clean by preventing erosion and filtering out pollutants. Converting Indonesian forests to oil palm plantations was found to cause a 500-fold increase in sediment in streams. To preserve water quality, cities as diverse as Bogota, Harare, and Singapore have set aside protected areas in upland watersheds.
Forests make many economic contributions to developing economies, but you wouldn’t know it by looking at gross domestic product (GDP).
Goal 7: Affordable and clean energy
Hydroelectric dams supply two-thirds of Latin America’s electricity, and the productivity of these dams depends on having an abundant, reliable, and clean supply of water. Forests limit the amount of sediment that flows into reservoirs, maintaining generation capacity and avoiding costly repairs and dredging. Where deforestation has been rampant, as in the watershed above Haiti’s Péligre Dam, electricity production has plummeted (pdf).
Goal 8: Decent work and economic growth
Forests make many economic contributions to developing economies, but you wouldn’t know it by looking at gross domestic product (GDP), which doesn’t count goods and services that don’t enter formal markets. However, economic estimates of the value of forests, and the costs when they are destroyed, are becoming more common. The World Bank calculated that Indonesia’s catastrophic 2015 forest fires caused $16bn (£13bn) in damages to health, infrastructure, and agricultural output—more than double the potential revenue from growing palm oil in cleared areas.
Goal 9: Industry, innovation, and infrastructure
Forests form a natural “green infrastructure” that protects towns from floods, fires, droughts, and other natural disasters. Hillsides with less deforestation had fewer landslides after a deadly 1999 tropical storm in eastern Mexico; and coastal mangrove forests protected villages from deadly waves following the super cyclone in Odisha in 1999 and tsunamis in the Indian Ocean in 2004 and Japan in 2011.
Goal 13: Climate action
Deforestation is the second-leading cause of climate change after burning fossil fuels. On many days in 2015, forest fires in Indonesia produced more greenhouse gas emissions than the entire US economy. Net deforestation is responsible for about 10 percent of climate emissions. When you consider that forests can remove carbon from the atmosphere too, protecting tropical forests while restoring damaged forests could contribute up to 24–30 percent of the potential climate solution.
Goal 14: Life below water
Forests don’t just keep carbon dioxide out of the atmosphere, they also keep it out of the ocean, where it forms carbonic acid and breaks down the calcium carbonate that marine animals need to form hard shells. Meanwhile, coastal mangrove forests serve as breeding grounds and nurseries for a wide variety of fish, crustaceans, and other sea life. Thirty percent of the fish catch in southeast Asia and 60 percent of commercial fish species in India rely on mangroves at some stage of their life cycle.
Goal 15: Life on land
Tropical forests are extraordinarily diverse, ranging from high montane cloud forests to lowland seasonally flooded forests to dry deciduous forests, each with its own distinct array of plant and animal life. One square kilometre of tropical rainforest in Malaysia can contain more tree species than all of the United States and Canada; a single tree in the Peruvian Amazon may be home to more ant species than the entire British Isles. Conserving tropical forests protects the habitat of two-thirds of all species, including some of the most charismatic: jaguars, gorillas, orangutans, and birds of paradise.
Forest conservation, long at the centre of efforts to protect earth’s biodiversity, is increasingly understood to make important contributions to the other SDGs as well.
In a recent trip to the center of the world, I found myself confronting the big development questions in a low-income country with reasonably propitious circumstances. Papua New Guinea (PNG) is larger, richer, and growing faster than I had thought. It will go to the polls this very month to elect a new government. It is also facing all the dilemmas faced by most low-income countries since the 1950s—political fragmentation, resource curses, income inequality, and poor health. Have we learned anything to help it meet those challenges?
After seven decades of research and experience and effort, I’d say we have only partial answers to these questions because the decisive factor—public policy—is fundamentally indeterminate. The political choices being made in PNG bring this into relief. The current government’s policies can be characterized as blatantly disregarding norms of good governance or as pragmatic initiatives to construct a national and civil polity. Which of these characterizations is more accurate will only be revealed by the social and environmental consequences.
Papua New Guinea is at the center of the world
For starters, let me explain why Papua New Guinea (PNG) is the center of the world. One individual I met during my travels told me, “The world looks very different from here … You see a country in transition, strategically located as the bridge between Asia and the Pacific.” Then he convinced me with two maps on his wall much like the following.
Most of us are conditioned to think the world looks like this:
The re-centered map also shows that Papua New Guinea is firmly placed near Asia-Pacific trade routes, with valuable mineral and oil resources demanded by economic giants like China, Japan, Malaysia, the Philippines, and South Korea. PNG’s central location is partly driving a construction boom in Port Moresby as the country prepares to host the Asia-Pacific Economic Cooperation (APEC) meetings in 2018. In addition, PNG benefits from a long coastline (we know that being landlocked is a hindrance to development). It shares a land border with Indonesia, one of Asia’s largest economies and its 260 million people. It is also close to a place with higher wages (more on that below).
PNG is also an international leader on climate change
PNG has also played a central role in one of the world’s most challenging crises: climate change. In 2005, along with Costa Rica, the PNG government led a coalition of rainforest nations to develop a system, known as REDD+, that would compensate them for preserving their rainforests. These proposals eventually led to billion-dollar programs like the Amazon Fund. If global targets of slowing climate change by 2030 are going to be met, it will require sharp reductions in tropical deforestation because deforestation releases large greenhouse gas emissions; because destroying mature forests reduces carbon sequestration; and because policies for preserving tropical forests are among the most cost-effective ways to address global warming (see CGD’s Why Forests? Why Now?).
PNG is growing richer but facing a resource curse
Nevertheless, PNG is a struggling developing country with common problems of small size, concentrated exports, high income inequality, and political fragmentation. Its population is dispersed—85 percent of people live in rural areas. Domestic integration is difficult because of mountainous terrain and a combination of geology and climate that makes road maintenance costly. PNG’s per capita income barely budged from 1960 to 2000 (rising from $1,200 to about $1,900 in 2011 USD), but it experienced a resource boom and grew 60 percent to $3,000 in 2017. It is projected to reach $3,900 sometime in 2030.
PNG’s top exports come from mining (gold and copper) and agriculture (palm oil and coffee). A massive investment by ExxonMobil into extracting natural gas (LNG) contributed to the investment boom, but that project only started producing in 2014—just as global fuel prices began to decline. Economic growth is expected to resume at a modest pace on the base of extracting natural resources and agriculture, however, few expect the economic benefits from these sectors to be widely shared. Some argue that PNG will face a “natural resource curse,” including evidence that resource exports are driving up exchange rates and reducing the profitability of local industry. Others have documented the way promises of jobs and income for local communities can devolve into militarization and exacerbate inter-ethnic conflict. Current policies are keeping the currency overvalued and dependence on imported consumer goods may be one of the motivations that the country (elites?) won’t let the foreign exchange rate adjust more rapidly.
Papua New Guinea has unexploited potential due to the wage cliff
One response to the resource curse would be to diversify exports, but the greatest potential probably lies in reaping the benefits of labor mobility. PNG is on one side of an economic cliff relative to Australia. The Torres Strait islands that are part of Australia lie only 4 km from PNG. I was told you can travel between PNG and Australia’s mainland “in a tinny in half a day.” While that proximity has implications for controlling illicit trade and the spread of infectious disease, it also presents an incredible opportunity for raising incomes in both countries by encouraging properly regulated temporary migration. Average wages in PNG are on the order of $580 USD per month (including the formal sector), while Australian wages are closer to $5,600 per month—a place premium of 10 to 1. No anti-poverty program exists to help Papuans raise their income on the scale that would be possible by an appropriate labor mobility agreement, temporary work program, or skills partnership.
Health challenges, old and new
While PNG is more “central” than you might think, it is still a lower-middle income country with poor health conditions. Life expectancy is only about 60 years on average. Health has improved over the last two decades, but the pace has been too slow for PNG to meet any of the Millennium Development Goals. Infant mortality and maternal mortality remain high at about 47 per 1,000 live births and 215 per 100,000 births, respectively. Measles, diarrhea, and respiratory illnesses are among the top 10 risks for premature death, but increasingly Papuans are dying early from non-communicable diseases (NCDs – see figure below).
The reasons for this slow pace of improvement are multifaceted and complex, but public health policy hasn’t been particularly helpful. Several Papuans told me they remembered community workers who maintained demographic and health records and conducted outreach visits when they were young, but reported that these functions are rarely performed today. A few years ago, a study described 2002 to 2012 as a “lost decade” because, by many measures, the provision of primary health care stagnated or declined during that period. That study documented declines in drug availability, consultations and availability of doctors at front-line facilities, and attributed these changes to poor management and less public funding reaching facilities.
PNG’s future depends on political action
Indeed, public financial management and the politics that drive it are the factors that will make or break PNG’s future. PNG has been independent for only 40 years and has undertaken two major waves of decentralization as part of the process of building a national political order and a viable governing coalition. In his effort to push resources and benefits to local communities, Prime Minister O’Neill created a District Services Improvement Program (DSIP) which gives each parliamentarian the equivalent of US$3 million each year to spend in their district without restrictions. While its critics call the money “slush funds” and deride it as institutionalizing corruption, O’Neill and its defenders argue it is more effective than national policies and strategies for reaching the local level. Spending these funds seems to be hindered by the same difficulties in financial and human resource management that have characterized national and provincial service systems and political favoritism. Ironically, the devolution of spending could also serve to strengthen central authority by investing more power in national parliamentarians.
The sophistication of a political system that mediates among more than 800 languages and cultures cannot be underestimated, yet it still seems to be focusing on short-term tactical gains at the expense of long-term goals. PNG is certainly not unique in this regard. It’s a trait shared by most countries. Nevertheless, PNG is facing a significant transition in the next decade as foreign investment and increased international engagement bring resource benefits along with resource curses.
As I look at what we’ve learned in the field of development, I wonder, what advice we can offer the next government? The benefits of prudent fiscal and monetary policies, rule of law, tough negotiations for revenues from extractive industries, labor mobility agreements, and promoting intensification of agriculture rather than destroying forests sound good, but all rely on constructing a political coalition aimed to serve collective national prosperity and not necessarily particular interests. The benefits that come from investments in education, health, and infrastructure are similarly widespread without necessarily helping incumbents win re-election. Creating and implementing an effective national bureaucracy to serve the people is a daunting challenge. This country deserves the best that the international system can offer from researchers, policy practitioners, and funders to help meet these challenges and get the most out of its opportunities. The “how” embedded in politics is the one thing countries like PNG need to figure out for themselves. The rest of the world cannot answer that conundrum but we should help with the rest.
Thanks to Emily Foecke for her inputs to this blog post, Sarah Allen for her help in putting it together, and to the Australian and PNG officials and individuals who took the time to speak with me during my trip.
Updated 6/22/2017: Estimates of Australian and PNG wages have been corrected. The original post included incorrect estimates of wages and mistakenly reported a place premium of 38 to 1.
1. Achieving climate stability requires conservation of tropical forests. 2. Protecting tropical forests could lower the overall costs and accelerate the achievement of global climate stability. 3. Forests generate many non-climate goods and services that are essential to meeting sustainable development goals. 4. Advances in technology have made stopping forest loss feasible. 5. Rich countries and international organizations should act now to scale up REDD+ payment-for-performance agreements.