new delhi & london

The managers of the main United Nations (UN) fund for environmental research projects have agreed to review their policy on supporting projects in developing countries. The move follows criticism of the fund's excessive bureaucracy and apparent insensitivity to local concerns.

The Global Environment Facility (GEF), a US$2 billion UN fund organized through the World Bank, concluded at its first assembly in New Delhi, India, two weeks ago that its activities need to be more transparent, and agreed to accept greater involvement from the private sector, the public and environmentalist groups.

But the meeting failed to resolve a long-running controversy about the method used to cost projects, agreeing simply to show “greater flexibility” in assessing applications.

There was controversy also about several other issues. These included complaints that the fund is too small, that there is insufficient transparency in assessing applications, that public involvement is cursory and that the categories of projects eligible for funding reflect the concerns of developed, rather than developing, countries.

India, Brazil and several African countries, for example, had pressed for additional GEF funds to go to projects to improve water supply and sanitation, or to slow down desertification — both prime concerns for the African states. They argued that such issues are of more pressing environmental concern than climate change or ozone depletion.

But GEF managers maintained that there would be no change in distribution of GEF funds to the four ‘focal areas’: climate change and biodiversity conservation (40 per cent each), and ozone depletion and water supplies (10 per cent each).

The findings of a 26-country survey of GEF-fund recipients fuelled much of the debate. The survey, carried out by the secretariat of the UN Convention on Biological Diversity, revealed concern about the scale of spending on international consultants, whose costs often consume up to half the total project expenditure. It also revealed deep unease over the method used to calculate the size of project grants.

Under GEF rules, a country must show it can finance a project in full, and the GEF then pays for the extra cost of a more environmentally friendly alternative. This system, known as ‘incremental costs’, was developed after the Second World War to help finance the reconstruction of Europe.

But the countries replying to the survey complained that incremental costs were unworkable for activities such as research, where the concept of a more environmentally friendly alternative does not hold. According to the survey, “the principle of incremental costs in the case of biodiversity was meaningless, and decisions in this respect were arbitrary and confusing”.

The survey also reflected concern in some countries that projects take too long to get approval. Suresh Praby, India's environment minister, said most of India's 12 GEF projects have yet to take off. He claimed that proposals have to be sent to the GEF council at least three times before they are approved, and that the total process takes about three years.

But a GEF spokesman in Washington says projects are usually approved within three months — less time than the World Bank's non-GEF activities take.

Meanwhile, the announcement at the New Delhi meeting of a $2.75 billion, three-year replenishment of the GEF fund was marred by complaints that it contained $680 million brought forward from the first round of GEF funding, as well as $80 million of unused funds. Moreover, contributions from the United States, Germany and Italy were lower than for the first round.

In addition, some emphasized that the fund is considerably smaller than other forms of development assistance for similar projects. Halifax Initiative, for example, a Canadian environmentalist group, pointed out that the World Bank's support for fossil fuel projects undermines GEF's efforts to support cleaner technologies.

GEF's own analysis shows that between 1993 and 1997, the bank committed $9.4 billion for carbon-dioxide-emitting fossil fuel projects, while setting aside a relatively meagre $500 million for GEF projects.

But Caio Koch-Weser, managing director at the World Bank, says the bank is preparing to devote more non-GEF finance to environment-friendly projects. These will include a scheme for trading carbon emissions (see Nature 390, 7; 1997), and a $186 million wind power scheme enabling India to raise its wind power generation from 30 to 700 MW.