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Sunday, April 11, 2010

Global Environment Facility (GEF):An Overview

Richard K. Lattanzio
Analyst in Environmental Policy

The Global Environment Facility (GEF) is an independent and international financial mechanism (i.e., a grant and lending institution) that promotes cooperation and fosters actions to protect the global environment. Established in 1991, it unites 180 member governments and partners with international institutions, nongovernmental organizations, and the private sector to assist developing countries with environmental projects related to six areas: biodiversity, climate change, international waters, the ozone layer, land degradation, and persistent organic pollutants. GEF receives funding from multiple donor countries—including the United States—and provides grants and concessional loans to cover the additional or "incremental" costs associated with transforming a project with national benefits into one with global environmental benefits. In this way, GEF funding is structured to "supplement" base project funding and provide for the environmental components in national development agendas. GEF partners with several international agencies, including the International Bank for Reconstruction and Development, the United Nations Development Program, and the United Nations Environment Program, among others. GEF is the primary fund administrator for four Rio (Earth Summit) Conventions, including the Convention on Biological Diversity, the United Nations Framework Convention on Climate Change, the Stockholm Convention on Persistent Organic Pollutants, and the United Nations Convention to Combat Desertification. GEF also establishes operational guidance for international waters and ozone activities, the latter consistent with the Montreal Protocol on Substances that Deplete the Ozone Layer and its amendments. Since its inception, GEF has allocated $8.8 billion—supplemented by more than $38.7 billion in co-financing—for more than 2,400 projects in more than 165 countries. 

GEF is one mechanism in a larger network of international programs designed to address environmental issues. Each year, billions of dollars in environmental aid flow from developed country governments—including the United States—to developing ones. While the efficiency and the effectiveness of these programs are of concern to donor country governments, a full analysis of the purposes, intents, results, and consequences behind these financial flows has yet to be conducted. International relations, comparative politics, and developmental economics can often collide with environmental agendas. Critics contend that the existing system has had limited impact in addressing major environmental concerns—specifically climate change and tropical deforestation—and has been unsuccessful in delivering global transformational change. A desire to achieve more immediate impacts has led to a restructuring of the Multilateral Development Banks' role in environmental finance and the introduction of many new bilateral and multilateral funding initiatives. The effectiveness of GEF depends on how the fund addresses its programmatic issues, reacts to recent developments in the financial landscape, and responds to emerging opportunities. The future of GEF remains in the hands of the donor countries that can choose to broaden the mandate and strengthen its institutional arrangements or to reduce and replace it by other bilateral or multilateral funding mechanisms.

Date of Report: April 7, 2010
Number of Pages: 25
Order Number: R41165
Price: $29.95

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