Sustainable development is grossly underfunded, says Theodore Panayotou, director of the Harvard Institute for International Development. Erasing the shortfall in the future depends on finding imaginative new ways to mobilize resources.
"Countless win-win approaches to sustainable financing are left untapped," says Panayotou, whose top recommendation is to stop wasting money.
Each year more than $500 billion is spent worldwide for subsidies that promote wasteful consumption and degrade the environment. The subsidies underwrite land clearing, logging, use of fossil fuels, and other activities that can harm the environment. Although opposition from vested interests can be daunting, there is cause for optimism: Subsidies have already been phased out in Brazil (for ranching), in Mexico (for energy), and in Indonesia (for pesticides).
Differential taxation of products according to their environmental impact would discourage damaging practices and promote environmentally friendly ones. For example, Thailand encourages the use of unleaded gasoline by taxing it lightly while increasing taxes on leaded gas. Environmental investments like reforestation, soil conservation, and pollution cleanup can be financed from taxes on logging, mining, soil erosion, and emissions - without resorting to higher general taxation or increased foreign borrowing. If introduced gradually, such cross-subsidization could make the structure Of the economy more environmentally sound without hindering growth. …