Download From billions to trillions: and then what?

From Billions to Trillions:
and Then What?
Rob Vos
Director Rural Poverty Reduction
FAO
Rolph van der Hoeven Farewell Seminar
ISS, The Hague, 8 October 2015
SDGs and Global Public Goods

Many Global Public Goods elements in SDG agenda

Achieving sustainable development maybe GPG in itself

Sustainable food security

Preserving biodiversity, oceans, ecosystems, etc.

Fighting climate change

Treatment of communicable diseases and other global health
issues

Better regulation of international financial markets (to also reduce
international inequality)
 Providing GPGs will require stronger global partnership
and much more development finance
Are we getting quadruple A?
Yes, but….no really


“2030 Agenda” and SDG 17 – Means of implementation
and strengthened global partnership

Not much more than MDG8

MDG Gap Reports: poor track record
AAAA – Addis Ababa Action Agenda

Step back from Monterrey

No policy changes agreed: no significant additional funds
were pledged; no trade concessions were promised, and
no relaxation of OECD and G20 control over
international tax cooperation norms

Systemic issues left out

Only positive points: infrastructure fund (public-private
partnership financing) and “technology facilitation
mechanism”
Billions: Declining importance of ODA
Trillions are needed
They say so 
Meeting climate change challenge:

$ 6 trillion (per year) worldwide for infrastructure (clean energy, cities, land use
systems) over 2015-2030

$ 270 billion (per year) incremental investment for low-carbon transitions (2015-2030)

$ 100 billion (per year) for Green Climate Fund (mainly for adaptation) in developing
countries (by 2020)
Sustainable Energy for All (SE4A)

$ 300 billion (commitments made at Rio+20)
Meeting the poverty and hunger challenge (FAO, WFP, IFAD)

$ 267 billion (per year) for investment and improving access to food for poorest
Meeting educational needs (Global Partnership for Education)

$ 25 billion (per year) for global education fund (external financing gap)
What about “innovative sources of
finance” for global public goods?
• Existing mechanisms for
global funds: “small change”
- Innovative mechanisms
administered $5.8 billion
in health financing and
$2.6 billion in climate
financing over last
decade
- Only several hundred
million per year are
additional to ODA.
Source: UN-DESA, WESS 2012: In Search
of New Development
6
6
Finance
“New” sources of innovative financing
Potential mechanisms
Internationally
coordinated taxes

Financial transaction
tax (FTT)

Currency transaction
tax (CTT)

Carbon tax

Airline transportation
tax

Billionnaire’s tax
300
US$ billion per annum

350
250
Upper bound
Lower bound
200
150
100
50
0

Use of IMF Special
Drawing Rights (SDRs)
for development
7
Source: UN-DESA, WESS 2012: In Search of New
Development
Finance
Fixing the Global Reserve System
The Problems
1.
Asymmetric adjustment problem

Deficit countries obliged to adjust, no pressure on surplus countries
to do so
 deflationary bias
2.
Triffin dilemma

Use national currency (US$) as international reserve currency
 Instability with cycles in core currency value
3.
Growing inequities

Lack of adequate contingency financing

Demand in reserves for self-insurance
 Deflationary bias
Fixing global reserve system and
leverage development finance
Alternatives:


Move to multi-currency standard

Provides diversification and potentially less unstable

But not instability proof and inequities remain
SDR (true international currency) based system may be preferable

Countercyclical issuance of SDRs

IMF lending in SDRs
Either way:

Leverage excess reserves for development finance (MDB’s)

Leverage unused SDR deposits for development finance (buy bonds from
MDB’s)
Wishful thinking?
Not all public money, too contrary, but public investments and change in incentives
need to induce transformative changes
 There are trillions on the sidewalks:
 Leveraging unused and newly issued SDRs (US$ 100-350 billion p.y.)
 New MDB’s (BRICS Bank and AIIB: both US$ 100 billion in basic capital)
 Green Climate Fund (US$ 10 billion to become US$ 100 billion by 2020)
 Fossil fuel subsidies (US$ 300 billion per year)
 Carbon tax (up to US$ 250 billion per year)
 Remittances form migration (US$ 450 billion per year)
 International tax cooperation (US$ 200-250 billion per year)


But, then what?
Increasingly complex financing architecture
 Major issues of governance
 New “Bretton Woods” moment:


need to redo Addis Ababa: triple A may be good enough
From Billions to Trillions:
and Then What?
Rob Vos
Director Rural Poverty Reduction
FAO
[email protected]
Referenced graphs and tables
$93 trillion (2015-2030) for emission reductions
Future sources of growth of crop
production
World
East Asia
South Asia
Latin America & Caribbean
Near East & North Africa
Sub-Saharan Africa
0
Arable land expansion
20
40
60
Increases in cropping intensity
80
Yield increases
100