GEF should have been a liability fund, rather than a 'guilt fund' set up by the North to make up for the global damage it had caused

-- GLOBAL ENVIRONMENTAL FACILITY
Established in October 1991, number of members: 165
The institution The World Bank designed the institutional structure for the Global Environmental Facility (gef ), initiated in 1990. The us made sure gef began on a temporary three-year term. With Australia and Canada, the us maintained that such a funding facility would send out 'wrong signals'. gef was given permanent status only in 1994.

gef has three 'implementing agencies' - the World Bank, the un Environment Programme ( unep ) and the un Development Programme ( undp ). Despite no show of faith by developing countries, the World Bank is the strongest member of the gef trinity.

The facility was meant to focus on 'global' areas of interest - climate change, biodiversity conservation, ozone depletion and international water resources. In 1992, it began the interim mechanism for the Convention on Biological Diversity (cbd) and the Framework Convention on Climate Change (fccc) at unced.
Think global, act global Developing countries, only marginally involved when gef took shape, could not push the 'polluter pays' and liability principles. gef was set up in vague recognition of the fact that the world's ecosystems are suffering due to lack of financial resource, not the South's call for compensation for environmental damages caused by the North. gef funds would come as aid, not compensation.

Following stringent dos and don'ts by donor countries, particularly the us , gef had a narrow mandate. It only funds the 'incremental amount' incurred to achieve 'global benefit', not national benefit. For example, if India wants to build a power plant, gef would not fund the entire power plant, built for national benefit. It will only fund the extra cost borne by India to use better technology and reduce its carbon dioxide emissions, a 'global benefit'. This has not gone down well with recipient countries, who find the process of defining the exact 'incremental cost' of each project tedious and bureaucratic.

In an attempt to bridge the gaps between 'local' and 'global', and overcome criticism that the process was long-drawn with no role for local communities and ngo s, a small grants programmes ( sgp ) covering projects up to us $50,000 and a medium-sized grants ( msg ) programme with a cost ceiling of us $1 million per project were initiated.
Challenges ahead The restructured gef failed to correct the balance of decision-making power between developing and industrialised countries, or involve local communities in its projects. It has to become an institution that sees sustainability as much from the eyes of the poor as from the wealthy.

The new millennium will have to see the gef operating on principles where the North pays for their share of benefits from global common property like the atmosphere and oceans. The environmental cost of internationally traded commodities will have to be internalised. The growing interest in automatic sources of funding for the global environment, including global taxes and fees, may provide the answer.

Problem
In the 1980s, the South began to demand compensation for problems caused by the environmental harm caused by Northern lifestyles, such as the ozone hole, climate change and biodiversity loss. The South also wanted compensation for compromising their own development to safeguard the larger part of the world's remaining natural wealth. The UN and Bretton Woods institutions had failed in this task, supplying aid rather than compensation and creating rather than resolving the crisis by exporting unsustainable development paradigms to poor countries.

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