Keynote Address to the Seventeenth Sustainable Development Conference

Delivered at the Seventeenth Sustainable Development Conference of the Sustainable Development Policy Institute (SDPI) in Islamabad, Pakistan

Your Excellency, Mr. Mamnoon Hussain, President of Pakistan

Your Excellency, Prof Ahsan Iqbal, Federal Minister of Planning, Development and Reforms

Ambassador Shafqat Kakakhel, Chairman of SDPI

Dr. Abid Suleri, Executive Director of SDPI, thank you for the kind invitation,

Excellencies,
Distinguished Delegate,
Ladies and Gentlemen,

The theme of this Conference: ‘Pathways to Sustainable Development’ is timely. The United Nations system and Member States are fully geared to negotiate and adopt the new global sustainable development goals (SDGs) in September next year. Building on the work of the Member States, who have proposed 17 SDGs and 169 targets, the Secretary-General last week released his Synthesis Report, “The Road to Dignity by 2030”, which lays out the development framework for the goals and makes a case for deepening partnerships for financing, trade, and science and technology.

Post-2015 sustainable development has the potential to break new ground. Its conceptual framework is anchored in an integrated approach, and its processes have involved unprecedented levels of global consultation. This agenda is not just about aspirational goals but it makes a persuasive case for global partnerships in finance; trade; as well as science, technology and innovation. Pathways to sustainable development are complex but attainable. Success will depend critically on how global governance mechanisms unfold to support sustainability and climate action, as well as how politically committed Governments are to this agenda, because country ownership; national institutions and coordination; as well as domestic financing will be key to leveraging the course of such development.

In my remarks today, I will share with you:

  • First, the mega-lessons learned from recent development experience.
  • Second, perspectives on what’s new about the emerging global development agenda and why?
  • Third, some thought on the state of play and how South Asia should position itself.

New leadership across South Asia has a unique opportunity to mainstream the sustainable development agenda to ensure effective development outcomes for all people.

Lessons Learned from Recent Development Experience

With hindsight we have learnt many critical lessons about what works and what does not in business of development. I will highlight five:

  • First, being multi-dimensional undertakings, development processes cannot occur without robust, high quality growth, political commitment and proper institutions;
  • Second, strong governance and country ownership are critical for the appropriate pace and sequencing of structural reforms;
  • Third, changes in climate dynamics caused by carbon emissions, reckless use of natural resources, inefficient energy and water use, etc. induce climate-related natural disasters and ecological damage which, together, reverse socio-economic gains;
  • Fourth, globalization despite its significant benefits has attendant risks. Developing countries may have withstood the 2008 global economic and financial crisis, but emerging challenges including weak global demand; deleveraging of the private sector; financial and exchange rate volatility caused by the withdrawal of unconventional monetary policy; and more could follow as interest rates rise; and
  • Fifth, lack of progress in financing for development and on the trade agenda – two principal areas of global partnership – have resulted in significant shortfalls in official development assistance flows and, barring market driven progress in global value chains and now some movement on trade facilitation agreements, the Doha trade agenda remain at standstill.

What’s New in Emerging Global Development Architecture and Why?

To ensure deeper and irreversible economic and human progress, the architecture for the post-2015 development agenda calls for a rethink and redesign of development policy frameworks. Instead of relying on a segregated approach to development, this round of global development advocates a holistic and integrated approach to economic, social and environmental concerns.

There is growing evidence of strong inter-dependence and inter-linkages between these three core pillars, and a coordinated response on these pillars would be self-reinforcing. Transmission channels and mechanisms between the three pillars are manifold. For instance: economic growth fostered by inclusive policies has positive spill overs across economies which, in turn, leverage social progress.

In the same vein growing exposure to vulnerabilities, because of poor access to education or lack of employment opportunities or poor environmental conditions, negatively impacts economic growth and productivity. Unsustainable consumption and reckless use of natural resources causes environmental degradation and depletion of natural capital, which impacts quality of land and water; loss of biodiversity; and deterioration of ecosystem services.

All this threatens to reverse hard-won development progress. Similarly, rising greenhouse gas (GHG) emissions have significantly degraded air quality across many cities, impacting people’s health and increasing the costs of health care. The cross-border nature of rising emissions has further complicated environmental management, directly affecting even those countries whose own emissions are low.

The System of Environmental Economic Accounting (EEA) calls for organizing data to derive coherent indicators and statistics, to monitor interactions between the economy and the environment, to better inform policy decisions. EEA has enabled us to better estimate who benefits from the natural resource base and changes in natural wealth. Depletion of natural resources affects the measurement of real GDP growth, and EEA helps us to understand and address unsustainable production and consumption patterns. For example, GDP growth in South Asia, factoring in the environmental economic implications, would be much lower. Therefore, pursuit of GDP growth without adequate attention to the quality of this growth (in terms of social and environmental outcomes) has negative intergenerational equity implications.

Switching to more sustainable development paths is becoming more urgent with every passing day. The Fifth Assessment Report of the Intergovernmental Panel on Climate Change underscores that failure to contain the rise of surface temperature to below two degrees Celsius by 2100 would be catastrophic for the planet. South Asia, in particular Bangladesh, would be the worst affected, as the IPCC concludes that a one degree increase in temperature will raise sea levels by up to 98cm.

While there remains some scepticism about the feasibility of limiting the rise in global temperatures to two degrees Celsius, “Deep Decarbonisation” and “Green Growth” offer routes to low-carbon development paths. These options call for urgent transition to sustainable development approaches, supported by global cooperation at an unprecedented scale in technology development and diffusion, which allows switching for adoption of low-carbon sustainable technologies.

In Lima, Peru, the UNFCCC is building momentum for the new institutional arrangements and options for COP 21 to be held in Paris next year. In other words, on climate action, there is movement, albeit slow, on multiple fronts. To name but a few: COP20 is considering supportive measures, such as institutional arrangements for technology and financial mechanisms to scale up predictable, financial support for technology innovation and diffusion by calling on the Green Climate Fund (whose contributions have been raised by $10 billion) to offer a financing window for this activity. COP20 has also called for continued reforms of the Clean Development Mechanism (CDM) and launching of work to develop the CDM further as a tool for mitigation beyond 2020, while streamlining its standards and regulations, as well as avoiding double dipping the claims of carbon emission reductions.

South Asia: Context and Perspectives of Sustainable Development

Mobilizing South Asia to adopt and lead on the sustainable development architecture and its pathways will help foster positive spill overs given the strong nexus between the economic, social and environmental pillars.

  1. Growing below its potential, South Asia’s track record in reducing poverty has been mixed. More than half a billion people, or 31 per cent of the subregion’s population, remain trapped in extreme poverty (at or below $1.25 a day). Representing 40 per cent of the world’s total poor, South Asia has largest concentration of poor on the planet.
  2. Quality of growth in South Asia has been impacted by growing inequality that has eroded gains in social development. For instance, the rise in the Gini coefficient to 33.5 in recent years, lowers the inequality-adjusted real GDP per person in Pakistan and India by 35 to 37 per cent, and by nearly 50 per cent in the case of Sri Lanka. The inequality adjusted human development index has been lowered by more than 25 per cent
  3. Although South Asia countries have launched a range of social safety net programs to address consumption and income disparities and the rural-urban divide, youth unemployment remains high (close to 10 per cent – almost double the level of average unemployment), employment elasticity has steadily declined, female participation rates in the workforce is low and more than 80 per cent of workers in South Asia depend on low quality informal sector jobs.
  4. Except for Sri Lanka, South Asian countries rank low or at a medium level in UNDP’s Human Development Index, and in the lower half of the ESCAP Infrastructure Index. The subregion also falls short of the MDG targets on reducing maternal and child mortality, improving basic sanitation and bringing down the proportion of underweight children.
  5. Energy deficits in South Asia, compounded by difficulties in energy diversification as well as limited use of renewable sources and low energy effiiency, have magnified blackouts, with often severe economic consequences.
  6. South Asia is the worst affected subregion, accounting for more than 50 per cent of all fatalities from natural disasters in Asia and the Pacific.

Sustainable Development Approaches for South Asia

In view of these growing issues and challenges, there is a strong case for South Asia to adopt a transformational set of mutually reinforcing policies to positively harness the nexus between three pillars of sustainable development. The subregion needs to boost aggregate demand by raising its low income levels; enhance smart investments in human development, social protection and job generation; and expanding the coverage of basic services. Both the social and environmental dimensions can reinforce economic growth.

To move forward, South Asia should, at a minimum, collectively adopt an action program. I will highlight seven priority areas for action:

  1. While access to drinking water improved between 1990 and 2010, realization of the MDG sanitation target remains off-track by a wide margin in the subregion. As a result about a billion people are without access to basic sanitation. Recognizing that every US$1 spent on sanitation yields about $5.50 return by way of savings on health and productivity, launching an aggressive and widespread campaign on this issue is critical.
  2. South Asia has a unique opportunity to bridge the global skills gap. A 2012 Mckinsey study has projected this gap to be around 40 million workers with tertiary degrees and another 45 million with secondary education by 2020. India’s Skills Development programme supported by a new Ministry of Skills development and Entrepreneurship will harness the youth potential. At the same time, the subregion’s participation in knowledge-based industries, including in ICT-enabled services, biotechnology and nanotechnology, offers additional opportunities.
  3. Sustainable agriculture in South Asia will do much to eradicate extreme hunger and food insecurity. Agriculture productivity remains stagnant due to land degradation, over-use of chemicals encouraged by poorly-designed subsidies and lack of modern agricultural practices. To foster a new sustainable green revolution in South Asia, there is a need for joint action to encourage smart agricultural policies, reduce food wastage, invest in modern practices and infrastructure that links farm to fork and lowers transaction costs.
  4. “Sustainable Energy for All” (SE4All) can be advanced by raising ambitions on harnessing renewable energy opportunities – this is critical as the current energy mix is the source of 70 per cent of GHG emissions, even though there is enormous untapped hydroelectric potential (which currently contributes barely 1 per cent of the total energy mix) as well as real potential for greater reliance on solar and wind energy.
  5. South Asian countries have committed to voluntary targets under the UNCCC. India aims to reduce the emissions intensity of its GDP by 20–25 per cent by 2020 (relative to the 2005 level). Bhutan already sequesters more carbon than it emits, and the Maldives has a goal to achieve carbon neutrality by 2020. Such targets need to be vigorously pursued and replicated.
  6. Smart incentives can encourage sustainable development practices in South Asia. For instance, one can create ‘wealth out of waste’ as is being done in India, which has incentivized production of recycled paper as a source of livelihood for millions of people in the informal sector. To reduce carbon footprints and dependence on imports, business enterprises need to go beyond business-as-usual models to more creative use of technologies to generate wealth and move towards low-carbon pathways.
  7. The sustainable development architecture needs to recognize that, by 2050, South Asia cities will account for 70 per cent of the subregional population. Among others, this calls for Governments to introduce acceptable building codes for homes, resilient and efficient urban infrastructure and public transport system, as well as encouraging low-carbon pathways; energy and water saving; and waste recycling.

Financing and Trade – Key to promote Sustainable Development

Implementation of the sustainable development agenda would benefit from coordinated and synchronized action across various agencies and ministries. Strengthening and streamlining incentive regimes entails phasing-out regressive energy subsidies; discouraging investment in unsustainable business solutions; and incentivizing innovation and diffusion of sustainable technologies. At the same time, the region has scope for mobilizing resources by raising efficiency in tax collection (which is currently less than 40 per cent); as well as broadening and deepening domestic equity and debt markets.

Equally pressing for the subregion is the need to develop a strong pipeline for viable and sustainable projects that could be eligible for the new financing vehicles such as the People’s Republic of China sponsored Asian Infrastructure Investment Bank and now its South-South Climate Fund. This is also key to attract financing from institutional investors and to tap the regional bond market. Also important will be to examine the possibility of prioritizing sustainable development in the development finance institutions. Most encouraging has been the initiative of Bangladesh’s Central Bank to issue green banking guidelines in 2011 to stimulate green investments. Fostering innovative public-private partnerships (PPPs), can also be a source for leveraging financing being made available for sustainable development projects.

Facilitation and transfer of environmentally sound technologies for climate change mitigation and adaptation, as well as the pursuit of low carbon pathways, will be critical, especially for the developing and least developed South Asia belt. Secretary-General Ban Ki-moon recently announced the formation of a High-level Panel to advise on the proposed Technology Bank, as well as a Science, Technology and Innovation Support Mechanism dedicated to aiding the least developed countries. The Bank and STI support mechanisms are critical for achieving the SDGs. South Asian countries need to refocus and strengthen their STI policies to provide the necessary ecosystems to develop and adopt sustainable development tools and practices.

Similarly a fair, just and open multilateral trade regime is critical for market access of developing countries and LDCs that are supported by Aid-for-trade, foreign direct investment and technology transfers to build sustainable productive capacities.

These efforts need to be complemented by external finance for sustainable development to assist South Asia in meeting its challenges. Multilateral development banks disbursed a total of $27 billion in climate finance in 2012, of which only $3.73 billion, or 14 per cent, found its way to South Asia. While a good start, this does not match South Asia’s population share, nor the disproportionate challenges it faces as I highlighted earlier. Tapping the Green Climate Fund, established through the UNFCCC process, can only be possible if South Asia shows good policy momentum on carbon reduction and prioritizes financing of sustainable development.

Conclusion

In conclusion, pursuit of the SDGs by South Asia is critical for the wellbeing of the subregion’s people and its environment. With nearly a quarter of the world’s population and almost 40 per cent of the global poor however, South Asian achievements will also significantly affect global development outcomes.

This is also why South Asian countries need to be supported by the global community in pursuing the sustainable development agenda by facilitating flows of development finance, technology, market access, among other means of implementation, as a part of reinvigorated global and regional partnership for development. For their part, countries in South Asia have to nurture a culture of sustainable development, both in the public and private sectors; deploy their own resources to leverage sustainable financing; establish appropriate institutional coordination mechanisms to set legal, regulatory and policy frameworks for sustainable development; and ensure effective implementation through proper monitoring and accountability.

With most South Asian countries having achieved political transitions over the past two years, the new governments have an opportunity to launch renewed action and reforms to remove the impediments to faster and more sustainable development. Securing a more inclusive, resilient and sustainable future will benefit a quarter of humanity and beyond.

Having recently adopted its seven pillared ‘Vision 2025’, which captures most of the sustainable development priorities, Pakistan is on right track to provide leadership to South Asia and the wider Asia-Pacific region in its transition to sustainable development.

I thank you.