Background
Chapter Two Background—The GEF In a Nutshell
1. WHAT IS THE GEF?
The Global Environment Facility (GEF) is a financial mechanism that provides grant funds to developing countries for projects covering four "focal areas": climate change, biodiversity, international waters and ozone depletion. The three institutions carrying out the GEF's work, known as Implementing Agencies (IAs), are the World Bank, the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP). A Secretariat for the GEF coordinates communication and project.The Global Environment Facility approval with these agencies, and liaises with the GEF's governing bodies (Council and Assembly) composed of member governments.
Funding from the GEF is limited to so-called "recipient countries", which qualify for technical assistance grants from UNDP or loans from the World Bank. A number of international agreements help guide the GEF's work in the focal areas, with the exception of international waters. To be eligible for funding a country must be party to the relevant treaty:
• Biodiversity—Convention on Biological Diversity (CBD)
• Climate change—Framework Convention on Climate Change (FCCC)
• Ozone—Montreal Protocol on Substances that Deplete the Ozone Layer
Parties to the CBD and FCCC have adopted the GEF as their financial mechanism, although this is currently an interim arrangement for the CBD. Both conventions have provisions for financial assistance to help eligible parties meet their obligations. In regards to the Montreal Protocol, the GEF provides funds for countries in transition (i.e., Central and Eastern European countries), which are not eligible under the Montreal Protocol's own financial mechanism.
One of the key aspects of GEF funding is that it does not usually cover the full cost of projects; assistance is limited to financing only the costs of achieving global environmental benefits. These incremental costs support activities that extend beyond national priorities.
Currently, GEF project proposals must be endorsed by the recipient country government to ensure that they are country-driven (i.e., based on national priorities). Funding for projects ranges from Small Grants (up to US $50,000) to Medium-Size Grants (from US $50,000 to US $1 million) to Full Project Grants (US $1 million and more).
Box 2.1 The GEF in a Nutshell
GEF mission. The GEF finances measures to achieve global environmental benefits in the areas of climate change, biodiversity, international waters and ozone layer depletion.
Focal areas. The GEF finances projects in four focal areas: biodiversity, climate change, international waters and ozone layer depletion.
Implementing Agencies (IAs). The organisations primarily responsible for carrying out the work of the GEF: The World Bank, the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP).
Incremental costs. The difference in cost between a project with global environmental benefits and an alternative project without such global benefits.
Types of grants. There are three major types of grants: Small Grants (under US $50,000), Medium-Size Grants (US $50,000 to US $1 million), and Full Project Grants (more than US $1 million).
Operational Strategy. An overall strategic "roadmap" for guiding GEF funding and related activities.
Operational Programmes. Established in each focal area, these are frameworks for designing, implementing and coordinating a set of projects to achieve global environmental objectives.
Project cycle. The sequential steps a project goes through (from conceptualisation to project completion). The main phases are: project identification, GEF Council approval, Implementing Agency approval, and project implementation and completion.
Enabling activities. A category of activities funded by the GEF, designed to (i) help developing countries meet their reporting requirements under the Biodiversity and Climate Change Conventions, (ii) achieve a basic level of information to enable policy and strategic decision-making, and (iii) undertake national planning to identify priority activities.
Pilot Phase. This refers to the initial trial period of the GEF (between 1991 and 1994)..The Global Environment Facility
2. A GEF HISTORY—HOW DID THE GEF COME ABOUT?
The GEF emerged from the concern over global environmental issues expressed predominately by industrialised countries in the late 1980s. Numerous ideas for financing response measures to address major environmental problems were proposed by various governmental and nongovernmental institutions.
The GEF, initially proposed by France and supported by Germany, was the one that finally received the necessary political and financial support. More than a year of negotiations ensued before the GEF was officially established in October 1991. Initially, it was created as a three-year experiment: the GEF Pilot Phase. The Pilot Phase, which ended in mid-1994, included project funding totaling US $735 million.
Further support for the GEF came from the United Nations Conference on Environment and Development (UNCED), held in 1992, and the Climate and Biodiversity Conventions, with their provisions for financial mechanisms. Donor governments hoped to avoid a proliferation of new funding mechanisms, and therefore stressed that one "facility," administered by existing institutions, serve the various global environmental conventions.
The speed at which the GEF Pilot Phase was established, as well as the reasons behind its swift creation, generated a number of criticisms and problems:
• Institutional arrangements. During the Pilot Phase, the GEF administration was located within The World Bank, which led to tensions between the Bank and the other IAs. Environmental NGOs argued that GEF funds would give a false appearance of environmental benefits (or "greenwash") to the Bank's environmentally unfriendly projects, because of the close association of the GEF with the Bank. This would allow the Bank to avoid the fundamental changes needed to mainstream environmental concerns in its lending.
• Governance structure. The complicated governance structure made it difficult to distinguish a clear line of responsibility or accountability for decisions. NGOs were particularly concerned about lack of transparency and the need to see how and why decisions were being made at all levels of the GEF, from policy to projects.
• Global vs. local. Many NGOs and developing countries were critical of the focus on the global environment, when there were so many pressing local and national environmental concerns.
• Top-down approach. Because of the pressure to allocate funds quickly, many projects were developed in a top-down fashion that did not reflect national priorities. For example, projects already under development by IAs were modified to be eligible for GEF funding. NGOs and others argued that projects needed to be country-driven (i.e., based upon the priorities and interests of the host country) in order to secure long-term interest and sustainability.
Toward the end of the GEF's Pilot Phase, governments started discussions on whether the GEF should be continued in a more permanent form, and if so, what changes might be needed. Governments commissioned the independent evaluation of the GEF, and the results were presented in December 1993, six months before the end of the Pilot Phase. (GEFDOC #27; See Chapter 9)
With the end of the Pilot Phase, governments started negotiations to restructure the GEF, based on the results of the Independent Evaluation. In March 1994, negotiations were concluded. The resulting agreement (generally referred to as the GEF Instrument; GEFDOC #22) included key institutional changes, universal membership, and greater transparency and democracy in the governance arrangement. Generally, NGOs supported the restructuring of the GEF, stressing a number of critical areas where the GEF provides additional values for global environmental protection.
3. HOW IS THE GEF ORGANISED?
After the Pilot Phase, the structure or organisation of the GEF was revised and set out in the GEF Instrument (GEFDOC #19). It should be noted that this organisation is not rigid, but remains flexible as the GEF Secretariat, IAs and other GEF-related entities seek to improve coordination and.The Global Environment Facility communication. Below is a description of the major actors in the GEF process as outlined in Diagram 2.1, and further contact information is available in Annex II.
The Assembly consists of all countries participating in the GEF, currently about 155. Any country may participate, with the expectation that developed countries will provide some financial contribution.
The Assembly meets every three years to review policies and operations of the GEF, and can take decisions to amend The GEF Instrument. The next Assembly meeting will be in New Delhi in April 1998.
The Council is the main governing body, meets twice a year and makes decisions about policy and operational matters taking into account decisions by the Assembly. As the financial mechanism for the Biodiversity and Climate Change Conventions, the Council is obliged to follow the guidance provided by the governing bodies (Conferences of the Parties—COPs) of these conventions. The Council must also report back to the COPs on activities carried out under the financial mechanisms. The GEF is not the financial mechanism for the Montreal Protocol, but it still cooperates with its COP.
The Council consists of representatives of 32 members derived from "Constituency Groups" of countries. The Council includes 18 members from "recipient countries" (six for Africa, six for the Asia/Pacific region, four for Latin America and the Caribbean, and two for countries in transition) and 14 from non-recipient (developed) countries. Each Council member serves for three years, or until a new member is appointed by the constituency.
To date, all Council decisions have been taken by consensus. If a vote were ever necessary, it would be tallied on a country rather than constituency basis, using a double majority system (i.e., a majority of donors and a majority of countries is needed for a proposal to pass).
The Secretariat supports and coordinates all major functions of the GEF. It is headed by a chief executive officer (CEO), who reports to the Council and the Assembly. The Secretariat is located in the offices of the World Bank in Washington, D.C., but in practice is independent from the Bank.
The Implementing Agencies (IAs) are responsible for developing projects for GEF funding and implementing them through designated executing agencies in the specific country or region. The IAs include The World Bank, the United Nations Development Programme (UNDP) and the United Nations
Environment Programme (UNEP). The IAs also provide input on policies and programmes, and are accountable to the Council.
The IAs work closely with executing agencies (through individuals called "task managers"), which are responsible for the day-to-day operations of individual projects. Executing agencies can be government bodies, other UN agencies, NGOs, universities, etc. The IAs are expected to administer projects within their areas of competence; for example, the World Bank specialises in investment projects, UNDP in technical assistance projects, and UNEP in targeted research and enabling activities, as well as international waters projects. In practice, there is some overlap among the IAs.
The Scientific and Technical Advisory Panel (STAP) is a group of 12 internationally recognised experts whose main role is to provide advice on GEF policies, operational strategies and programmes. It may review selected projects but does not examine each one. Many of STAP's members have project as well as purely scientific expertise, and the current STAP has better coverage of social issues than during the Pilot Phase. The STAP maintains the Roster of Experts, and all projects must be reviewed by someone on this list.
The GEF Operations Committee (GEFOP) is the forum through which the Secretariat discusses major policy issues with other actors in the GEF "family." It consists of representatives of the Secretariat, IAs and the STAP. As necessary, representatives from the relevant Convention Secretariats participate.
Originally, the GEFOP reviewed all projects under consideration, but the workload (number of projects) became so burdensome that the project review process was simplified and is now based on monthly meetings ("bilaterals") between representatives of the Secretariat and each IA. The project review process is still cumbersome and time-consuming, and the GEF is currently discussing how to improve the GEFOP and bilateral review process.
Nongovernmental organisations (NGOs) are now able to participate in Council meetings as observers. NGOs can also participate in a wide range of project and policy activities under the GEF process (see Chapters 10–12)..The Global Environment Facility
The Trustee for the GEF Trust Fund is the World Bank. The role of the World Bank as trustee is independent from its role as an IA. As the trustee, the Bank helps with fund-raising, accounting and financial management of the fund. The reason for this arrangement was to avoid having to create a new financial bureaucracy and independent legal structure. (The trustee was let out of Diagram 2.1 to help simplify the illustration.)
Diagram 2.1 GEF Organisational Chart
4. KEY GEF POLICIES
The GEF Council approves policies specifying rules and procedures related to GEF funding and operations.
Incremental costs. The policy on incremental costs defines the concept, describes how such costs relate to project selection, and details the elements to be taken into account in calculating incremental costs. Projects must have positive incremental costs if they are to receive GE support. Simply put, incremental costs are the difference in costs between a project with global environmental benefits and one without. (GEFDOC #21)
Land degradation activities. The land degradation policy is designed to address this cross cutting issue through the climate change, biodiversity and international waters focal areas. The policy establishes principles for projects addressing land degradation, guidelines for project eligibility and a list of project priorities. (GEFDOC #4 & #5)
Monitoring and evaluation (M&E). The M&E policy is designed to ensure ongoing, systematic monitoring of GEF projects and periodic assessments of GEF performance. This is coordinated by an M&E unit established within the Secretariat. Additionally, each IA has its own M&E procedures, which they are supposed to apply to their GEF projects. Unfortunately, this has no been as thorough as desired by NGOs.
Public involvement. This policy outlines the need for public involvement in GEF projects covering information dissemination, consultation and stakeholder participation. This policy combines the provisions on participation contained in The GEF Instrument, as well as the policies and procedures of the GEF's IAs. During the GEF's Pilot Phase, it was heavily criticised for lack of public participation in its projects, as well as lack of documentation on levels of participation The criticisms also targeted the absence of operational guidelines on how public involvement will be incorporated into the project cycle. (GEFDOC #9 & #14)
Targeted research. This policy recognises emerging needs for information and goal-oriented research to provide information, knowledge and tools that improve the effectiveness of GEF projects and programs. The policy outlines some criteria for GEF funding of such research activities, and calls for further guidance and prioritisation of information needs from the Conferences of the Parties to the CBD and FCCC. (GEFDOC #5 & #6)