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European Report on Development

Coping with scarcities

by Peter Hauff

In brief

Water, energy and land are intelligently made use of in Kenya's Naivasha region: flower farm worker.

Water, energy and land are intelligently made use of in Kenya's Naivasha region: flower farm worker.

Demand for water, energy and land is growing. EU cooperation with poor countries should focus on these issues, argues this year’s European Report on Development. By Peter Hauff

The authors’ core message is that the EU is leading the international community on climate protection. At the same time, it must pay attention to inclusive growth, so it would make sense to tackle issues relating to water, energy and land in a coherent manner (“WEL nexus”). The EU and its member countries, the document warns, must keep in mind that struggles over these resources tend to hurt poor people most.

The European Report on Development (ERD) is supposed to build bridges between policymakers and research. For the first time, the executive summary of this independent endeavour was published in Arabic. The ERD is written on assignment from the European Commission and seven member nations: Finland, France, Germany, Luxemburg, Spain, Sweden and the United Kingdom. For the current report, three research institutes cooperated: the London-based Overseas Development Institute (ODI), the Maastricht-based European Centre for Development Policy Management and the Bonn-based German Development Institute (DIE/GDI).

Kenyan model region

Coherent policy approaches are viable, the ERD argues, pointing to success in Kenya’s Naivasha area, where small farms, major flower-growing businesses and a geothermal power plant are interlinked in a sensible way. The scholars suggest that cooperation of local, national and international agencies should follow this example in other countries.

The current ERD was published at an auspicious time – shortly before the United Nations’ Rio+20 summit, which will take stock of global environmental affairs in June, and immediately after an EU summit on sustainable energy. The EU promotes up-to-date energy provision in developing countries and plans to provide an additional 500 million people with access to eco-friendly energy by 2030.

According to the ERD, policymakers must respond in four ways to intensifying disputes over water, energy and land:
– They must manage economies’ demand in a way that changes habits, so less garbage needs to be collected and less food is wasted.
– They must increase and improve the supply of water, energy and land. International cooperation can boost power and water supply, for instance, by making funds available.
– They must keep efficiency in mind and ensure technology transfer as well as funding for innovations.
– Finally, they must boost the resiliency of the poorest people because they deserve protection from the impact of social change, land grabs and natural disasters.

The ERD uses the acronym DSER to point out that its emphasis on „Demand, Supply, Efficiency, Resilience“ is a coherent approach. The way in which the authors distinguish three groups of actors that can make a difference is less convincing however. Their three categories are the public and private sector plus the EU. The EU, however, is a regional organisation of nations, so it is part of the public sector. On the other hand, it is not a global institution. The ERD does not elaborate what kind of actors multilateral organisations such as the UN, the International Monetary Fund or the World Bank are.

Social disparities

In an online essay they published at the same time the ERD was launched, two DIE/GDI researchers, Mario Negre and Mark Furness, argue that the EU development policy should do more to tackle social inequality. In principle, the European Commission agrees that social disparities can harm growth, but that is not reflected in its action, the DIE/GDI authors state. They bemoan that the Commission wants to cut aid to middle-income countries because it believes that emerging markets are gaining strength and can take care of themselves.

Furness and Negre, however, argue that the EU is neglecting social disparities in the countries concerned. Some 60 % of the world’s poor today live in large countries with strong growth rates, such as China, India, Indonesia, Nigeria and Pakistan.

Andris Piebalgs, the EU development commissioner, is known to be of the opinion that inequality can thwart growth. Negre and Furness, however, criticise him for not saying so on trips abroad. On the one hand, his stance reflects respect for the sovereignty of developing countries, according to them, but on the other hand, it is rooted in the reluctance of some EU members to promote government involvement in the economy and the redistribution of incomes.

Transparent land deals

Individual ERD proposals are likely to prove controversial. For instance, the document recommends the application of the rules of the Extractive Industries Transparency Initiative (EITI) not only to mineral resources, but to land transactions too (please note interview with ­Peter Eigen on p. 242). Moreover, the authors demand that eco-system services must be paid. Put simply, they want nature conservation to become attractive in business terms (please note our KfW supplement). Such remuneration would contribute to safeguarding the availability of water, energy and land. The model the ERD has in mind is the international trade in carbon emissions.

The ERD leaves no doubt that the pressure on resources is growing. It estimates that the demand for water and energy will rise by 40 % by 2050 – and the demand for food will even increase by 50 %.

Peter Hauff