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I. The role of agriculture and land in the provision of global public goods


Ten years after the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro in 1992 - also known as the Earth Summit or Rio-92 - South Africa will be hosting the "World Summit on Sustainable Development" in Johannesburg. At the Rio Summit, world leaders adopted Agenda 21, a blueprint for attaining sustainable development in the twenty-first century. At the Johannesburg Summit, to be held in August-September 2002, attention will focus on many of the key challenges and opportunities the global community faces in implementing the various chapters of Agenda 21.

Ten years after the Earth Summit in Rio de Janeiro, the World Summit on Sustainable Development will review implementation of Agenda 21.

FAO is the Task Manager for four chapters of Agenda 21, namely: Planning and management of land resources (Chapter 10), Combating deforestation (Chapter 11), Sustainable mountain development (Chapter 13), and Sustainable agricultural and rural development (Chapter 14). It is also a major partner in the implementation of several other chapters of Agenda 21, notably, Combating desertification and drought (Chapter 12), Biological diversity (Chapter 15), Oceans and seas (Chapter 17), Freshwater (Chapter 18) and Toxic chemicals (Chapter 19), and in the implementation of some of the multilateral environmental agreements (MEAs) that came out of Rio-92. These include the United Nations Framework Convention on Climate Change (UNFCCC), the Convention on Biological Diversity (CBD) and the Convention to Combat Desertification and Drought in those Countries Experiencing Serious Drought and/or Desertification, particularly in Africa (UNCCD).1

The concept of global public goods is gaining importance in discussions on sustainable development.

A concept that has gained importance in the discussions on sustainable development leading up to the Johannesburg Summit is that of global public goods (GPGs). This concept is increasingly viewed as a useful framework for addressing global environmental problems and increasing political will and financing for better coordinated global efforts. A large body of recently available literature has focused on various aspects of GPGs, such as health, knowledge, cultural heritage, financial stability, peace and security.2 The importance of GPGs with regard to agriculture and natural resources, however, has received less attention in this debate.


The concept of public goods is linked to the economic notions of externalities and market failure. An externality refers to a situation where, for example, a firm's actions have unintended or unwanted side-effects that benefit (positive externality) or harm (negative externality) another party that would otherwise not be associated with the firm's product.3 In general, the benefit or cost imposed is not compensated for through market transactions. Market failure occurs when the positive contributions or negative consequences of an action are not adequately reflected in the market price of the related products. These are, thus, either over- or undersupplied.

Global public goods are goods with universal benefits but provided by a smaller group.

Public goods are a special case of externalities and are goods for which consumption cannot be confined to a particular consumer or group of consumers.4 Strictly speaking, pure public goods are goods having characteristics of non-excludability and non-rivalry in consumption.5

Pure public goods exhibit the characteristics of complete non-excludability and complete non-rivalry, while goods characterized by complete excludability and rivalry are termed private goods. Between these two extremes, a series of so-called quasi-public goods are characterized by different degrees of non-excludability and non-rivalry. For example, while actions to promote biodiversity and landscape conservation or to mitigate climate change are generally considered as pure public goods, national parks with free access could be considered as non-excludable, but rival in consumption. Likewise, national parks with regulation or entry fees, and those without congestion, could be considered as excludable, but non-rival.

Public goods are often location specific - for example, flood control, the off-site effects of soil erosion and watershed protection - and can be referred to as local public goods. However, some extend beyond the local or regional area, and their impact is transboundary in nature. Public goods whose impact is global in nature are referred to as global public goods. Examples could include biodiversity and global climate change mitigation. Kaul, Grunberg and Stern provide the following definition of a GPG:

A GPG is a public good with benefits that are strongly universal in terms of countries (covering more than one group of countries), people (accruing to several, preferably all, population groups) and generations (extending to both current and future generations, or at least meeting the needs of current generations without foreclosing development options for future generations).6

Agriculture and land can provide or contribute to important global public goods: biodiversity, climate change mitigation and others.


Table 37 illustrates some of the public goods associated with the land-cluster chapters of Agenda 21 (the list should not necessarily be considered as exhaustive). These include public goods that are of local and global nature and semi-public goods characterized by different degrees of rivalry and excludability. The public goods are also classified according to the local, regional or global nature of their impact.

Table 37

Chapter of Agenda 21

Associated public good

Range of spillover

10 - Planning and management of land resources

Ecosystem stability

Regional, global


Biodiversity conservation

Local, regional, global


Carbon sequestration


11 - Combating deforestation

Forest biodiversity

Local, regional, global


Ecosystem stability

Regional, global



Local, regional, global


Reduction of greenhouse gas emission from forest fires

Local, regional, global


Carbon sequestration


12 - Combating desertification and drought

Incremental carbon sequestration



Protection of waterbodies

Local, regional, global


Biodiversity conservation in drylands

Local, regional, global

13 - Sustainable mountain development

Ecosystem stability

Regional, global


Hydrological stability

Local, regional


Carbon sequestration


14 - Sustainable agriculture and rural development

Conservation of agrobiodiversity

Local, regional, global


Carbon sequestration


15 - Biological diversity

Conservation of agrobiodiversity

Local, regional, global


Carbon sequestration


Several land-use options, outlined in Chapter 10, are aimed at promoting the conservation of biodiversity through the maintenance of species diversity and restoration of degraded lands. Such measures also have the potential to make the largest contribution to incremental carbon sequestration in both soil and biomass and promote endangered species in the surrounding areas.

Chapter 11 - Combating deforestation - also addresses pure public goods such as biodiversity, the stability of the hydrological cycle and global climate system, and the maintenance or restoration of ecosystem stability (the latter having the characteristics of a local or regional public good). Combating desertification (Chapter 12) and the rehabilitation of degraded and mountain ecosystems (Chapter 13) can contribute to wildlife protection, biodiversity and climate change mitigation through carbon sequestration.

Public goods related to sustainable agriculture and rural development (Chapter 14) include widely shared resources and benefits such as the conservation of agrobiodiversity, farmers' knowledge on agrobiodiversity, watershed and flood protection benefits, and climate change mitigation through carbon sequestration. Agricultural research and knowledge provided by Consultative Group on International Agricultural Research (CGIAR) centres are vital contributions to GPGs in so far as these innovations are shared by the global community. Agriculture can also contribute to the generation of negative externalities, such as nutrient depletion, increase in flood frequency downstream and loss of natural forests and wetlands. Conventional and highly commercialized farming systems are often blamed for destroying species diversity and natural regeneration processes.

Other cases of transboundary or global public goods could include food safety, transboundary plant and animal pests and diseases,7 the protection of international water bodies and the destruction of obsolete pesticide stocks.

Progress in the provision of land-related global public goods has been slow since Rio-92.


Agenda 21 mainly calls for policy action towards reducing negative externalities generated by economic activities, but the provision of GPGs is not directly addressed. Indicators for measuring progress are therefore difficult to formulate and assess directly. A brief overview of progress with regard to some of the GPGs covered by Agenda 21 is provided below.

Rehabilitation of degraded lands. This includes the complete rehabilitation of severely degraded lands, improvement of currently used marginal lands or drylands and improvement in land-management practices. Information on all these aspects is sparse and the total area brought under land rehabilitation is difficult to assess. Some 20 percent of the world's susceptible drylands are affected by human-induced soil degradation, placing at risk the livelihoods of more than 1 000 million people.8 Overall, progress has been very slow; soil loss and desertification persist with particular intensity and impact for many lower-income countries. These degraded lands, if rehabilitated, could provide opportunities to enhance carbon sequestration and improve the livelihoods of people who are at risk.

The rich forests of Homs in the Syrian Arab Republic require careful management and control
The maintenance of forest ecosystems contributes to wildlife protection, biodiversity and climate change mitigation through carbon sequestration

- FAO/20565/M. MARZOT

Creation of protected areas of global importance. Efforts towards the conservation of biodiversity have mainly taken the form of establishing protected areas and reserves. Recent estimates show an increase in natural heritage reserves of global importance - to 131 million ha in developed countries and 133 million ha in developing countries. However, these areas have been created through the transfer of natural forests and shrubs into reserves, rather than through restoration of degraded lands.

Area under natural forests and plantations. The recent Global Forest Resources Assessment (see Box 1) pointed to a reduction in natural forest cover of 16.1 million ha per year between 1990 and 2000 (from 3 808 million ha to 3 682 million ha). Plantation cover increased slightly from 155 million ha to 187 million ha over the same period. This resulted in a net loss of 12.5 million ha in forest cover, but the net rate of deforestation appears to have slowed when compared with that of the pre-1990 period.

Shift towards sustainable agricultural practices. Since Rio-92 there has been an increased emphasis on organic farming in developed countries and a shift towards conservation agriculture and integrated pest management (IPM) practices. This shift includes changes in cropping patterns to legume crops, the use of composted or uncomposted organic manure and the selection of appropriate species and varieties for the biological control of pests. Conservation agriculture has been adopted on almost 60 million ha in a diverse group of countries (see Box 10). These developments have helped greatly to enhance soil nutrition and soil organic matter and increase soil carbon storage.

Box 10


Conservation agriculture1 is a strategy that can prevent, and even reverse, the declining soil fertility that commonly results from mechanized tillage or ploughing. The term conservation agriculture encompasses several techniques, but in general this method of crop production calls for reduced tillage and leaving crop residues on the land to protect the soil from wind, encourage biological activity and create organic matter in the soil. Leaving soil residues on the surface creates a structure that admits water, so that it reaches the plants' roots - instead of running off the surface and taking the soil with it.

Conservation agriculture began in the United States in the late 1970s as a reaction to growing soil erosion and fertility problems and the spiralling fuel costs that followed the 1973 oil embargo and made tillage an expensive practice. Today, about 60 million ha of farmland worldwide are cultivated in this way. The United States remains a leader in conservation agriculture, although the most dynamic growth in this method has occurred in South America. In southern Brazil, Argentina and Paraguay, as much as half the arable land is now cultivated using conservation agriculture.

After a few years, the benefits can include:

  • higher and more stable yields;
  • significant savings in irrigation water;
  • less loss of topsoil;
  • cost and energy savings from not ploughing;
  • less runoff, reducing flooding and chemical contamination of rivers;
  • better local water supplies because of reduced runoff;
  • less silting of watercourses.

The conversion to conservation agriculture requires the purchase of different sowing equipment or adaptation of existing equipment. Because this method requires the minimal use of chemical pesticides, farmers must learn to control pests and diseases through IPM, which emphasizes the use of pests' natural enemies. This takes time, and because the pests and diseases are no longer controlled by ploughing, farmers who adopt conservation agriculture initially need to use more herbicide, not less. After a few years, however, the higher returns should cancel out the extra costs. Eventually, IPM enables farmers to reduce herbicide use greatly, or abandon it altogether.

Conservation agriculture has another desirable effect. Plants consist largely of carbon, and when they decay or are burned, they release carbon dioxide - the most significant single "greenhouse gas" contributing to climate change. With better management, agricultural land can return this carbon to the soil as organic matter - a process known as carbon sequestration.

1 More information on conservation agriculture can be found at

Physical progress/potential in the direct promotion of GPGs.

A recent estimate of global carbon storage predicted that sustainable harvesting and management of forests worldwide could help in storing an additional 184 Tg (1 Tg = 1012 g) of carbon per year in forests and wood products during the next 50 years, with a range of 108-251 Tg per year.9 Likewise, typical agricultural soils contain 100-200 tonnes of carbon per hectare over a depth of 1 metre. For intensively cultivated soils, a change in land-use practices could result in increased organic matter and carbon sequestration. However, it is difficult to assess to what extent land and forest resources have contributed to global climate change mitigation since Rio-92.

Physical progress in the conservation of biodiversity. In terms of conserving biodiversity, there have been significant improvements in the understanding of the nature and extent of change in major ecosystems, many of which are rich in biodiversity. Similarly, significant progress has been made in raising awareness and in the creation of protected areas and ex situ collections of gene pools of importance to food and agriculture.

Funding for agricultural research for the benefit of the global community has been declining.

CGIAR research as GPGs. Developing countries largely depend on the research and knowledge provided by international and national research centres. Thus, agricultural research and dissemination of knowledge in developing countries, especially where it concerns areas that have poor resources, could be considered as public goods. Specifically, research undertaken and knowledge disseminated by the CGIAR centres are often considered as GPGs10 and are shared among the global community. Nevertheless, over the past ten years, funding for the CGIAR system and technological research has continuously declined, with the result that the CGIAR centres are experiencing increasing financial stress. Inadequate funding could affect the ability of the centres to conduct research and disseminate the knowledge required for improved food production and the alleviation of hunger and poverty.11

Expansion of the knowledge base. The documentation and registration of farmers' knowledge about agrobiodiversity could be considered another example of a GPG. National reporting to the CBD suggests that about two-thirds of countries have conducted such case studies (e.g. on pollinators, soil biota, integrated landscape management and farming systems).12

There has been progress in understanding and preserving biodiversity.

International undertaking on protecting plant genetic resources. Recognition of the concept of Farmers' Rights in the recent agreement reached on protecting plant genetic resources is an important step forward that will help protect global agrobiodiversity in gene banks, farmers' fields and in the wild. The concept of Farmers' Rights is intended to form the basis of a formal system of recognition and reward to encourage and enhance the continued role of farmers and rural communities in the conservation and sustainable use of plant genetic resources.13 The agreement ensures that global benefits resulting from the use of plant genetic resources are shared equitably and calls for mandatory payments when commercial benefits are derived from the use of these resources.14

Compensation of the providers is indispensable for adequate provision of global public goods.


Because the consumption of public goods is non-excludable, there is a temptation (assuming a beneficial public good) to benefit without paying, i.e. free-riding. Consequently, mechanisms for compensating the providers are necessary to ensure that socially desirable levels of the good will be provided. This is true also for GPGs, where the benefits accrue to the global community while the providers are inevitably a much smaller group.

Official development assistance has declined since Rio-92, particularly for agriculture and rural areas.

Agenda 21 calls for measures that generate both public and private goods, although funding mechanisms for their implementation were not specifically designated for one or the other. However, the global progress review report on financing for sustainable development provided a disappointing picture of the past performance in meeting the Rio-92 financing objectives and mechanisms.15 Despite the promise made by developed countries of increasing official development assistance (ODA) to 0.7 percent of their gross national product (GNP), ODA after
Rio-92 declined sharply from 0.33 to 0.22 percent of donor GNP, followed by a slight increase to 0.24 percent in 1999. ODA to agriculture (broadly defined) suffered a decline in real terms of more than 40 percent between 1988 and 1999. Within agriculture there were sharp decreases in ODA to agricultural services, crop production and forestry, although the share for environmental protection, research and training and extension increased.

An example of a conservation agriculture technique in a maize crop in Brazil
Here the crop develops in a mulch cover that protects the entire soil surface from erosion, improving water infiltration and controlling weed growth


Foreign direct investment (FDI) is concentrated on a few countries. FDI flows to most least developed countries have been negligible, and the agriculture and natural resource sectors have not benefited. FDI is motivated by market opportunities, which means that in general this financing instrument cannot be expected to generate much in the way of public goods. Moreover, it is not usually guided by sustainability considerations.16

On the other hand, global financing mechanisms such as the Global Environment Facility (GEF) - see Box 11 - have been an important source of funding for many multilateral environmental agreements, and thus the provision of GPGs. The GEF has helped fund over 800 projects; between 1991 and 1999 more than $2 billion were allocated to projects on biodiversity, climate change, international waters, ozone depletion and land degradation, and even larger amounts were mobilized as cofinancing. The largest portion of funding went to biodiversity projects, closely followed by projects on climate change.

Other funding mechanisms for global public goods have emerged.

Finally, some new sources are emerging for financing GPGs. National funds are being created under CBD, UNCCD and UNFCCC. Another source of funding is provided by the capital flows with technology transfer to developing countries envisaged under the Clean Development Mechanism (CDM) (resulting from the as yet unratified Kyoto Protocol). However, as with conventional funding mechanisms (ODA and FDI flows), the flow of resources under these various mechanisms has been uneven, and many are yet to be developed or implemented fully.

It is necessary to increase official development assistance, particularly to agriculture and rural areas.


Increasing ODA to the target set at Rio-92 occupied an important place in the preparations for the UN Conference for Financing for Development. The Monterrey Consensus called for concrete efforts towards the target of 0.7 percent of GNP as ODA to developing countries.17

There is, however, a need to focus particular attention on agriculture and rural areas. Indeed, a successful strategy for alleviating poverty and hunger must begin by recognizing that they are mainly rural phenomena and that agriculture is central to the livelihoods of rural people. A reversal of the declining trend in overall resources for hunger reduction, agriculture and rural development is necessary. It is also important to recognize that attaining the environmental objectives outlined in the land-cluster chapters of Agenda 21 will require much greater effort directed towards the agriculture sector and rural areas.

One important means of increasing political will and financing commitments to agriculture and rural development would be the recognition of the important potential role of agriculture and rural areas in the provision of GPGs. Indeed, only limited funding is currently available for such GPGs.

Additional funding must be mobilized to compensate the providers of global public goods.

Ensuring the provision of GPGs linked to the land-cluster chapters of Agenda 21 requires more than increased financing for development in general and for the agriculture and rural sectors specifically. Financing mechanisms must be geared directly to the provision of such goods. It is important to retain the idea that GPGs are goods and services benefiting the global community but provided by a narrower group of people, and that compensation to the providers is in the interest of the global community. Indeed, financing mechanisms for GPGs must be perceived and designed as a payment for goods and services provided.

A further important issue is whether increased financing for global public goods can also contribute to global poverty alleviation. While this will depend on specific circumstances and on the design of the mechanisms compensating the providers, there is a strong case for identifying synergies between the provision of GPGs and poverty alleviation and designing compensation mechanisms accordingly.

Synergies should be sought between the compensation of global public goods and poverty alleviation.

One option would be to link additional ODA flows to the effective mobilization of domestic resources for the provision of GPGs. Additional funding would be required, however, and serious consideration should be given to the creation of new financing mechanisms that provide both GPGs and transfer resources between developed and developing countries. A particular challenge is to design mechanisms in such a way as to also ensure an important contribution to poverty alleviation. (A review of some of the existing or potential financing mechanisms is provided in Box 11.)

Box 11


Global Environmental Facility (GEF). The GEF, established in 1991 and restructured after Rio-92, is intended to ensure international cooperation and financing to address major threats to the global environment. It brings together 166 member governments, the scientific community and a number of private sector and non-governmental organizations (NGOs). The implementing agencies are the United Nations Development Programme (UNDP), the United Nations Environment Programme(UNEP) and the World Bank. It finances and mobilizes cofunding for projects in the following focal areas: 1) biodiversity,

2) climate change,

3) international waters and

4) ozone depletion. Projects to address land degradation are also eligible for funding in so far as they relate to the four focal areas. Specific proposals, including land degradation as a separate focal area, are to be submitted for final approval at the GEF Assembly in October 2002.1

Debt-for-nature swaps, especially in sub-Saharan Africa. Sustainable debt financing is an important option for mobilizing resources for public and private investment. Debt-for-nature swaps is a mechanism through which the international debt of developing countries is written off and diverted towards financing environmental projects that yield global environmental benefits. Studies have shown that the highest deforestation rate is found in those countries of Africa that are also highly indebted. This suggests that there is significant potential for checking deforestation and promoting global public goods (GPGs) in these countries (e.g. reforestation and land-management activities) through such mechanisms.

Climate Change Fund. Under UNFCCC, both developed and developing countries are obliged to reduce greenhouse gas (GHG) emissions in the atmosphere and increase the sink capacity through the management of biomass and soils. A Climate Change Fund has been proposed to help the least developed countries build their capacity and finance for implementing the provisions outlined under the Convention. Although the structure of the proposed fund is not yet clear, some countries have already committed contributions to the establishment of the Fund.

Clean Development Mechanism (CDM). The CDM, designed under the as yet unratified Kyoto Protocol, allows countries to finance emission reduction projects in developing countries and receive carbon emission reduction credits for their investment. The CDM could prove to be one of the most innovative financing mechanisms for promoting land-related GPGs. (The CDM is discussed in more detail in the following section.)

National Environmental Funds. Environmental funds have been established in a few developing countries under two UN Conventions - the UNCCD and the CBD - and are increasing in numbers. They are usually managed by private organizations and are capitalized by grants from governments and donor agencies as well as from environmental taxes and charges. Such funds could find wider application.

Improved mobilization of domestic resources. Domestic resource mobilization for the promotion of GPGs should enhance the existing financing mechanisms and help open new opportunities in an effective way. The removal of perverse subsidies; full-cost pricing of natural resources and services; the establishment of property rights over land, water and forests; fiscal reform towards implementation of environmental taxes and drawing on the willingness to pay of the beneficiaries of local and global public goods could all help create an enabling environment for mobilizing domestic resources and attracting external resources.

1 Global Environment Facility (GEF). 2001. Note on the proposed designation of land degradation as a GEF focal area. GEF Council, 5-7 December 2001.


There is a need for increased focus on the land-cluster-related GPGs in the overall debate on GPGs, alongside other aspects that have so far received more attention, such as health, knowledge, cultural heritage, financial stability and peace and security. The global nature of these land-related GPGs lends justification to enhanced financing for their provision and to the development of new financial mechanisms for this purpose. The increased focus on the provision of GPGs and the need for globally coordinated efforts towards poverty alleviation would call for instruments, policies and programmes to be devised that at the same time address the effective implementation of the land-cluster chapters of Agenda 21 and contribute to poverty alleviation.

The following section considers in more detail the envisaged new financial mechanism for the provision of GPGs: the Clean Development Mechanism (CDM) deriving from the Kyoto Protocol on global climate change.

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