1. From Billions to Trillions: and Then What? Rob Vos Director Rural Poverty Reduction FAO Rolph van der Hoeven Farewell Seminar ISS, The Hague, 8 October 2015

2. SDGs and Global Public Goods  Many Global Public Goods elements in SDG agenda  Achieving sustainable development maybe GPG in itself  Sustainable food security  Preserving biodiversity, oceans, ecosystems, etc.  Fighting climate change  Treatment of communicable diseases and other global health issues  Better regulation of international financial markets (to also reduce international inequality)  Providing GPGs will require stronger global partnership and much more development finance

3. Are we getting quadruple A? Yes, but….no really  “2030 Agenda” and SDG 17 – Means of implementation and strengthened global partnership  Not much more than MDG8  MDG Gap Reports: poor track record  AAAA – Addis Ababa Action Agenda  Step back from Monterrey  No policy changes agreed: no significant additional funds were pledged; no trade concessions were promised, and no relaxation of OECD and G20 control over international tax cooperation norms  Systemic issues left out  Only positive points: infrastructure fund (public-private partnership financing) and “technology facilitation mechanism”

4. Billions: Declining importance of ODA

5. Trillions are needed They say so  Meeting climate change challenge:  $ 6 trillion  $ 6 trillion (per year) worldwide for infrastructure (clean energy, cities, land use systems) over 2015-2030 $ 6 trillion $ 6 trillion  $ 270 billion (per year) incremental investment for low-carbon transitions (2015-2030)  $ 100 billion (per year) for Green Climate Fund (mainly for adaptation) in developing countries (by 2020) Sustainable Energy for All (SE4A)  $ 300 billion (commitments made at Rio+20) Meeting the poverty and hunger challenge (FAO, WFP, IFAD)  $ 267 billion (per year) for investment and improving access to food for poorest267 billion Meeting educational needs (Global Partnership for Education)  $ 25 billion (per year) for global education fund (external financing gap)

6. 6 6 What about “innovative sources of finance” for global public goods? Existing mechanisms for global funds: “small change” -Innovative mechanisms administered $5.8 billion in health financing and $2.6 billion in climate financing over last decade -Only several hundred million per year are additional to ODA. Source: UN-DESA, WESS 2012: In Search of New Development Finance

7. 7 “New” sources of innovative financing Potential mechanisms  Internationally coordinated taxes  Financial transaction tax (FTT)  Currency transaction tax (CTT)  Carbon tax  Airline transportation tax  Billionnaire’s tax  Use of IMF Special Drawing Rights (SDRs) for development Source: UN-DESA, WESS 2012: In Search of New Development Finance

8. 8 Realizing the potential  Double dividend from taxing public bads  But to realize potential political agreements needed for: (a) coordinated implementation (b) allocation of revenue for development and global public goods  AAAA failed to establish appropriate inter-governmental Tax Coordination body

9. Fixing the Global Reserve System The Problems 1. Asymmetric adjustment problem  Deficit countries obliged to adjust, no pressure on surplus countries to do so  deflationary bias 2. Triffin dilemma  Use national currency (US$) as international reserve currency  Instability with cycles in core currency value 3. Growing inequities  Lack of adequate contingency financing  Demand in reserves for self-insurance  Deflationary bias

10. Fixing global reserve system and leverage development finance Alternatives:  Move to multi-currency standard  Provides diversification and potentially less unstable  But not instability proof and inequities remain  SDR (true international currency) based system may be preferable  Countercyclical issuance of SDRs  IMF lending in SDRs Either way:  Leverage excess reserves for development finance (MDB’s)  Leverage unused SDR deposits for development finance (buy bonds from MDB’s)

11. Wishful thinking?  Not all public money, too contrary, but public investments and change in incentives need to induce transformative changes  There are trillions on the sidewalks:  Leveraging unused and newly issued SDRs (US$ 100-350 billion p.y.)  New MDB’s (BRICS Bank and AIIB: both US$ 100 billion in basic capital)  Green Climate Fund (US$ 10 billion to become US$ 100 billion by 2020)  Fossil fuel subsidies (US$ 300 billion per year)  Carbon tax (up to US$ 250 billion per year)  Remittances form migration (US$ 450 billion per year)  International tax cooperation (US$ 200-250 billion per year)  But, then what?  Increasingly complex financing architecture  Major issues of governance  New “Bretton Woods” moment:  need to redo Addis Ababa: triple A may be good enough

12. From Billions to Trillions: and Then What? Rob Vos Director Rural Poverty Reduction FAO rob.vos@fao.org

13. Referenced graphs and tables

14. $93 trillion (2015-2030) for emission reductions

15. Future sources of growth of crop production