At the Millennium Assembly in 2000, world leaders agreed on a far-sighted plan to support global development objectives at the start of this new century. The International Conference on Financing for Development, held in Monterrey, Mexico, in 2002, was an important turning point in the effort to attain these Millennium Development Goals (MDGs) and to reduce the vast implementation gap in Agenda 21. At Monterrey, the downward trend in official development assistance (ODA) was reversed, and a commitment was made to reduce the debt burden, particularly of the least developed countries.

The challenge to be met at the World Summit on Sustainable Development in Johannesburg is to adopt an implementation plan that will revitalize multilateral cooperation and enable developing countries to use the available financial resources effectively and to launch partnerships with the private sector, bilateral sources and NGOs. The MDGs and the Johannesburg Plan of Implementation will serve as a framework for the measurement of actual achievements, the delivery of financing and the fulfilment of other related commitments. It is understood that while domestic resources remain the most important source of financing for sustainable development, public and private international financial flows, including those provided by the financial mechanisms of the Rio conventions, are also crucial.

This publication, which is a work in progress, seeks to present an overall picture of financing for sustainable development in the light of the challenges addressed at the Monterrey and Johannesburg events and to provide relevant information to policy- and decision-makers of developing countries in their transition towards sustainable development. It is also aimed at sharing experiences drawn from the Latin American and Caribbean region and its operational vision for the future with the global community and with other regions. Moreover, it is intended to help strengthen the capacity of Latin America and the Caribbean for the effective implementation of the Initiative for Sustainable Development agreed upon by the Governments of the region in the context of the Rio de Janeiro Plan of Action and for the timely execution of the Johannesburg Plan of Implementation.

Building upon seven case studies of selected countries, the technical analysis contained in this monograph presents options for developing countries seeking to generate resources for sustainable development and suggests how the private sector, donors and multilateral financial institutions can contribute to the same objective. The analysis also highlights the need to strike a new balance between the market and the public interest through public-private initiatives that combine market innovation, social responsibility and enabling regulations. Financial trends and the flow of domestic resources, particularly as they relate to public expenditures for the environment, are also analysed.

The implementation of sustainable development programmes should ensure the integration of economic, social and environmental objectives, and these integrated aims should be reflected in the policies and decisions adopted at the national, regional and global levels.

The seven country case studies and the overall regional analysis suggest a number of specific measures:

• Putting in place an effective operational strategy to increase ODA beyond the commitments made in Monterrey for sustainable development and environmental protection;

• Designing new instruments to revitalize debt-for-nature swaps by converting them into debt-for-sustainable-development swaps;

• Assessing the feasibility of a payment system for environmental services;

• Identifying how foreign investment can make the most significant contribution to sustainable development, and determining which policies should be used to increase the compatibility of foreign investment with sustainable development;

• Improving transparency in the costs of subsidies, the incidence of environmental taxes and market barriers;

• Expanding capacity development and institution-building to optimize the mobilization of financial resources for sustainable development, particularly at the regional level, based on the existence of multilateral financial institutions in Latin America and the Caribbean;

• Supporting communities and Governments in their efforts to secure equitable access to the innovative financial mechanisms being established as part of the environmental regime.

ECLAC and UNDP will continue their partnership, while also involving other development actors, in an effort to support Governments in the adoption of measures and policies that will expand financing and investment for sustainable development. They will also promote partnerships between public and private sectors and the NGO community aimed at strengthening and re-designing public and private institutions and thus enabling them to respond to the operational requirements of fulfilling the MDGs and the Johannesburg Plan of Implementation.

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