Strategic Objective: To promote government expenditure and taxation policies that encourage the transition to sustainable development.

Achievements and Highlights

• IISD continues to be recognized for our contribution to the dialogue on the relationship between poverty and the environment. In February 2003, the 22nd Governing Council of the United Nations Environment Programme endorsed the poverty-environment conceptual framework developed by IISD. The Governing Council also adopted a work plan to operationalize the framework in Africa over the next three years. IISD expects to provide advice and play a leading role in coordinating the related network and in developing country studies.

• IISD's work on poverty and the environment is based on the writings and teachings of Nobel Laureate Amartya Sen, author of the acclaimed publication, Development as Freedom. In cooperation with the Mazingira Institute in Kenya, IISD released There is a Better Way, a comic book based on Sen's work. The comic book, which has been well-received in Africa, conveys Sen's thoughts in everyday language for the benefit of all. IISD also published two issues of Nexus, a newsletter exploring the linkages between poverty and the environment.

IISD's Economic Policy Team continues to examine the relationship between poverty and the environment, and the impact of subsidies.

• Economic Policy Director, Dr. Anantha Duraiappah, made a substantial contribution to the Millennium Ecosystem Assessment, co-writing a chapter called gLessons Learned: Consequences for ecosystems, human well-being and poverty reduction.h The assessment addresses the relationship between ecosystems and human wellbeing. More information is available at http://www.millenniumassessment.org

• The five-year TERI-Canada Energy Efficiency Project was carried to near completion. This was a multi-million dollar project funded by the Canadian International Development Agency, and run in partnership with The Energy and Resources Institute (TERI), based in India. The majority of IISD's work this past year focused on Green Budget Reform, identifying budgetary instruments and developing analytical tools to examine the sustainability implications of energy sector development. These aims were achieved through four separate initiatives:

  1. Identifying green budget opportunities in TERI's annual budget recommendation to the government of India.
  
  2. By recognizing that people with lower incomes allocate a larger share of their budgets to energy than people with higher incomes, the MARKAL-Equity compensation initiative produced three papers documenting economic modelling efforts to study the impacts of climate change mitigation scenarios on lower income groups and the design of compensation packages to minimize the adverse impacts on households.
  
  3. To bridge the gap among policy-makers, society and the economic, social and environmental systems in which we live, The Framework for Energy Sustainability Assessment initiative produced the Energy Sustainability Gauge, an interactive, Web-based tool linking the analysis of salient indicators of sustainable energy development with the implementation status of the mix of policy instruments affecting the indicators. The gauge, which has been applied in India and Canada, will be made available to the public and interested policy community by 2004.
  
  4. IISD developed and applied a methodology for estimating the full costs of thermal power production in Canada. Full-cost accounting, as it is commonly known, makes explicit the magnitude of direct environmental costs borne by society from thermal power generation, thereby promoting power sector investment decisions that are indeed least cost.

The five-year TERI-Canada Energy Efficiency Project draws to a close with numerous useful outputs and learnings.

• Work began on the Van Lennep Subsidies Initiative, a project encompassing the talents of our Economic Policy Team and our Trade and Investment Team. Named after the late Emile van Lennep, a distinguished Dutch economist, the project aims to establish a process to resolve subsidy-related differences between developed and developing countries in a constructive, transparent and equitable manner; to defuse the present antagonistic and suspicious attitudes towards the World Trade Organization on the issue of subsidies; to build research capacity to identify trade-related subsidy issues; and to develop policy approaches to address these priorities.