This chapter traces the Development Assistance Committee’s (DAC) role in shaping policies for sustainable development. This has been a major priority for the Committee’s member countries since the early 1990s. The DAC has produced a range of guidance that has helped providers of development co-operation to integrate environmental considerations into their policies and practices. Notable examples include introducing environmental impact assessment requirements into development projects and integrating the objectives of the three Rio conventions into development co-operation. Over the past 20 years, these efforts have built increasingly on co-operation between the OECD’s Development Assistance and Environmental Policy Committees, to integrate sustainable development into development co-operation and to ensure that policies are coherent, and that they are informed by the comparative advantage of each policy community. Policy guidance has been the DAC’s main tool for promoting sustainable development among its members, as well as among policy makers and development actors in partner countries. As a result, many development agencies have made progress in integrating environment into their operations based on the DAC’s guidance. However, resource availability and partner country ownership are increasingly becoming critical issues.

With the fresh impetus for sustainable development and green growth highlighted in this Development Co-operation Report, it is essential that we have robust and credible methods for measuring the financial resources pledged and allocated to achieve these goals. This chapter, contributed by the statistics team in the OECD’s Development Assistance Committee, explains how aid to sustainable development is measured, how it has grown over the years and what challenges remain. The current marker system has already helped to raise awareness in donor agencies of the importance of mainstreaming environment in all development co-operation as demonstrated in the statistics presented elsewhere in this report. Future efforts are called upon to facilitate tracking international official and private flows in support of the Rio conventions and environmental objectives more generally.

The developing world needs sustainable energy to support its growth and to move people out of poverty. Worldwide, 1.3 billion people still have no access to electricity, and up to a billion more have to cope with unreliable access at best. In particular, rural Sub-Saharan Africa has an electrification rate of only 12% and the total number of people without access to electricity continues to rise steadily. The UN, under its Sustainable Energy for All initiative, is seeking to ensure universal access to modern energy services by 2030. In this chapter, the author describes how the European Union, which provides more than half of all global official development assistance (ODA), is contributing to the UN initiative, placing the emphasis on access to modern energy services; regional integration, focusing on projects with a regional reach; and broad-based renewable power generation. Nonetheless, he notes that official development assistance will not be able to meet the challenge alone. The private sector will need to engage much more actively, both through investment and through financing. The rewards will be substantial: new markets, new productive partnerships, new innovative technologies for developing countries, and more income and jobs.

Short-lived climate pollutants (SLCPs) are chemicals that remain in the atmosphere for only a few days or a few decades at the most. They include black carbon particles (or soot, emitted from wood fires, for example); methane (from oil and gas production and municipal waste); and tropospheric ozone (from motor vehicles). In addition to being powerful greenhouse gases, these are dangerous air pollutants, with various detrimental impacts on human health, agriculture and ecosystems. Yet, there is little public awareness of the threat these chemicals pose. Actions to reduce SLCPs might be the only way to slow down global and regional warming in the short term (10-30 years) and, at the same time, provide immediate air quality benefits. In this chapter, the author provides examples of initiatives underway to tackle these pollutants and, at the same time, bring benefits to developing countries. Many of these measures are low-cost, with initial investments offset by subsequent cost savings, for example, from reduced fuel use or harnessing of recovered methane. Global action is needed to raise awareness, enable and encourage national and regional initiatives, and support the widespread implementation of SLCP control measures. In March 2012, Sweden, Bangladesh, Canada, Ghana, Mexico and the United States launched the Climate and Clean Air Coalition, a global partnership to help developing countries scale up their efforts to combat SLCPs.

The world is waking up to the fact that water is key to sustainable development. Previously seen as the Cinderella among the United Nations’ many preoccupations, 2010 finally saw access to clean water and sanitation recognised by the UN as a human right. Not a moment too soon – OECD modelling suggests that if we continue current trends, by 2050, 2.3 billion additional people will be living in river basins that are under extreme water stress. Despite some good progress driven by the Millennium Development Goals, water statistics continue to alarm: every year, for instance, dirty water causes the death of more than 2.2 million children under the age of 14. This chapter, written by three senior water policy makers, calls for a profound rethink of how we tackle the water crisis, including:seeing water as one of the key elements of future growth;using innovative methods to fund the water challenge to the tune of 1-2% of individual countries’ GDP over the next 20 years;taking an integrated approach to water resources management;bringing together multiple partners and stakeholders to manage water in the context of decentralised and transparent governance; andincluding such innovative water policy in the overall context of other development.

The concept and principles of sustainable development have been accepted for several decades as being central to societal progress. Yet, we are still trying to shift to a truly sustainable development model. This chapter illustrates sustainable development in action through the story of an integrated watershed management project in Ethiopia in which the authors were involved. The project has regenerated and enhanced natural resources, improved incomes and food security, and provided a range of social benefits. It has also improved people’s resilience in the face of climate change, while contributing to carbon sequestration. The success of this approach to watershed management lies in the fact that it is not solely a technical approach. Full participation of local resource users has been fundamental, as has social capital and a supportive institutional environment. The project’s approach has now been scaled up to the national level, influencing key areas of national policy, including the Productive Safety Net Programme and Ethiopia’s Green Economy Strategy. Too many sustainable development approaches never go beyond the pilot project. An important lesson from this experience is that while a successful local approach can and should be applied at the national level, doing so requires institutional and policy commitment from governments and from civil society, as well as the investment of enough funds to enable scaling-up. As the initial project was inspired by similar work in India, it also demonstrates the value of sharing experiences.

In many countries, wealth in oil, gas, diamonds, gold and other minerals can be a curse rather than a blessing. When poorly managed, such natural resource wealth can result in poor economic performance, weak and unbalanced growth, poverty, conflict, environmental damage, and ineffective or authoritarian rule. In this chapter, the authors argue that the resource curse is not, however, inevitable. They provide a detailed account of how co-operation between Norway (a country with four decades’ experience of managing large oil reserves) and Ghana has helped the African country to manage its oil for the benefit of the population as a whole. Drawing on the experience of Norway’s Oil for Development programme and its principles of good governance, Ghana is striving to ensure economically, environmentally and socially responsible management of its petroleum resources. The Ghanaian government has focused on developing and improving relevant legislation, establishing and developing institutions, and building competence. Twinning arrangements between public sector institutions in Ghana and their sister institutions in Norway have ensured continuity, sustainability and a holistic approach. Placing emphasis on the principles of transparency, accountability and anti-corruption, the experience offers practical lessons that can prove useful for other countries.

This chapter reports on three countries that are integrating crucial elements of green growth into national policies and sectoral plans to achieve concrete results: China, Kenya and Korea.Co-authors: Shen Xiaoyue, Division Director of Environmental Policy, Policy Research Center for Environment and Economy, Ministry of Environmental Protection (MEP); Jia Lei, Research Assistant, Policy Research Center for Environment and Economy, MEP, China.China is applying green economic policy to reduce poverty and promote social advances. For example, it aims to create at least 5.3 million green jobs within two or three years through energy savings, pollution reduction, adjustments to the industrial structure, technical innovation and biogas projects.Kenya has replaced GDP-based traditional economic development models with a new model incorporating social dimensions of development progress. With a focus on sectoral implementation overseen by an inter-agency National Steering Committee, the country aims to reach long-term sustainable development through a broad, participatory green economy approach.Korea aims to create growth engines and jobs out of green technology and clean energies. Korea’s targets include reducing CO2 emissions by 30% and quadrupling renewable energy supplies by 2030. Korea is also providing green aid to support developing country partners.

A revolution is occurring in the business arena: for many leading companies worldwide, social and environmental action is no longer solely about compliance or resource efficiency; it is about garnering competitive advantage. In this chapter, the author outlines a vision for the future in which business, government and civil society all work together, each doing what they do best, to create what none of them could achieve alone. He draws on many examples of such partnerships, such as the Water and Development Alliance (WADA) between The Coca-Cola Company and the United States Agency for International Development (USAID), which is benefiting over half a million people globally. Green paths that the business sector can follow include: mainstreaming resource efficiency into operations; valuing natural capital; and leveraging the resources of the private sector against those of the public sector to multiply the impact. The free flow of creative knowledge and expertise through partnerships is essential to drive the social and environmental changes needed to ensure a vibrant and prosperous future.

This final chapter examines the implications of the Rio +20 Conference for development co-operation. The outcome document of Rio +20 – The Future We Want – outlines a plan to set global sustainable development goals (SDGs) and other measures to strengthen the management of environmental and natural resources, combat poverty, and promote a green economy paradigm for all. The statement reiterates the importance of natural capital and its value in achieving sustainable development. It advocates a more encompassing approach to promote development, while recognising poverty reduction as a continuing major challenge. Furthermore, it calls for a financing strategy, accompanied by technical assistance and capacity development, to ensure adequate support to developing countries. Achieving the sustainable development mission requires actions from the public and private sectors and civil society alike. More voluntary commitments, like those launched at Rio +20, are necessary and welcome.For development co-operation actors, these outcomes imply new ways of thinking and operating. Among other things, development co-operation will need to:help establish SDGs as part of the post-2015 development framework and use them to guide future official development assistance (ODA) and other flows;mainstream green growth thinking into all areas of development co-operation and provide more timely and targeted support to meet the needs of different types of developing countries – from the poorest to those that are medium income and rapidly developing;inspired by the many voluntary commitments made at Rio, speed up more effective use of ODA and use it to partner with and to leverage other sources of finance for sustainable development;improve and accelerate the sharing of information, skills and technology to strengthen capacity and resilience in partner countries;support the adoption of natural capital accounting by developing countries in their decision-making processes, as well as its use by development co-operation agencies in their own aid investments.

Australia is among the few DAC members to increase ODA in 2011, having escaped the global economic and financial crises without a recession, and being relatively unaffected by the current euro area turmoil. In 2011, Australia’s net ODA was USD 4.8 billion, a 5.7% increase in real terms over 2010. This funded larger bilateral grants in 2010 and 2011 and has kept the annual growth rate of Australia’s ODA at 6% since 2006.

In 2011, Austria’s net ODA amounted to USD 1.11 billion. Compared to 2010 – the year when Austrian ODA recovered after dipping significantly in 2008 and 2009 – the 2011 ODA level represents a drop in real terms of 14.3%.

In 2011, Belgium’s net ODA amounted to USD 2.80 billion. This is a decrease of 13.3% in real terms, after sustained increases – of 15% annually on average – between 2008 and 2010.

Canada’s net ODA was USD 5.29 billion in 2011. After increasing by 14% in 2010, Canada’s ODA decreased in real terms (by a little over 5%) in 2011 due to Canada’s decision to cap its development co-operation budget at 2010 levels.

In 2011, Denmark’s net ODA amounted to USD 2.98 billion. Compared to 2010, this figure is a nominal increase of 3.8%, but a drop in real terms of 2.4%. This follows a period when Denmark’s ODA grew at an average annual real growth rate of 2% (between 2007 and 2010). In the context of a freeze in Danish public spending for the period 2011-13, Denmark planned to sustain ODA at the 2010 nominal level (in DKK) until 2013, but fell short of this by 1% in 2011.

In 2011, ODA grants managed by European Union (EU) institutions amounted to USD 12.63 billion, a 6.4% decrease in real terms compared to 2010 (USD 12.68 billion). The level of ODA managed by EU institutions is determined within the EU multi-year financial framework. The multi-year financial framework for 2014-20 currently being prepared by the European Commission proposes a substantial budget increase for external action (up to 25% in 2011 prices from the previous financial framework). Once agreed, this will confirm the strengthened priority of external activities for the EU and should lead to an increase in EU development co-operation funding levels. In 2012 the EU underwent a DAC peer review of its development co-operation (see page 244 and following for a summary of the findings).

In 2011, Finland’s net ODA amounted to USD 1.41 billion. In nominal terms, this figure represents an increase of 3% from 2010, although in real terms Finland’s ODA has dropped by 4%. As for several other DAC members, this is the first decrease after many years of ODA growth. Finnish ODA grew quickly between 2008 and 2009 – at an average annual rate of 12% in real terms – but started to slow down in 2010. The ODA growth rate is expected to reach zero in 2013-14 as ODA for those years will be frozen at the nominal 2012 level.

In 2011, France’s ODA amounted to USD 12.99 billion, down by 5.6% compared to 2010. This is the first decrease in real terms since 2007, after which ODA increased by an average of 13% each year between 2008 and 2010.

In 2011, Germany’s ODA was USD 14.5 billion. Germany increased its ODA by 5.9% between 2010 and 2011, reflecting an increase in its bilateral grants. This increase brought Germany’s ODA above the 2008 level, the highest reached in the past five years.

In 2011, Greece’s net ODA amounted to USD 331 million, down from USD 508 million in 2010. This decrease of 39.3% is a direct consequence of the country’s severe economic crisis. Greek ODA did increase in 2007 (+5%) and 2008 (+27%), before starting to decline in 2009 (–13%).

Ireland’s ODA in 2011 was USD 904 million, a reduction from 2010 levels of a little over 3% in real terms. After increasing its ODA in 2007 and 2008 (by 6% and 8% respectively), Ireland started to cut ODA in 2009 (by 18%) and continued to do so in 2010 (by 4%).

In 2011, Italy’s net ODA grew by 33% in real terms, reaching USD 4.24 billion. This remarkable upsurge is due to increases in debt forgiveness grants and to the large amounts provided for refugee assistance following the arrival in Italy of refugees from North Africa. This increase follows a period of strong fluctuations in Italy’s ODA levels between 2006 and 2010.

In 2011, Japan’s net ODA amounted to USD 10.6 billion. This was a fall of nearly 11% in real terms from 2010 (although 2010 levels were 12% higher than the previous year). This fall was largely due to the decline in government loans. Japan’s ODA has been suffering from an extended period of stagnation, fluctuating around the USD 10 billion mark between 2006 and 2011.

In 2011, Korea’s ODA was USD 1.32 billion. This figure is an increase of almost 6% from 2010 when Korea’s aid surpassed USD 1 billion for the first time. Korea increased its ODA at an average annual rate of 29% a year between 2006 and 2010. Moreover, Korea’s ODA volume was the 17th largest in the DAC in 2011, up one place from 2010; its commitment to increase ODA could bring it up to 15th position by 2015.

In 2011, Luxembourg’s net ODA amounted to USD 413 million, a 5.4% decrease from 2010. Like other DAC members, this is the first drop after several years of increase. Luxembourg’s net ODA grew at an average annual rate of 4% between 2006 and 2010.

In 2011, the Netherlands’s net ODA stood at USD 6.32 billion, a 6.4% decrease in real terms from 2010. After growing at rates of 3% and 4% annually in 2007 and 2008, the Netherlands’ ODA fell by 4% in 2009 before recovering in 2010, when it increased by 3%.

In 2011, New Zealand’s net ODA amounted to USD 429 million. This figure represents a 10.7% increase over 2010, placing New Zealand among the few DAC members that increased – in real terms – their ODA in 2011. This is also the first increase in net ODA recorded by New Zealand after a 2% decrease in 2009 and a 6% drop in 2010. New Zealand is committed to reaching an ODA level of NZD 600 million, and will continue to increase ODA according to its medium-term expenditure plan.

In 2011, Norway’s ODA was USD 4.94 billion, a 8.3% decrease in real terms from 2010. This is the first decrease following steady growth in Norway’s ODA (an average annual rate of 7% in real terms) between 2006 and 2010.

In 2011, Portugal’s net ODA reached USD 669 million. In comparison to 2010, this figure represents an increase in nominal terms of 3.1%, but a decrease in real terms of 3%. This reduction in net ODA is comparable to the average drop for all DAC members: 2.7% in real terms. Portugal’s ODA remained relatively stable in 2011; there were much greater variations in 2008 (+23%), 2009 (–15%) and 2010 (+32%) (all rates in real terms).

In 2011, Spain’s net ODA amounted to USD 4.26 billion. Spain’s ODA grew considerably between 2006 and 2008, with average annual increases of nearly 22% in real terms during these years. However, the global economic crisis and its aftermath has resulted in cuts in Spain’s ODA budget since 2009 that are now becoming more significant (the drop in ODA in 2011 represents a decrease of 32.7% in real terms from 2010). ODA levels are expected to continue to decrease as the new Spanish government is planning more budget cuts to respond to its difficult financial situation.

In 2011, Swedish net official development assistance stood at USD 5.61 billion. The budget for Swedish ODA is linked to the country’s gross national income (GNI) and has, therefore, fluctuated in recent years. The 2011 ODA level is an increase of 10.5% in real terms over 2010 levels, well above the average annual growth rate of 1% that Swedish ODA recorded during the period 2006 to 2010.

In 2011, Switzerland’s net ODA amounted to USD 3.09 billion, a 13.2% increase in real terms compared to 2010. This followed a net drop in ODA of 4% in 2010 after steady growth of 8% in 2008 and 12% in 2009.

In 2011, the United Kingdom’s net ODA amounted to USD 13.74 billion; a decrease of a little under 1% in real terms compared to 2010. The United Kingdom’s net ODA dipped by almost 30% in 2007 but increased at an average annual rate of 13% between 2008 and 2010.

With net ODA standing at USD 30.75 billion in 2011, the United States is the largest provider of development co-operation. Compared to 2010, this ODA level is a decrease of just under 1% in real terms. After falling by 10% in 2007, the United States’ net ODA recovered quickly in 2008, when it increased by 19%, and continued to grow at an average rate of 6% yearly in 2009 and 2010.

Over the last six decades Canada has gained a strong reputation for its contributions to international development, multilateral organisations and the promotion of human rights. The strengths of Canada’s development co-operation include its well-respected field presence in its partner countries; its dedicated support for research for development via the International Development Research Centre (IDRC); its significant and strategic support for the multilateral system; its effective whole-of-government approach for disaster response and fragile states, particularly Afghanistan and Haiti; and its good track record as a constructive partner within the development co-operation and humanitarian communities.

The OECD currently has 34 member countries, 23 of which are members of the DAC, as is the European Commission. This section highlights the ODA flows from the 11 OECD countries that are not DAC members: Chile, the Czech Republic, Estonia, Hungary, Iceland, Israel, Mexico, Poland, the Slovak Republic, Slovenia and Turkey.

This section contains information on the volumes and key features of the development co-operation programmes of 16 countries that are not members of the OECD; 12 of these report their ODA flows to the OECD-DAC. Although Brazil, China, India and South Africa do not report their data to the OECD-DAC, they have been making important contributions to international development co-operation for many years; the figures presented in this chapter are based on official government reports. The Bill and Melinda Gates Foundation is the only private funding entity reporting to the OECD-DAC.

Net OOF flows were negative in 2000-01, 2003-04 and 2006-08.

The coverage of the data presented in the Development Co-operation Report has changed in recent years. The main points are as follows.

(Cross-references are given in CAPITALS)