Statement for the CSD18

Here is the draft statement which will not substantially change.

This is the first public statement without a carbon-based international reserve currency, because during last weekend it become clear that no reserve system is needed in the Tierra Fee and Dividend system, a major decision in the development of the system.

TRANSFORMING THE INTERNATIONAL MONETARY SYSTEM

TO SERVE LOW CARBON AND CLIMATE-RESILIENT DEVELOPMENT:

The Case for the Tierra Fee & Dividend System

A Statement at the 18^th UN Commission for Sustainable Development

By

The International Institute of Monetary Transformation

Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist, president

www.timun.net; gaia1@rcn.com; 718 275 3932; 917 617 6217

Draft, 24 April 2010

INTRODUCTION

Development or living well in global North and South has to be low carbon and climate resilient within the ethical context of Article 3 of the UNFCCC and the demands of climate justice as proposed at the December 2009 Copenhagen conference and the April 2010 Cochabamba peoples’ conference.

Domestic, regional and especially international monetary policies can be used to work towards low carbon and climate-resilient development in the global North and South. Fundamental change in the often underemphasized international monetary system leads to fundamental change in the financial, fiscal, economic and commercial systems given that it is like glue which binds them together.

THE PRESENT MONETARY NON-SYSTEM AND THE DIRECTIONS OF THE MONETARY FORK IN THE ROAD

Many observers have pointed to the need of having a second Bretton Woods monetary system since the early one of 1944 expired on 15 August when the USA unilaterally disconnected the convertibility the dollar with gold. This action lead to emergence of floating exchange rates and of reserve currencies, the major one is the US dollar. It also led to the creation of SDRs which have been hardly used during the last 40 years. Basically, the international monetary system is a non-system which has been judged to be immoral by the notable monetary economist Mundell.

IMF, the fund to balance the global financial imbalances, has failed its surveillance function because of the continuing global financial imbalances and because of its double standard for developing and developed countries.

The present non-system is a muddling at considerable transaction and reserve currency maintenance costs amidst humanity’s greatest challenge of restoring the degraded Earth’s processes of the cycling of matter (particularly the carbon cycle), the flowing of energy and the webbing of life. There is a choice between the present muddling through and using a transformed international monetary system for working towards low carbon and climate-resilient development. We have reached a fork in the monetary road: one direction is to continue with reformist proposals for IMF and reserve currencies keeping an international order in place that enrich the few, impoverish the many and imperil species and planet; the other direction is to embark on a transformed international monetary system based upon a de-carbonization monetary standard and the new currency of the Tierra with the new institutional arrangements of a carbon account in a nation’s balance of payments and an  UN Monetary Board which would have greater authority than the 1944 Keynesian International Clearing Union.

Reasons that governments, CSOs and business are to take the transformational route are the following:

• We have to go beyond the reformist proposals of the 2009 UN Stiglitz Commission and the BRIC countries for a non-national or supranational reserve currency and the sophisticated interpretations of the UNDESA and UNCTAD proposals for international reserve currencies and move toward a transformed international monetary system that does not need reserve currencies which costs the developing world some $100 billion annually;
• A transformed international monetary system is able to dealing with the integrated financing of development and climate measures by the issuance of a carbon-based international currency within an equitable system, thus providing liquidity without causing inflation by spending credit into circulation without becoming indebted to the privately-owned banking systems;
• Only a transformed international monetary system is able to  provide the necessary monetary stability for international finance, trade and economics to flourish
• The IMF and its SDRs are unable to lead in this transformation because of its limitations in distributional justice and of its inability to deal with the climate crisis in a fair, formidable and fast way.

TIERRA FEE & DIVIDEND SYSTEM

• Integrates the transformed international monetary system with a carbon reduction approach that produces faster, fairer and more formidable results than the presently dominant approach of cap-and-trade;
• Its monetary architecture is based upon the de-carbonization monetary standard, a most appropriate standard in these carbon-constrained times.
• It also includes the principle of government as regulator and driver based upon the contextual sustainability framework of a sustainability economics that includes a bioregional focus with the novel concept of frugal trade

NEED FOR THE ESTABLISMENT OF THE UN COMMISSION ON MONETARY TRANSFORMATION AND THE CLIMATE CRISIS

·        Looking for bold delegations that take leadership in having the GA pass a resolution in the same way that GA in October 2008 instituted the UN The UN Commission of Experts on the Monetary and Financial Crisis and its Impact on Development

·        To be followed by prompt intensified cooperation between the UN agencies such UNFCC, INCTAD, UNDESA and UNEP, CSOs, business and academe.

·        For additional information, see forthcoming Cosimo Publication THE TIERRA FEE & DIVIDEND SYSTEM: A Monetary Approach to Low Carbon and Climate-resilient Development by Frans C. Verhagen, M.Div., M.I.A., Ph.D.

Cochabamba and the UNITAR/Yale Conferences

This is one of the few post during the month of April. The main reason is that I was called to serve on a grand jury for 4 weeks daily from 9.30 to 4-5 pm. The following is my comment to a newsletter story of April 15 by the Cochabamba  Conference on http://pwccc.wordpress.com/2010/04/15/news-bulletin-the-world-comes-to-cochabamba/#comment-566. I added to my comment the abstract that I submitted to the UNITAR/Yale conference to show how each conference in its own way is able to contribute to the emergence of Tierra Fee and Dividend approach for low carbon and climate-resilient development.

"The Bonn recognition of the CMPCC is encouraging, in no small measure due to the intervention of Ambassador Solon as reported in the Guardian story a few days ago. More important is its willingness to consider the recommendations coming out of the CMPCC. Having made the case for the practical proposal of a UN Commission on Monetary Transformation and the Climate Crisis both in the CMPCC Working Groups and in a one hour meeting with Ambassador Solon on March 19, I hope the Conference recommends the establishment of such Commission, so that the UNFCCC can recommend that the GA passes a resolution to establish the Commission in a similar way it did with the UN Stiglitz Commission in September 2008 under the leadership of H.E. Miguel D'Escoto Brockmann, MM. One of the main agenda items of such Commission would be the consideration of the Tierra Fee & Dividend system which uses a transformed international monetary system for low carbon and climate-resilient development by adopting a de-carbonization monetary standard with the accounting unit of the Tierra. It would lead nations to deal with global ecological/carbon imbalances via their carbon accounts in the adjustment mechanism of a modified balance of payments.  I am appending here an abstract that I submitted for a presentation at the UNITAR/Yale Conference in medio September emphasizing the position that the international community has to go beyond simply reforming present institutions by transforming them in order to make real progress for the climate and development. It is a position that seems to be close to the purpose of the Cochabamba Conference.

Abstract

The Tierra Fee & Dividend System:

 A Monetary Approach to Low Carbon and Climate-Resilient Development

For

2nd UNITAR/Yale Conference on Environmental Governance and Democracy: Strengthening Institutions to Address Climate Change and Advance a Green Economy Event Application

By

Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist

President, International Institute of Monetary Transformation

New York City

April 15, 2010

This research builds on reformist efforts in the international monetary system or rather non-system to achieve a transformed international monetary system that is to be used for low carbon and climate-resilient development in both the global North and South. As such it does not strengthen present institutions dealing with climate change and the Green Economy, but transcends them by transforming them into a higher level of unification.

The Tierra Fee & Dividend (TFD) system consists of the carbon reduction methodology of the Fee & Dividend approach as suggested by climatologist James Hansen in opposition to the cap-and-trade approach and of Tierra Monetary Paradigm which is based upon the de-carbonization monetary standard with its accounting unit of the Tierra. In the first phase of the TFD the Tierra will be a carbon-based international reserve currency that is part of the carbon account of a nation’s balance of payments. Replacing the present hard currency reserves, the TFD would free up $100 billion annually for the developing world which can be used for domestic investment and consumption. Like global financial imbalances global ecological or carbon balances have to be balanced via the adjustment mechanism of this modified balance of payments.

One of the main effects of and the rationale for the TFD is the creation of joint financing of the MDGs and climate mitigation and adaptation measures. As such it has been presented at the ECOSOC and GA debates in March 2010 at the UN Headquarters. The full impact of this bold, transformational Tierra Fee & Dividend system is expressed in the attached draft Tierra Scenario of 2025 which resembles Edward Bellamy’s Looking Backward, 2000-1887.

Given the complexity of integrating monetary transformation, carbon fees or taxes within a political context where governments are regulators and drivers the forthcoming book length publication on the TFD discusses the need and feasibility of having the UNFCCC in COP 16 or 17 and other UN organizations recommend to the General Assembly passing a resolution to establish the UN Commission on Monetary Transformation and the Climate Crisis."