Introduction
On 9 and 10 December 2008, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Government of the Republic of Indonesia jointly organized a High-level Regional Policy Dialogue on "The Food-fuel Crisis and Climate Change: Reshaping the Development Agenda" in Bali, Indonesia. The main objective of the Dialogue was the identification of strategies to deal with the impact of the food, fuel and financial crises within the context of climate change in a comprehensive and integrated manner and to prevent those crises from becoming a development emergency.

The High-level Policy Dialogue was attended by more than 100 policymakers, economists, climate change specialists, food and energy security experts, agricultural innovators, private sector entrepreneurs and civil society representatives from the Asia-Pacific region. Government representatives from twenty-two ESCAP member states were present, as were several United Nations bodies, specialized agencies and other organizations.

The Executive Secretary of ESCAP, Ms Noeleen Heyzer, delivered the welcome address at the opening session. The event's keynote address, by the President of Indonesia, Mr. Susilo Bambang Yudhoyono, was delivered by Indonesia's Co-ordinating Minister of People's Welfare, Mr. Aburizal Bakri. The Executive Secretary also moderated a round table on "Threats to Development: Addressing Financial and Food-fuel Crisis and Climate Change in Volatile Times'.

The sections that follow have been derived from the Bali Outcome Document which contains recommendations to be used as a framework for regional action in handling the triple crises.

The convergence of crises
The recent volatility in food and fuel prices pose a grave challenge for the Asia-Pacific region, while the increasing spillover effects of the global financial crisis threaten to inflict untold damage on human lives. The convergence of these interrelated and mutually exacerbating crises, together with climate change challenge, threaten to undermine the development gains achieved in the region and negatively affect its future prospects.

Progress towards the Millennium Development Goals in the region in particular could be significantly reversed. All indications suggest that the number of people living below the poverty line, as well as those vulnerable to poverty, could increase dramatically. The crises have disrupted trade and investment and are causing difficulties in securing cost-effective financing for development.

The financial crisis
The currency markets in the region have shown increasingly disorderly behaviour in recent months, generating large and erratic shifts in the exchange rates of the currencies of the countries in the region, thereby threatening to disrupt intraregional economic stability. There is thus a need for more intense consultation among countries regarding exchange rate policies and related actions.

The current financial crisis is also threatening to disrupt trade by generating a significant gap in trade finance, mainly because of tightened credit conditions in the United States of America and Europe. There is a need to focus more on regional mechanisms. A number of banks in the region with an excellent track record could play important roles in filling the gap. However, this needs to be supplemented by increased government support to export credit agencies.

Longer term, durable stability in the region calls for greater co-operation. Consideration should be given to the establishment of formal interregional exchange rate arrangements, supported by an adequate intraregional stabilization fund and mechanisms for effective surveillance of financial markets to provide early warning of fragilities, vulnerabilities to financial shocks and contagion.

Against that backdrop, participants called for greater international and regional co-operation among governments in monetary and financial matters to cope with the crises. This included:

  1. the strengthening of existing mechanisms as well as the establishment of new mechanisms to support countries with balance of payment difficulties;
  2. the provision of a channel for countries affected by the crises to receive budget financing assistance specifically for Millennium Development Goal-related activities;
  3. the improvement of surveillance of financial markets to provide early warnings of fragilities, vulnerabilities to financial shocks and contagion; and (d) the removal of regulatory deficiencies to curb speculation in commodity markets.

The meeting recommended that ESCAP provide a forum for fostering a common understanding of the crises, for harnessing greater regional collaboration and exchange of information through high-level policy dialogues, and for the identification of policy options and the adoption of suitable approaches in response to the global financial crisis. The platform could focus on the formulation and implementation of effective measures for the social protection of the poor and other vulnerable groups, particularly smallholder farmers, women and children.

The food crisis
Increased speculation in commodity markets has been a major factor in recent gyrations in the markets for fuel and food, threatening energy and food security. An additional 41 million people in the Asia-Pacific region had been pushed into undernourishment in 2007 due to the food crisis. They joined the 923 million people who were already chronically food insecure, and of whom 95 million are malnourished children under the age of five.

This makes it necessary to strengthen food security in the region within a comprehensive framework encompassing sustainable agriculture and forestry, climate change anticipation, adaptation and mitigation, social protection, including hunger-based safety nets, and well-functioning markets. Tighter regulations to curb commodity speculation needed urgent attention in the reform of the international financial architecture.

The meeting identified several priority areas for action:

  • Technical co-operation to support capacity building to strengthen national food security programmes, including the management of food stockpiles, the planning of potential land use for agriculture and effective food information systems.
  • Research and development on sustainable agriculture, including its climate adaptation and mitigation potentials, along with the necessary financial resources.

Regional co-operation can play a pivotal role in preventing and coping with the food crisis and ensuring that all people have access to food. It can be highly effective when dealing with the impacts of natural disasters, including floods, drought and other events that contribute to food insecurity. Effective regional early warning systems could enhance food security by co-ordinating agricultural information from member States on matters such as expected crop yields, floods and drought.

Regional and sub-regional action might also involve investments in effective food storage facilities/food banks and transport logistics, as well as capacity development in establishing national agricultural insurance schemes, while ensuring that social dimensions are also included in those schemes. Arrangements should be made for the sharing of experiences and the transfer of best practices in that regard.

The fuel crisis
In light of the fuel crisis, there is an urgency of moving towards a new sustainable energy paradigm in creating a virtuous cycle of sustainable energy development that would include three elements: (a) quality of economic growth, (b) reliance on greater energy efficiency and renewable energy, and (c) strengthened efforts to mitigate and adapt to the effects of climate change.

While indigenous technologies have definite benefits, there is a need to find ways to expand access to modern energy services to the poor. One of the mechanisms highlighted was a provision of transition technologies (including solar photovoltaic lanterns and gasification systems for household use) as compared to large technology initiatives. Public-private co-operation should be a key element in any strategy to increase financing and investment in energy infrastructure and widen energy services.

Regional co-operation to address the energy crisis should include joint research, capacity building and new financial resources to promote best practices and exchange of information in technology development and transfer. The aim would be to move towards a low-carbon economy, reliable and sustainable energy supplies, and energy efficiency by increasing the share of renewable energy and natural gas in the energy supply.

The member states of ESCAP should co-operate proactively in order to implement an Asia-Pacific sustainable energy security framework. This would require countries in the region to work together to integrate their energy systems. Developed countries, should share experiences in the development of new and renewable energy technologies with developing countries, and transfer clean energy technologies to developing countries.

This could be achieved through the reduction of technical and licensing costs, the removal of barriers to technology transfer and the strengthening of national technical capacity and the promotion of South-South and triangular co-operation. To make this possible, the developed countries should provide adequate, timely and sustainable financial assistance to enable the developing countries to address the impact of climate change.