Ecological Impact Fund

Developing countries lag in deploying advanced green technologies. Absent strong environmental regulations, substantial taxes on emissions and green subsidies, there is little motivation to invest in overcoming the challenges posed by patents and technical know-how. Better incentives are needed to intensify the development of green innovations suitable for the developing world and their rapid and wide deployment.
 
The Ecological Impact Fund (EIF) is a proposed new international financing facility that would enable originators of innovative green technologies to exchange some of their monopoly privileges in return for impact rewards. The invited exchange would apply only in the lower-income countries: originators choosing to forgo their monopoly markups in this EIF Zone would receive shares of predictable annual disbursements that are divided according to the emission reductions achieved with deployments of their “greenovation” in that EIF Zone. The EIF would create an artificial market on which greenovations of many different kinds would be able to compete.
 
The EIF’s main purpose is greatly to improve the diffusion of impactful green technologies in the Global South. It would do so first by inducing participating originators to waive licensing fees and monopoly markups, and second by paying these originators an impact premium, additional to the sales price, for the wide and effective use of their participating innovations. The EIF would moreover stimulate development of additional greenovations that – tailored to prevailing needs, cultures, circumstances, and preferences in the EIF Zone – would be especially impactful there. These two effects would produce a third: the EIF would help build capacities to develop, manufacture, distribute, install, operate, maintain, and repair greenovations in the EIF Zone.
 

Advantages of the EIF

Efficiency: it creates strong incentives to develop and deploy green technologies for the most cost-effective emission reductions across a wide range of sectors and technologies.

Performance: it pays strictly according to actual impact.

Cost control: it limits cost by means of a fixed annual budget and secures cost-effectiveness through competition among a wide variety of green innovations, which ensures a low reward rate.

Innovator Attitude: it motivates originators actively to support deployment of their innovations by helping with installation and know-how, and even through subsidies to poor buyers – to the extent that the additional green impact rewards earned by such efforts are expected to outweigh their cost.

Fairness: it is funded primarily by beneficiaries of historical emissions, ensures ample rewards to participating innovators, supports developing countries in their green transformation, and reduces health burdens and the dangers of climate change for all and especially for the most vulnerable.

Consonance with the SDGs: it advances sustainable industrial and technological development in low-income countries (SDG 9) and reduces climate change by mitigating emissions (SDG 13), including through helping to support access to clean energy (SDG 7) while strengthening international partnership (SDG 17).

Intermediate Goal: an Ecological Impact Fund (EIF) Pilot

An experimental pilot could test and refine the EIF idea and thereby clear the way toward establishment of the EIF. This pilot might involve a single reward pool of, say, $150 million, to be split among a few preselected greenovations in proportion to the pollution reductions achieved through their deployments, competitively priced, in a suitable region of the EIF-Zone over a two-year period. The pilot would show concretely how greenovators respond to competitive impact rewards and how ecological impact can be assessed in a prompt and reliable manner. It would help refine impact assessment and provide an indication of the cost-effectiveness of the new impact rewards. The EIF pilot would also yield its own ecological benefits and policy insights through the pilot projects it monitors and rewards.

More information

A one-page policy brief on the EIF.

A three-page sketch of the EIF proposal.

A fuller discussion of the EIF (winner of a £20,000 OHE policy innovation prize).

The EIF at Ideas Lab in Brussels (Centre for European Policy Studies).

The EIF at the German Council on Foreign Relations (DGAP).

The EIF presented in Brazil’s Federal Supreme Court (STF), 4 June 2025.

The EIF presented at a T20 Conference in Cape Town, 23 June 2025, report in the Daily Maverick.

A statement by the German technology assessment agency TÜV SÜD on the feasibility of assessing emission reductions, as required in the EIF’s operation.

“Ecological Impact Fund: Greening the Global South” in Sachin Chaturvedi, K. Seeta Prabhu, Sabyasachi Saha, eds.: Wellbeing, Values and Lifestyles: Towards a New Development Paradigm (New Delhi: RIS and Singapore: Springer 2025), pp. 167–180. 

“An Ecological Impact Fund” in Green and Low-Carbon Economy 1:1 (2023), pp. 15–21.

Backgrounder on Ecological Degradation published in China.《生態不正義：富國發展，窮國埋單?｜專家有話說》 香港01編譯，香港01，2025年7月8日。

Appeal for Sino-European cooperation toward establishing an Ecological Impact Fund.

Essay grounding impact rewards as a complement to the patent regime in a philosophical discussion of freedom and Adam Smith: “Freedom, Poverty and Impact Rewards,” in Social Philosophy & Policy 40:1 (2024), pp. 210-32, Cambridge University Press.