Editors' Summary: At the U.N. Conference on Environment and Development (UNCED) held in Rio de Janeiro, Brazil, in June 1992, participating nations agreed that the compatibility of environmental protection and economic development is critical to sustainable development. In three key documents — the Framework Convention on Climate Change, the Convention on Biological Diversity, and Agenda 21 — the nations provided that the incremental costs of financing sustainable development will be significantly funded by the Global Environment Facility (GEF), a sustainable development institution formed in 1990 as a mechanism for financing global environmental improvements. The GEF is managed by the U.N. Development Program, the U.N. Environment Program, and the World Bank and has a budget consisting entirely of voluntary contributions from countries.

The author describes the GEF and analyzes its current status. He examines GEF's present project funding criteria, explores the effect of the UNCED agreements on the GEF's structure of the GEF, and enumerates the UNCED agreements' new requirements for the GEF and its projects. The author concludes that the GEF is a significant and necessary step toward sustainable development and finds that it is a model for financing future environmentally innovative projects, despite its dependence on voluntary monetary contributions.