In recognition of the need for new financial resources to be brought to bear to meet such global environmental threats as global warming, ozone depletion, loss of biodiversity, and pollution of international waters, the French government, with the support of Germany, proposed a Global Environmental Facility (GEF) in September 1989. In November 1990 the GEF was established as a three-year pilot program with an initial funding commitment of SDR 1 billion (about $1.3 billion US) to focus on these four areas. Funding would be on a grant or concessional basis, additional to existing aid flows, and would involve broad-based multilateral participation.
A key premise of the GEF is that it would support activities to benefit the world at~large that would not otherwise be supported by existing environmental or development programs. Thus it would fund projects that offer substantial global environmental benefits, but that are not justified economically unless part of the cost is offset by concessional assistance. Similarly, it would support projects that are economically justified without GEF funding, but which, if altered to bring about additional global environmental benefits, would no longer be economically viable.