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India’s Environment Is Actually Good for India’s Economy

India’s Environment Is Actually Good for India’s Economy

A couple weeks ago, hearing a petition seeking a ban on mining close to the Dehing Patkai Wildlife Sanctuary in Assam, a bench of the Supreme Court of India observed, “We are conscious of the fact that our orders in favour of the environment affect economic development adversely. There has to be some method by which economic development is not retarded as this has a direct impact on poverty in the country.”

Coming from the apex court of the country, this concern – also shared by other key stakeholders like policymakers, industry bodies, etc. – merits further examination. Put differently, we need to answer two questions. First, does protecting the environment adversely impact economic development? And is it possible for India’s environmental and economic objectives to converge?

To understand if our environment is detrimental to the economy, we need to understand the economic value of healthy environments. The term used in environmental economics for this value proposition is ‘ecosystem services’. Water security is one such ecosystem service. For example, all rivers in peninsular India have their watersheds in the forests and grasslands located in hilly regions, like the Western Ghats. These forests absorb rain water like huge sponges and release them slowly, through the year. If these forests are gone, rains will result in massive floods that reach the ocean in no time, leaving our rivers dry and the entire agrarian economy and our food security at risk. In the scenario where our organised economic sectors are looking at the rural economy as the next big growth engine, the implications of this are obvious.

Disaster prevention is another key ecosystem service. North Kerala and Coorg in Karnataka showed us how denuded hills cause major floods, resulting in the loss of human lives and property. Without the protective shield of mangroves, cyclones cause heavy damage not just in coastal areas but in the hinterland as well. The disappearance of lakes and marshlands is resulting in intense flooding in most of our cities every monsoon.

The financial and social cost of mitigating these disasters is significant, with collateral impacts like crop losses. Apart from stretching the scarce fiscal resources of our states, each disaster pushes the affected region a few years behind on the economic timeline, with impairment of productive assets and disposable incomes. This, in turn, impacts the overall growth trajectory. On the positive side, a healthy environment provides diverse benefits like better health and productivity of citizens, improved quality of life for the poor, food and water security, higher per capita incomes, etc. – all of which play a key role in growing sustainably.

That a healthy environment is the backbone of a resilient economy is not an exaggeration. The environment provides a wide range of services that in turn drive long-term economic growth. And this mechanism far outweighs short-term gains that can be derived by overlooking the environment. Importantly, the impact of environmental degradation is far greater on India’s poor. This fact prompts the question: Is the value of ecosystem services included in our GDP? The answer is ‘no’ – and this is a part of the reason why environmental protection is not a policy priority. Models of valuation of ecosystem services are emerging globally, and it would be appropriate to take a bold step towards factoring this in our GDP computations. Critics may point to the issue of double-counting but we certainly can find an answer to this.

Environment and economy together

So how do we craft an economic model that meets these twin objectives?

First, we need a formal land-use policy that protects environmentally fragile areas and designates ‘safe’ zones for industry. There is no dearth of uncultivated, fallow lands in India outside of ecologically sensitive areas. It should be possible to build a ‘land bank’ for industry out of these.

Second, we should incentivise industry to quickly move to environmentally friendly technologies. This includes activities like power generation, where we should aim for three-fourths of our needs being met by renewable energy sources.

Third, we need to start building strong ‘green’ economic models. Sikkim has already shown the way with a mix of livelihoods like organic farming, fruticulture, eco-tourism, value-added food products, etc. This model can be replicated in all hilly regions. Combined with strengthening traditional agriculture, we have the potential to become value-added food product suppliers to the world. And new options like ecological restoration of degraded areas offer potential to generate very high rural livelihoods and simultaneously help build our natural assets.

All of these, in turn, can reinvigorate the economy, be major drivers of the GDP and reduce migration to cities as well. And to achieve all these, we need to start believing that the environment is an ally, a benefactor, of the economy, and develop the conviction to firmly implement environmental norms.

One is reminded of an old American-Indian saying: “We do not inherit the Earth from our ancestors, we borrow it from our children.” We have a moral obligation to leave for our children an Earth that is healthier than the one we were born into – and economically vibrant as well.

Ramesh Venkataraman is a certified ecological restoration practitioner and a chartered accountant.

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