Sunday, July 22, 2012

Negotiating Environmental Concerns with Economic Priorities

Investment not expense
It is a widely accepted view that protecting the environment constitutes a net expense to economy. Corresponding to the global climate change (sic rising temperature), mankind’s concerns for environmental protection have grown multiple times in the past decades. However, despite the much enhanced knowledge and concerns  for environment and its preservation, all the human efforts are still not enough to preserve a sustainable environment. Polls conducted across the planet showed that the public attached great value to protecting the environment. Yet, environment is only degrading year after year. One primary reason is mankind’s economic concerns and prioritisation of economic agenda over environmental concerns by almost all the countries. In spite of the ever rising temperature, the imminent threats of melting Arctic glaciers and subsequent rise of sea levels, all the international environmental summits including the latest one could not come up with any effective mechanism to counter environmental degradation. Very often, environmental concerns faded into oblivion during economic hard times, and it is a reflection of the fact that majority of the public and most of the leadership still believe that protecting the environment represents spending money rather than saving it. In other words, it represents consumption rather than investment. 
Economic activity, both production and consumption, relates to the environment in two fundamental ways — we draw resources (both renewable and non-renewable) from the environment to produce goods and services, and we emit wastes into the environment in the process of both production and consumption. Too often we think and act as if we were not part of nature. Rather than thinking of ourselves as nested in nature and dependent upon it, we think of ourselves as sitting on top of it, managing it. We think there is the human world and the natural world, and we forget that we are ourselves, with all our technology, part of nature. So what is the reality? What will happen to our industrial civilization if the supply of natural resources is constantly diminished relative to demand? The answer is obvious. Our prosperity will be threatened. And the solution is obvious. We must strive to obtain more goods and services from our finite supply of non-renewable resources, and we must protect — from both extraction and waste impacts — the natural productivity of our forests, fisheries, agricultural and range land, and other renewable resources. Its obvious that our continued prosperity depends on protecting both extractive potential and waste absorption capacity.
As we look at our interest in the world, we think in sequence — individual, family, community, region, nation and world. Conventional economic thinking says that prosperity is a function of competitiveness, and that competitiveness is a function of efficiency. But when economists think of efficiency, they usually consider only the efficiency of labour and capital.
This is outmoded. Japan and Germany produce their products with about half the energy input of American industry. Energy represents about ten percent of the cost of production, and so they achieve with their efficiency about a five percent competitive advantage in world markets relative to US goods. This advantage is certainly significant, but to it must be added the price edge of using other natural resources more efficiently. These efficiencies benefit countries, companies, and local communities. Using our natural resource base in a more efficient way, and maintaining a larger supply of both non-renewable and renewable resources relative to demand, makes the products of a nation, a company, or a community more competitive in the marketplace.
At the same time, we must begin to calculate into our economic reasoning the costs imposed by wastes. When wastes reduce the productivity of natural systems — forests, fisheries, agricultural and range lands — they reduce our supply of economic inputs. When wastes damage our existing investments — acid rain eating our bridges, etc. — they reduce our wealth. And when wastes damage our health, they impose costs even as they add to GNP by generating demand for health services.
A big part is our habit of treating consumption of our stocks of non-renewable resources as pure income — and likewise treating our unsustainable draw of renewable resources as pure income. One eminent environmentalist said: “Valuing forest products as equal to the cost of extracting them is like valuing our life savings by the cost of driving to the bank to withdraw them”.
Forests, fisheries, agricultural and range lands, mineral resources, fossil fuel resources, slow to recharge aquifers, and other natural resources are being consumed. Yet in the national accounting system driven by GNP, we fail to calculate net income. Our forests shrink, but we do not subtract the shrinking asset value from gross income to see if we are realizing net income. Our topsoil is lost, but we do not subtract its value from the value of agricultural products. And so on, and so on, as we gradually impoverish ourselves without even counting the costs.  A single mature tree can be worth tens of thousands of rupees. The net present worth of a mature tree planted as a seedling today would be less that one cent. At this worth, none will ever be planted.
Viewed from a global perspective, we must admit that there is no realistic possibility of increasing per capita incomes and preventing the destruction of the global environment without halting population growth and at the same time promoting massive economic development and economic growth.
The real question is the nature and direction of that growth and development. Investment must be directed to those technologies which can improve living standards without destroying the natural resource base.
Population stabilization probably depends more than anything else on increasing economic security in the developing world. At the centre of this is improving health care and economic opportunity for women. This requires economic growth — the right kind of economic growth.
Protecting the living and productive natural systems in these countries — their forests, fisheries, agricultural lands, etc. — depends in turn on halting the slide into desperate poverty. A starving population will strip every twig and blade of grass to survive, and this unfortunately is the harsh reality in Manipur. We face the prospect of utterly destroying much of the natural world in developing countries unless a successful economic program is created. 
The world needs a new detente today — one between advocates for economic prosperity and advocates for environmental protection. Change is much in vogue in this political year. And indeed we need change. But to get the right kind of change we will need a massive educational effort. Our contradictory feelings about government taxing and spending — we want the taxing to go down but the spending on our needs to go up — are a reflection of the fact that a large part of government spending represents support for middle class consumption. 
Over-exploitation of forest resources in Manipur
Perhaps, forest resources are the single largest source of livelihood after agriculture for majority of the mass in Manipur. But the sad part is, we continue to see forest resources only as firewoods and tree trunks for obtaining timber.  The tendency to disregard or undervalue the public benefits and externalities derived from forest ecosystems, whilst assigning value to the private goods that can be derived by harvesting and over-exploiting them lies at the heart of the ‘biodiversity crisis’ which is fast unfolding in Manipur as elsewhere in different parts of the world. Ignorance, economic compulsion and in some part greed are behind unrestrained exploitation of forest resources. Our people must have certain idea about the roles of forest in environmental protection viz retention of underground water, absorption of harmful carbon emission, balancing seasonal rainfall, prevention of landslides et al. But we doubt how many of our people have clear idea about total economic value of our forests. The carbon absorptive capacity of our forests has its economic value. The concept of carbon credits and carbon trading originated from the Kyoto Protocol of 1997. Total economic value of forest can be assessed either directly via consumptive behaviour such as timber or non-consumptive activities like recreation or indirectly for their functional services such as carbon storage and sequestration and water cycle regulation. It was heartening to learn that Manipur was the third State in India to evaluate the value of its forest produces in scientific manner. According to a study, the State’s forest area is worth Rs 5049.64 lakhs annually on the average (The Sangai Express, February 23, 2011). Now one can guess the economic value of our forests and it is much higher than the annual plan outlay of Manipur. But the problem is, we have little idea about how to use our forest resources judiciously and in sustainable and productive manner. We are rather over-exploiting our forest resources, that too at a pace much faster than the regenerative capacity of our forests. All the negative impacts of over-exploitation are now glaringly visible. We have witnessed flash floods last month and now we enduring an acute drought like situation. Having said this, we don’t expect our people would stop over-exploitation of forest resources from tomorrow or next month or next year. It is here State intervention is needed the most. It is in human nature, immediate requirements always precede future security. What we are doing today is sacrificing the entire future generations for our immediate requirements which are peanuts compared to what is in store in our forests. But then, how can one value a treasure without knowing its worth? So let’s start with correct assessment of the importance of forests in environmental protection together with a comprehensive study on their huge economic value.  

This article was published in The Sangai Express on Sunday, July 22, 2012

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