IF environment sustains life, economics runs it. The ever-continuing environment-and-development debate and discussion centre around the question of what the economic value of nature and its environmental services are.
This is the area that the discipline of environmental economics looks at, providing answers to questions on how much of goods and services can be extracted from nature without affecting its sustainability. Dr U. Sankar, the former director of the Madras School of Economics, is considered a pioneer in the field. At the age of 82, he still contributes to expanding the frontiers of this discipline and has mentored and guided many active environmental economists of the country over the years.
Introducing Sankar, the volume’s editors, K.R. Shanmugam and K.S. Kavi Kumar, write: “Prof. Sankar over the past two decades has contributed significantly towards the operationalisation of sustainable development objectives in India. His contribution ranged from designing economic instruments for addressing pollution problems in leather and textile units, analysing trade and environment inter-linkages, identifying appropriate eco-taxes on polluting inputs and outputs, and prioritising low-carbon growth strategies for fostering green economic growth. He has also contributed extensively to [the] fields of development economics, applied economics and public finance.”
Environment and Development: Essays in Honour of Dr U. Sankar is a celebration of his teachings by a group of environmental economists. These environmental economists have specialised in different areas within the discipline. As a result, the essays focus on diverse topics. Together, they construct a mosaic of concerns specific to India that straddle environmental and economic considerations.
Broadly, the essays are classified under two heads —environment and development. Those related to environment look at the economics of resource use, environmental degradation, conservation, and climate-change mitigation. The essays on development cover public works, health, education, and the growth of software industry clusters.
V.N. Balasubramanyam and Ahalya Balasubramanyam compare the development of the software industry in Bengaluru and Hyderabad. While Bengaluru has been more conducive to the growth of the industry, it is Hyderabad that has fared better in using information technology (I.T.) for the development of rural areas.
The way in which an industry cluster grows at a location is “primarily conditioned by resource endowments of the region and the initial structure of the economy of the region. Both the resource endowments and the structure of the economy are dictated by the history and geography of the region,” note the authors. Bengaluru had a long history of developing of human capital through educational institutions. Well-educated professionals from Bengaluru migrated to the Silicon Valley in the United States and contributed to its growth. Many returned to Bengaluru to start the software companies in the city.
Hyderabad, on the other hand, did not have the same history as Bengaluru, since the Nizam, who ruled the region before Independence, did not take the same interest in promoting education. Access to educated, efficient and trainable human capital gave Bengaluru a natural advantage over Hyderabad. However, Hyderabad showed a greater alacrity in using software products for rural development programmes run by the State government of the undivided Andhra Pradesh.
Writing about carbon intensity and its linkage with labour intensity, Brinda Viswanathan and Ishwarya Balasubramanian state that for a developing country like India, there is no need to mimic developed countries in creating low-carbon jobs through green industries. Instead, it should focus on creating more “green” jobs for the growing workforce.
“In other words, developing countries need to create decent employment that could address environment problems also. This is in contrast to developed countries where low-carbon jobs are created in the process of undertaking mitigation activities,” they note. Thus, through careful planning, the “Make in India” programme can ensure that it promotes manufacturing facilities that have a lighter carbon footprint, even while generating jobs.
This is an interesting observation, which, to a certain extent, summarises some of the developments in the international environment and climate change negotiations. Twenty years after the Earth Summit of 1992, when the Rio+20 Conference was held again at Rio de Janeiro in Brazil in 2012, one of the guiding themes was “green jobs”. In the two decades between the two Rio meetings, the world order had changed. Having not yet recovered from the 2008 meltdown, the developed countries were the ones looking for ways to generate employment in 2012, whereas jobs and livelihood were the primary concerns of developing countries such as India and China in 1992.
The rise in employment opportunities in India came with economic growth in the manufacturing sector and the services sector, in I.T.-based industries and financial services. While the services sector emits less greenhouse gases, judicious growth of the manufacturing sector can ensure that the growth story can continue even while the carbon burden is kept relatively low.
Kaliappa Kalirajan and others bring an international dimension to this argument. They write that effective intra- and inter-regional cooperation is needed to promote and sustain low carbon green growth across countries. The cooperation need not necessarily be limited to official development assistance and can take the form of private-sector partnership and investment. Establishing new and innovative regional financing mechanisms, especially for risk transfer and insurance cover, can help support private-sector initiatives.
Anubhab Pattanayak and K.S. Kavi Kumar look further into the equity debate relating to the climate-change negotiations. They unveil a framework for burden sharing (of action and cost required for mitigation) by adopting a four-criteria classification of countries—per capita income, per capita cumulative historical emission, total population and climate change impact.
“The study’s analysis shows that taking cross-country climate change impacts along with other factors into a burden sharing framework significantly increases the emission allocation going to poor country groups, which are little responsible for the problem, and have large population and least capability to bear the brunt of climate change impacts in the future,” explain Pattanayak and Kumar.
How do you ascribe an economic value to a natural resource such as water? Interestingly, the study by Haripriya Gundimeda and Vinish Kathuria looks at people’s willingness to pay and hedonic pricing (multiple characteristics that relate to the price) for water in a water-scarce city such as Chennai. This is a city without a perennial source of water, with only 78 litres per capita per day (lpcd) being available in normal years, which goes down to 32 lpcd in drought years.
“The aggregate willingness to pay for an increase in water supply situation from the existing state of fetching water through different sources (like groundwater, private tankers, metro tanker, public taps, etc.) to getting water through piped water and improved water quality in their houses was estimated at approximately Rs.904 million and Rs.45.39 million respectively,” they conclude. In other words, the residents of Chennai consider water flowing in the pipe as a valuable resource, and are willing to pay a good price to make it happen.
Tribal communities in the Kolli Hills of Tamil Nadu show similar willingness to grow diverse millet varieties, which are under threat due to several factors, state Sukanya Das and others. These farmers are willing to accept lower level of compensation for the most preferred varieties and higher for the least preferred varieties. “Given the farmers’ willingness to participate in a millet compensation programme, it is clear that direct compensation mechanism will be able to supplement returns so as to encourage the conservation of minor millets in a given year,” they state.
Kausik Chaudhuri and Debanjali Dasgupta compare the impact of subsidised credit through the Integrated Rural Development Programme (IRDP) with rural work programmes such as the Mahatma Gandhi National Rural Employment Guarantee Act across 15 States in the country. Their results point favourably to the reach and impact of the public work programmes compared with the IRDP. The study tries to set right the image of the employment guarantee schemes, which had come in for much political criticism in recent years.
Taking a different track, Zareena Begum and Amanat Gill look at improving tiger conservation in India. They make two suggestions to improve the current “fences and fines” conservation strategy. They suggest permitting sales from captive-bred tiger farms for curbing illegal trade of tiger body parts.
They argue for a community-based wildlife management practice, where the local communities could get a share of income from tourism in return for their active participation in anti-poaching activities.
While the idea of captive-bred tiger farms may not find any takers among environmentalists, policymakers and forest department personnel, the idea of community-based wildlife management is being tried out in different protected areas.
These programmes can be further fine-tuned to improve the community’s earnings and thereby strengthen their incentive to resist poachers.
Environment and Development also packs in interesting studies on the efficacy of health and education programmes of the governments in different States. The only fault with the volume is that its essays point in multiple directions. Perhaps that is a reflection of the diverse scholarship that Prof. U. Sankar encouraged.
Summarising the essays, the editors Shanmugam and Kavi Kumar write: “A general view is that the growth is necessary but not sufficient for promoting development objectives.” Sankar’s legacy is in teasing out and adding nuance to the linkages between economic growth, development and environment conservation through “theoretical and empirical rigour, along with policy focus”.
The essays succeed in doing justice to Sankar’s academic interests. They also help in strengthening the scope of environmental economics in India.
S. Gopikrishna Warrier is an environment journalist and blogger.