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Nothing green about 'green economy'
By Sudhirendar Sharma



Market forces are keen to put price tag on natural services but such an initiative can open a Pandora's Box of conflicting situations. Can we rule out trade-off in a capitalist market once nature and its services are commodified?

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Greener states like Uttranchal demand value for their ecosystem services

With Gangotri and Haridwar as its spiritual and religious abodes, a small state of Uttaranchal is at a strategic advantage ever since it was culled out of the most populous state of Uttar Pradesh in the year 2000. That 64 per cent of its total landmass of 51,125 sq. km is forested adds to its ecological significance. Haven't text books prescribed 66 per cent forest area as ecological benchmark for any landscape to be perfectly in sync with nature?

Indeed that has been the case but what is ‘strategic’ about it, if at all? According to S P Singh, a bio-scientist and former vice-chancellor of the Kumaon University, the total value of ecosystem services, including food production and raw materials, that accrue from these forests is worth US$ 2.4 billion each year. Should these services be paid to the State with immediate effect and distributed equally among its inhabitants, most migrants would return en masse to their homeland!

Whether or not migrants return home, the state economy will surely make a dramatic upsurge should such remittances ever reach it. For a State that has been managing within an annual budget of an estimated US$ 200 million, payment for ecosystem services from its forests alone will boost its economy manifold. Its annual revenue collection, pitched at 25 per cent of its current GDP, will seem minuscule against such transactions.

The ecosystem services that these forests generate on per hectare per year basis are in the following order: nutrient recycling is worth $429, followed by climate regulation and raw material valued at $167 and $164 respectively. Erosion control and waste treatment follow with a price tag averaging $100 each. Other services like recreation, food production, soil formation, genetic resources and water regulation add up another $163 only.

Does valuing ecosystem services lead to effective nature conservation or does it attract additional investment for maintaining the services? Either way, there is little doubt that mountain environments need to be preserved for millions of up and downstream beneficiaries, now and in future.

But the million-dollar question is whether or not the State will ever get billions accruing as services out of its natural capital? Since most of the benefits are indirect, like climate regulation and nutrient recycling, the tangible worth of ecosystem services amount to no more than 25 per cent of the estimated $ 2.4 billion. According to a Green India States Trust report, ecosystem value from a hectare of forested areas is in the vicinity of just US$ 125, or about Rs 6,255 only.

Despite the net worth of tangible ecosystem services being insignificant, most services get consumed locally and hence may not elicit any payments. Even in Switzerland where the value of its 80 per cent forested area has been adequately assessed towards protection against avalanches and landslides, the forest owners get only between US$ 25 and 35 million per year for managing some 1.24 million hectares worth of forests, averaging $ 30 per hectare.

Present assessment of ecosystem services are largely based on a controversial review paper published in the renowned journal ‘Nature’ in May 2007 by Robert Costanza from the University of Maryland and his 12 co-authors, who were clear in their global assessment of ecosystem services (pegged at US$ 33 trillion) that should an attempt be made to realize this astronomical figure, one would need to increase ‘gross national product’ much higher than the assessed value.

Though such valuations have remained contested, the worth of ecosystem services was never in doubt although these have been economically quantified only recently. The mute question is: does valuing ecosystem services lead to effective nature conservation or does it attract additional investment for maintaining the services? Either way, there is little doubt that mountain environments need to be preserved for millions of up and downstream beneficiaries, now and in future.

Several researchers have contested overt generalization of ecosystem services, arguing that these assessments are trapped within the framework of ‘capitalist economics’.

As the world braces to bring ‘green economy’ on the global agenda as an antidote to current climate negotiation imbroglio, mountain regions are being projected as a new growth opportunity with ecosystem valuation as the potential driver of change. Donor-funded projects are working overtime to amplify the gains from small ecosystem services transactions into ambitious green pictures that are anything but unrealistic on the ground at this moment.

Even Indian Government's gesture of transferring US$ 200 million over a five-year period to its mountain states for maintaining forest cover is being counted as a ‘green economy’ initiative. While such contributions must increase over the coming years, it is quite unlikely that such remittances would at anytime upstart new economy in the mountain regions. Unless it is clear where this money has indeed been invested, it would be preposterous to jump to any conclusions.

Valuing ‘natural capital’ is fraught with dangerous uncertainties, something that its proponents have conveniently tried to overlook. Flow of water from the mountains is counted as an important ecosystem service, warranting lower riparian to compensate its upstream counterpart for maintaining flow in the rivers. Far from being able to make any payments of this kind, Bangladesh may well seek payments for draining rivers through its territory. And, why not?

CAMPA is a compensatory afforestation scheme in India that allows forest bureaucracy to justify diversion of protected/forested areas for mining and tourism activities on the pretext that it offers better returns from the same patch of land.

Putting price tag on natural services can open a Pandora's Box of conflicting situations. Once nature and its services are commodified, their likelihood of trade-off in a capitalist market cannot be ruled out. CAMPA is a compensatory afforestation scheme in India that allows forest bureaucracy to justify diversion of protected/forested areas for mining and tourism activities on the pretext that it offers better returns from the same patch of land.

It would indeed be tough to withhold speculations and suspicions emerging on account of ecosystem valuation of natural services. The value of forests as ‘carbon sinks’ is equally dangerous as it allows financing companies, in connivance with the government, to legitimize the enclosure of forests from all use by people, based on often unauthenticated carbon storage figures. Can green economy be built at the cost of the livelihoods of the poor?

Several researchers have contested overt generalization of ecosystem services, arguing that these assessments are trapped within the framework of ‘capitalist economics’. Though it can help in capturing the ‘value’ of ecosystem services that the markets have failed to adequately quantify, for this to be accepted as a policy the world would need to invent a new pricing system for natural products! Unless this is done, green economy should be treated as a work-in-progress.

Despite somewhat ambiguous nature of ‘green economy’ the world is likely to be painted green with optimism in the run up to the Rio+20 Conference next year in Rio de Janeiro. For the west it offers an opportunity to divert attention from the core issue of curtailing its carbon-guzzling lifestyles. But should the developing world fall prey to the over-hyped but unsubstantiated gains from green economy projections is a billion-dollar question that ‘must’ first be asked!

 
Disclaimer:
The views expressed above are personal and do not necessarily reflect the views of d-sector editorial team.
 

Sudhirendar Sharma  |  sudhirendarsharma@gmail.com

Dr Sudhirendar Sharma is an environmentalist and development analyst based in New Delhi. Formerly with the World Bank, Dr Sharma is an expert on water, a keen observer on climate change dynamics, and a critic of the contemporary development processes.

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 Other Articles by Sudhirendar Sharma in
Environment Development  > Conservation > National Policies and Programmes

Milestone or Millstone?
Tuesday, July 03, 2012

UNESCO's decision to include the Western Ghats to the World Heritage List has brought cheer to environmentalists. But since a heritage tag doesn't advocate a new legal framework to protect the designated property, putting all hopes on a heritage tag shall be erroneous.

MoEF: For environment or economy?
Tuesday, May 08, 2012

Jairam Ramesh as environment minister constituted an expert panel to submit report on conservation of ecologically critical Western Ghats. But his successor Jayanthi Natarajan has decided against making the report public citing economic interests of concerned states.
 
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The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

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