As India and 104 other countries that have ratified the Paris Agreement on Climate Change hammer out the finer details of the deal, the Centre, at a domestic level, is still struggling to assess the impact of economic activities on the environment.
The fledgling Paris deal is an attempt to keep global temperature rise under 2°C as developmental activities take an increasing toll on the environment.
As far back as in 2009, the Centre had announced its intention to unveil “green GDP” figures that account for the environmental costs of depletion and degradation of natural resources into the country’s economic growth figures. Subsequently, the Ministry of Statistics and Programme Implementation set up an expert group in 2011 led by Partha Dasgupta, Professor Emeritus of Economics at Cambridge University, to work out a framework for green national accounts in India. The process, which was supposed to culminate in 2015, is yet to be completed.
“We are fully committed to releasing green GDP figures and we hope to do it eventually but we do not have sufficient micro level data on natural capital,” said an official of the Central Statistics Office, adding that an inter-ministerial group is looking into solutions to bridge the data deficit. Officials also point to the complexity of the exercise as well as the need for enhanced budgets to bridge the data gaps.
“There is no information on issues such as the total volume of surface water or the different sectors where water is used and the quantum used,” said the official.
The Dasgupta-led expert group had submitted its report in March 2013, recommending that economic evaluation be made on the basis of a comprehensive notion of wealth, including aspects such as infrastructure and capital equipment, human capital and natural capital.
Green GDP is expected to account for the use of natural resources as well as the costs involved. This includes medical costs generated from factors such as air and water pollution, loss of livelihood due to environmental crisis such as floods or droughts, and other factors, said Bhavna Prasad, Senior Advisor, Sustainable Business, at WWF-India.
The externalities of economic growth that are not factored into the conventional GDP numbers have a massive monetary value. A recent study by the World Bank estimates that in 2013 India suffered a loss of over $550 billion, or 8.5 per cent of GDP, just as a result of air pollution. The economic cost of other impacts, such as water pollution and land degradation, among several others, would be much more.
“These costs are not incorporated in the GDP. India is today one of the largest exporters of some commodities. But, the sustainability of these businesses is a question. We have finite land, finite natural resource. This has a direct impact on the economy,” Prasad said.
One such example comes from the WWF’s ‘Living Planet’ report, which finds that “25 per cent of India’s total land is undergoing desertification, while 32 per cent is facing degradation.” This has a direct impact on the future food production capacity of our agrarian economy as the country could see a 10-40 per cent loss in crop production by the end of the century.
Countries such as China and Norway have already experimented with green accounting. China launched the process in 2004, only to drop it in 2007. Factoring in environmental costs had a significant impact on the country’s perceived “economic growth”, resulting in a hasty departure.
“It has to be a concerted effort across the world to factor in environmental and social costs,” noted Prasad. “Otherwise it won’t be successful, as no one wants their growth figures to drop.”
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