Rewriting GDP: The natural way

A series of articles that appeared on the front pages of The Financial Times (May 30) and International New York Times (July 10) caught my attention recently. Both articles talk about how countries are trying to rewrite their gross domestic product (GDP).

The first one speaks about how drug dealers, prostitutes are set to give Britain a £10 billion boost to its accounts, while the later was on how Spain was doing the same to reshape and resize the numbers.

If one argues that the attempts made by England, Spain and a host of European countries is a step in the right direction, which considers sectors other than the traditional ones to calculate the GDP, the need for India to consider its rich biodiversity and ecosystems and their contributions to national economy is much more significant.

Let’s refer to an article written by Bill Gates, co-chairman of the Bill & Melinda Gates Foundation, in 2013 on the inherent problems of measuring growth in developing economies and how it creates problems for international aid.

He argues that countries, including the developed ones, have underestimated growth using traditional GDP calculations.

He cites that, for example, Ghana’s GDP jumped by 60 per cent when it included growth in just one sector — the progress in cell phone sector in measuring the national economics.

It is not just Ghana where the GDP numbers are being re-written but countries such as Estonia, Austria, Slovenia, Finland, Sweden, Norway and Italy have all included uncommon sectors while calculating the GDP.

The US joined this group in expanding the definition of investment to add 3.6 per cent to its GDP in 2012, according to a report in Financial Times .

For long the contributions of nature and ecosystems, including biodiversity, has been a subject of intense intellectual debate, mostly at workshops and seminars convened by conservationists and environmental economists.

India has significant amount of information on how we need to calculate the dollar value of contribution of ecosystems and biological resources to our country’s economy, but the problem is reluctance at the level of financial planners and economists to actually use the numbers to the advantage of re-writing the GDP as well as use the resource more intelligently to boost the local and national economy.

When I am suggesting this, I am fully aware of the sentiments of staunch believers in conservation action who advocate that ecosystems and biodiversity cannot be always valued using dollar values and they have more non-use value.

While I am in complete agreement with this sentiment, it is also important that we need to focus on development that does not compromise conservation benefits.

The Net Present Value (NPV) of India’s forests is estimated to be anywhere between ₹9.87 lakh to ₹55.55 lakh per hectare, according to the Indian Institute of Forest Management, Bhopal. The value of mangroves is estimate to be about $1,287 per hectare.

The annual total economic value (TEV) of forests in Himachal Pradesh is more than ₹1 lakh crore. Similarly, the forests of Uttarakhand are estimated to provide ₹1.6 lakh crores annually through ecosystem services such as providing water, retaining soil and others.

Pollination and seed dispersal support provided by insects, birds and other life forms is estimated to be anywhere between ₹6,879 lakh per year per hectare to ₹12,054 lakh per year per hectare. The total value of India’s forests is worth 7 per cent of the GDP.

Globally, not just in India, the ministries of environment are seen as speed breakers in the development process.

This reputation is due to the fact the issues related to managing environment are not properly articulated and assessed for development planning.

The language used in the debates is too complex for several people to understand when it comes to reasoning on the need to fix some speed governors in the development engines.

One has to understand that this is a mechanism to save the driver, the carriage and the public and not to stop the run.

Investing in rational decisions related to development is the key. If ensuring the numbers game in economic planning and national accounting is properly played, then conservationists need not convince planning and investment ministries to the importance of safe keeping the ‘golden goose’ than to kill it now because we are getting a few golden eggs.

India, in spite of repeated directives and intent to use ecological and environmental audits and performance reviews, ranging from the CAG directive on the issues in 2011 to the adoption of Green National Accounts Framework in 2013, is yet to reach a critical stage, that is visible, where the perception of policymakers is not to ensure minimal hearing to issues related to managing environment and ecosystems sustainably.

Merely publishing a series of option papers on Green Accounting is not enough. We need action on the ground to demonstrate that the potential of biodiversity and ecosystems are worth their long-term protection.

What we now need is a full-fledged communication strategy to reach out to people on the ground as well as to those writing the development and economic history that after all investing in the future is not bad and that we need to count the numbers carefully so that our actions do not lead to situations we need to be on the defensive to our national interests all the time.

Given its potential to transform local and national economies, if managed well, biodiversity and ecosystems in India could be the next big innovative option for India to develop socially, economically and environmentally using principles of sustainable development.

The writer is former chairman of the National Bio-diversity Authority

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