Economic Valuation of Nature
People,
Businesses and Economy depend
on nature for everything. Despite this our economies currently do not
reflect that dependency resulting in a non-judicious use of our natural
resources.
India's ecological footprint (the amount of
productive land and sea area required to produce the resources it
consumes and absorb its waste) is now over double its bio capacity. This
results in problems like collapsing fisheries, diminishing forest cover,
depleting fresh water systems and building up of carbon
dioxide emissions, to name a few.
India is depleting its ecological assets to
support its economic boom and the
growth of its population. This implies that business and government
intervention are urgently needed to reverse this trend, and ensure a
sustainable future in which India remains economically competitive and
generates better social and environmental outcomes.
One such intervention is valuing the
ecosystems we utilise. Both economic and non-economic valuation
techniques of doing this are relevant and important. However, decision
makers with the power to protect and manage natural resources often have
to make trade offs, which involve taking economic decisions, which are
made without fully accounting for what will be lost- usually public
goods and services from ecosystems and with a one-sided representation
of what is gained- private sector profits and employment. Hence economic
valuation which creates recognition and representation of our ecosystems
can prove to be a useful way of justifying and setting priorities for
policies, legislations and practices that protect or restore ecosystems
and their services.
This can be illustrated by the example
of establishing a Net Present Value (NPV) of forests in India. Under a
1980 law, when forestland is diverted for industrial use, the project
developer has to pay for compensatory afforestation and the Net Present
Value (NPV) of the forest, to make up for the loss in ecosystem. The
government has currently accrued over Rs 40,000 from these sources. NPV
is a monetised value of forestland, which is calculated for a period of
50 years and is paid by the user agency to compensate for the loss of
tangible and intangible benefits flowing from such lands. At present,
the government charges Rs 4.38 lakh to Rs 10.43 lakh per hectares (ha)
NPV, depending on the type and density of forest. This money is to be
utilised for compensatory afforestation, as well as the general
afforestation programme run through the Green India Mission and will
help India achieve its target of 33% forest cover.
In 2013, an expert panel commissioned by the Ministry of Environment,
Forests and Climate Change (MoEFCC) recommended revising the rates to a
range of Rs 5.54 lakh to Rs 50.72 lakh per ha which have been accepted
by the ministry. The panel also estimated that the notional value of
India's forest is Rs 115 trillion, which is higher than the GDP of
countries like Canada and Russia.
Despite its benefits, this tool is
contentious and often criticised by those who feel there is risk that it
will lead to the 'privatisation' and 'commodification' of nature and
that society should appreciate the intrinsic value of nature i.e. nature
for its own sake. While this moral argument is valid, it has
unfortunately failed to gain the traction required to generate positive
trends and has led us to a situation where we have no choice but to
change the argument to a more realistic economic one.
It is high time we stop thinking of the
environment as something that needs to be traded off for economic
development and recognise that it is in fact essential for economic
growth. This recognition is the foundation of building a truly green,
fair and inclusive economy where ecology and economics go hand in hand.
However, we need tools to build a bridge between these worlds that are
currently alien to each other and economic valuation of nature is one
such tool.■
Sonia Cyrus Patel
spatel@devalt.org
References:
http://www.footprintnetwork.org/en/index.php/newsletter/bv/indias_demand_on_nature_approaching_critical_limits
http://www.hindustantimes.com/india-news/india-s-forests-valued-at-rs-115-trillion-but-tribals-unlikely-to-get-a-share/story-L06QqOb6PGrkcx
Z7l1ACDI.html
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