Earth's dearth: invest more in natural capital

A while ago, a ceremony was held in Rio de Janeiro for passing the torch to signal the inauguration of the World Summit on Sustainable Development (WSSD), which is being held in Johannesburg shortly. A large number of world leaders will gather at Johannesburg, as was the case during the Rio Summit of 1992, though the expectations that preceded the Rio Summit appear to be missing this time. While Rio focused on environment and development, Johannesburg has a more specific and important though partly nebulous theme of sustainable development. Ten years have passed since Rio, but unfortunately the world has lost sight of the ambitious plans agreed upon in 1992. The grim reality is that the human race has shown far too little resolve since the Rio Summit to correct the damage inflicted mindlessly on the earth?s ecosystems over the past decades. It is ironic that all this has happened while industrialisation and economic growth have taken the output of goods and services for the world as a whole from six trillion dollars in 1950 to 43 trillion dollars in 2000. In the process, however, we have plundered the earth?s natural resources to an extent that would threaten life support systems all over the globe. If we were to take the case of climate change, for instance, which results directly from the increased concentration of greenhouse gases (GHGs) in the earth?s atmosphere, the consequences would impact profoundly on all forms of life and human activities. Right up to the middle of the 18th century, the concentration of carbon dioxide, which is the most significant GHG in the earth?s atmosphere, was stable at 280 parts per million (ppm). By 2000, it had increased to 368 ppm leading to serious effects on global climate, with rising temperatures, changes in precipitation, greater frequency and severity of droughts and floods, and sea-level rise (which seriously threatens coastal locations and small island states). The Intergovernmental Panel on Climate Change (IPCC), which has been in existence since 1988 has done a great deal of work in assessing all aspects of climate change ? scientific, technical and socio-economic. Global environmental problems such as climate change can only add to the precarious condition of our natural resources which are in any case being degraded by local pollution. The problems of air and water pollution, soil erosion, and deforestation are much too familiar to ignore. At the core of these problems is the inability of decision-makers and the leaders of public opinion to resolve the mistaken conflict between environment and development. Conservative economic thinkers rely on a valuation of environmental costs based only on what the market may indicate. But, in actual fact, markets do not carry out a proper valuation of environmental costs, or externalities as they are called. This is where public policy must step in to bridge the gap between private costs and gains versus social costs and benefits. We, therefore, need to develop an approach that integrates environmental costs and benefits with economic policy-making. Several assessments of environmental damage in India reveals that over 10 per cent of the country?s GDP is lost on this account. Today, it is not enough to emphasise the protection of the environment. What is needed is to actually invest in the regeneration of natural capital. Economic policy should target the much larger economic returns that would accrue from investments in the expansion of natural capital, such as forests, biodiversity, clean air, clean water, and healthy soil than from the creation of physical assets. It is interesting to note that a country like China, which during decades of communist rule degraded its natural assets, is now trying to reverse the trends of the past. Current government policy plans to convert part of China?s farmlands into forests. In essence, India should also be pursuing effective afforestation of wastelands to achieve the stated goal of one-third of the land area under forest cover. The problem of widespread poverty and degradation of natural resources essentially reflects two sides of the same coin. The poor in India as well as in other parts of the world cannot possibly improve their lot in life if they have to cultivate soil which is highly degraded, use water that is inaccessible or polluted, and provide fodder for their cattle from areas where nothing grows. Essentially, the first step in economic upliftment of the poorest of the poor is to ensure that they have the capacity to rebuild and regenerate natural resources on which their livelihood depends. India should resolve to set an example ten years after the Rio Summit, based on success stories and compelling evidence of a healthy balance between environment and development achieved in several other parts of the world. Why is it that a country which adopts the best know-how in the sectors of space, telecommunications, and computer science cannot adopt good practice in the sphere of economic policy-making which is also ecologically enlightened? The practice of paying lip service to these crucial issues on designated days like World Environment Day serves no purpose. We must be far more conscious of the health of the planet that our children will inherit.