The Cost of Environmental Degradation
06 May, 2003 · 1026
Col PK Gautam by juxtaposing the defence expenditure, constituting 2.3 percent of the GDP, against losses due to environmental degradation, amounting to 8 percent of GDP, brings to focus the real costs of environmental mismanagement
Almost all economic activities, including the annual defence budget, are expressed as a percentage of the Gross Domestic Product (GDP); the current defence budget expenditure is about 2.3 percent of the GDP. This trend in defence expenditure is an important empirical barometer to judge the national effort on security. Keeping the GDP as a datum, arguments are developed to indicate the trends and allocation in other activities like Research and Development. Similarly, in other departments proposals are made to enhance, for example, the education budget to about 6 percent of the GDP and so on. As this amount is available in cash and in a near real time cycle of a financial year, we seem to be very comfortable to deal with it with utmost clarity and precision.
China
and
India
due to environmental degradation.
(Source: Andrea Liebenthal, Promoting Environmental Sustainability in Development: An
Washington DC
: The World Bank, 2002, p15.)
India
amongst others should try to avoid this path followed by the West and remain below an ecological threshold or we follow a lower Environmental Kuznets Curve by adopting cleaner technologies and proper institutional arrangements. At the same time there have been widespread concerns about this curve or “grow now and fix environment laterâ€Â
At the same time, due to a multitude of factors, the nation is losing its natural and ecological capital in its quest for growth and removal of poverty. This loss is not clearly visible. It is long acting, mostly indirect and is a subject of low priority for security planners at present. Therefore, to most, the loss in the GDP due to environmental degradation is often overlooked. The reason for this is that there are no standard accepted procedures for quantitative evaluation; secondly, there is a not enough statistical data available; and thirdly, it is difficult to arrive at monetary estimates of degraded or lost environmental goods and services.
The Table below indicates the World Bank’s evaluation of loss obtained in
| Country
|
Environmental Degradation
(% of GDP)
|
Remarks
|
|
8
|
Air and water pollution damages were nearly $54 billion a year or 8% of the GDP in 1995. Some scholars have estimated the burden of environmental pollution at 5% of GDP. Loss due to deforestation alone is a staggering 12%.
|
|
4.5 to 8
|
Environmental cost assessment by scholars varies from 4.5% to 5% of GDP due to air pollution, groundwater mining, and deteriorating quality of aquifers, land degradation and deforestation. Annual economic costs of air pollution, contaminated water, soil degradation, and deforestation were estimated to be 8% of GDP by Tata Energy Resource Institute (TERI)
|
Evaluation the World’s Bank Performance,
In its 2001 evaluation of India, the World Bank had quantified that about 60 percent of environmental damage stems from economic losses because of unsafe domestic water supplies and unsanitary excreta disposal; another 20 percent from soil degradation.
This loss in GDP has led to another set of debate which challenges the very idea of the ingredients of the GDP. Environmentalists argue that we should calculate the Gross Natural Product instead of the Gross National Product or GNP to incorporate the real value. This alternative is gaining popularity, though it has not made inroads in mainstream economics.
Historically, the developed countries in the initial stages of growth increased their incomes with higher levels of pollution. This relationship is expressed as the Environmental Kuznets Curve. It is suggested that developing economies like
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