Opinion
The environment conundrum
06 Apr 2010 |
Dr Leena Srivastava
| Financial Chronicle
For far too long, the protection of the environment has been viewed as a necessary evil and a regulatory requirement that needed to be circumvented in order to carry on with the more \"important\" activities involving economic growth. A large number of studies have been undertaken in the past few decades on strengthening the environmental clearance processes and enforcing environmental compliance. However, at the end of all such efforts the common lament reflected the failure of implementation.
The introduction of the public interest litigation (PIL) in the early 1980s was possibly a turning point for environmental protection with the early cases of success coming in the mid-1980s itself when mining operations in Uttar Pradesh were halted due to their adverse impact on the environment. However, it was the highly publicised case of M C Mehta vs the Union of India in 2001 around the issue of vehicular air pollution, resulting in the direction that all commercial vehicles switch to CNG, which brought the power of the issue (environment) and the instrument (PIL) to the fore.
In the command-and-control regime under which environmental impact assessments were undertaken and clearances provided, it was no surprise that allegations of corruption and compromise flew thick and fast. Things started coming to a head when the policies designed to fast-track investments and infrastructure development collided with the extremely slow-moving and alleged corruption ridden process of environmental approvals. Rumblings about the environment being a barrier to development have gathered momentum over the past few years culminating in a loud, public and embarrassing spat between several infrastructure ministries of the government of India and the ministry of environment and forests.
So, how does this resolve itself? Obviously the minister, Jairam Ramesh, is right when he says the environment ministry cannot just be a rubber stamp for the purposes of clearance. We fervently hope not. However, the ministry does need to streamline and accelerate its decision-making processes – a commitment that the minister made when he first assumed office. Several measures have been identified time and again for improving the effectiveness of the system – measures that are merely awaiting a commitment. High on the list is a system that would ensure that the consultants undertaking environmental impact assessments on behalf of project proponents are certified and graded on a periodic basis, with their grading reflecting their performance on previous assignments. Equally important, from a confidence building point of view, is to ensure that the conditions on which environmental clearances are provided are implemented and monitored effectively. Another key area of weakness that can be easily addressed related to the public hearing process. Several studies have shown the perfunctory treatment that this essential element of an environment impact assessment process receives and the consequent delays that arise due to public protests.
As such, while the environment minister is admirably fulfilling his duties towards the sector for which he has the charge, he has to demonstrate the scientific basis of his ministry’s actions and not let it be perceived as being unnecessarily obstructionist or viewed with suspicion. Going beyond current controversies relating to environmental clearances, ensuring environmental compliance on an ongoing basis will go a long way in enhancing the credibility of this institution. A recent PhD thesis from a student, Ritu Paliwal, at the Teri University, clearly brings out the lacunae in the existing systems and also brings out starkly the extremely low costs of non-compliance (penalties) as compared to the costs that have to be incurred by industry for complying with the provisions of the environmental management plans. Paliwal observes the lack of a clearly defined rationale in arriving at a value for penalties in the Indian system. On the basis of her literature survey, she identifies the key elements defining a penalty value to include beyond the statutory compliance penalty, a value that reflects the benefit accruing to industry from non-compliance as well as a reflection of the gravity of offence committed. Unless appropriate penalty systems are defined with proper escalation clauses, while at the same time addressing the issue of technical and managerial capacities of state pollution control boards, the ethos of indifference may continue.
India is poised to significantly internalise environmental considerations into development processes. The ministry of environment and forests must urgently and constructively engage with the development process to ensure this transition to sustainable development. The ministry should draw inspiration from the finding that India’s regulations and processes are at par, and in some case better, than those in the developed world. Where we fail in this sector, as in several other sectors of the economy, is in the implementation.
Testing social responsibilities
23 Mar 2010 |
Dr Leena Srivastava
| Financial Chronicle
The invitation to be a part of the jury of the sustainable development trophies of the EdF (Electricite de France) Group came as a surprise. The invitation letter mentioned that the sustainable development trophies is an internal competition held throughout the group with an aim to promoting the employees\' involvement in sustainability initiatives around five major issues.
These issues are: Care for customers and local communities, climate change, energy efficiency, environmental protection and biodiversity and social responsibilities.
Arriving in Paris on the March 19 to actually assess submissions on this competition was an even more surprising and an extremely pleasant experience.
The EdF group comprises at least six business verticals and employs a work force of over 160,000 people, with a major concentration across various countries in Europe.
On the final jury day, a shortlist of 50 projects (from a total of 538 submissions from across the group) were put up to nine different committees for selecting two projects from each committee as the winners - totalling to about 18 winning projects.
Each jury comprised between six and eight members making a total of approximately 60 jury members drawn from the senior management of various group companies and other international members such as myself. Each team presenting their submissions had two members who spent 40 minutes with the jury committee in an extremely well choreographed process - complete with power point presentations and a well documented compilation of all submissions - which was a delight to participate in.
The above statistics and detailing of the process is merely to give the readers of this column an idea of the scale and commitment of the EdF group to internalising and encouraging the sustainability considerations within the organisation, both at an individual level as well as at the company level.
As the presentations began, it was clear that several of the submissions gave due consideration to the triple bottom line considerations in sustainable business design strategies, that is, environment, business and social impacts. The range of innovative and out-of-box initiatives that tied the different pillars of sustainability together, across both developing and developed countries, served as an eye opener.
One project worked with local communities to extend support to those struggling with debt and fuel poverty while at the same time promoting energy efficiency and reducing the dues for the utility company.
Another developed a partnership with a well known charitable organisation in order to leverage their services to provide support to vulnerable customers during back-out periods - thereby demonstrating great sensitivity and greatly enhancing the positive reputational impact for the company amongst its customers.
Many more such examples could be cited. The crux of the experience, however, is that not only are these initiatives replicable across the group but these innovative opportunities to integrate a business into the communities they operate in could possibly never have been sighted from the top - these had to be initiated driven from the grassroots level within the organisation.
The ministry of corporate affairs has issued voluntary guidelines for corporate social responsibility (CSR) for India\'s businesses.
This is a very encouraging document that provides a lot of room for businesses to define their own CSR implementation strategies in their own operating contexts. The EdF example illustrates how such CSR initiatives can, and probably must, go beyond companies to the employees within the company.
Also positive about the guidelines is an explicit recognition of corporate social responsibility within the company as well as CSR towards the society in which a business is embedded.
The important take-away from the above experience is that the specific amounts to be earmarked for CSR activities as per the guidelines can either be seen as money that needs to be spent to be in compliance with government guidelines or as a means for encouraging innovation and bringing about societal transformations towards sustainability.
Finally, it needs to be noted that the winners of the above competition are not given cash prizes or freebies of any kind. They are, instead, encouraged and facilitated in taking their message and learning across and outside the organisation through films (in which the team is the cast), participation in conferences/seminars and invited lectures!
Gross National Happiness
19 Mar 2010 |
Dr R K Pachauri
| The Asian Age
The kingdom of Bhutan has been espousing the concept of Gross National Happiness (GNH) as opposed to the Gross Domestic Product (GDP) which is followed by every other nation and society across the globe. Given the negative externalities that a number of economic activities are now known to impose on the society, the need for devising a new measure of economic progress and a more comprehensive definition of the human condition becomes imperative. The concept of GNH is certainly not easy to translate into practical application, because happiness itself is a very subjective measure, which the state cannot possibly come to grips with. But it is necessary for a new set of values to be accepted, on the basis of which the measurement of economic progress would shift from mere production and consumption of goods and services to a set of variables that are more aligned to happiness and satisfaction of human society.
In case of Bhutan, state policy has been very conscious of the need to preserve the country\'s natural resources and more importantly preserving the culture of Bhutanese society. Culture and tradition are intangible assets that are difficult to measure, but clearly have a major role to play in creating a sense of pride and social cohesion that a society exhibits. This is not to say that culture and tradition are always positive factors in creating human happiness, because at different stages during human history and in different places, culture and tradition have sometimes proved harmful in respect of factors such as gender inequality; discrimination on the basis of caste, creed or religion; and even practices like sati, which cannot be defended on any rational or ethical grounds. But the world today is afflicted with the spread of monoculture. Thomas Friedman, the Pulitzer prize-winning columnist and author, has rightly pointed out the downside of too many \"Americans\" on this planet. If everyone across the globe was to consume goods and services at the same level and on the same pattern as citizens of the US, we would probably strip the earth of its key natural resources, much as locusts devour an entire crop waiting to be harvested. GNH cannot rest on a culture of unbridled consumption, because that would be totally unsustainable.
Bringing about a shift to a more sustainable measure of economic well being, quite apart from the question of metrics, is really an issue related to attitudes and values. The appeal that the concept of GNH provides would be relevant only if this becomes the guiding principle defining the attitudes of society at large. If this were to happen, then possibly every human being would ask a question on how his or her actions would affect the level of happiness in that society. At the practical level, this could take the form of ensuring that no dumping of waste takes place in a public place or in observing traffic rules while driving on the road. In other words, GNH if imbibed by everyone in a society would create possibly a new ethos that respects the need to avoid actions which impact negatively on the welfare of others. Such a direction or approach would certainly not be smooth and devoid of tension. In case of Bhutan, for instance, the state has thus far maintained very successful and strict control over the number and quality of tourists allowed in that country. However, now that Bhutan has democracy and elected governments at all levels the question is whether the desire to make quick and easy money may lead to a dilution of existing tourism policy.
The contrast with Bhutan tourism policy is seen starkly in the laissez faire approach followed in most of our hill stations in this country. The result is that a hill station like Shimla that had a certain level of elegance and social order has now been converted essentially into a large sprawling slum. Much the same has happened to other hill stations like Mussoorie, Nainital and to a certain extent even Ooty. The desire to make a quick buck leads to violation of existing regulations, where they have been instituted, and certainly prevents effective regulations being put in place where they do not exist. The result is that civic services do not match up to the large pressure put on them by both permanent as well as floating populations in these locations, and as a result, therefore, quality of life suffers to the detriment of all.
With the rate at which urbanisation is taking place in India, the involvement of local citizenry in the governance of towns and cities becomes an important pre-requisite, and decision-making, therefore, needs to become inclusive in every respect. Pride in one\'s own habitat and the desire to preserve all that is good and pristine would only come from active involvement in decision-making by citizens and stakeholders in a particular location. All of this means that maintenance of environmental quality requires firstly a shift in values that would emphasise happiness in a larger social sense as opposed to consumption of more and more goods and services, irrespective of their harmful social impacts and a certain level of involvement on the part of the local community in environmental decision-making. Perhaps, the example of Bhutan, a country with a very small population, would be relevant even for a country like India with a large and expanding population. After all Indian society has traditionally practised some form of GNH, which we should not relinquish at this stage of our development. If anything, the time is ripe for us to draw this concept into the mainstream of economic policy as a substitute for gradual replacement of the measures of the GDP.
Inclusive growth, the CSR way
10 Mar 2010 |
Dr Leena Srivastava
| Financial Chronicle
Prime minister Manmohan Singh asserted a few years ago that inclusive economic development was a national goal. To his credit, a number of government programmes have since been initiated that imbibe the spirit of inclusiveness - the most popular among them being the National Rural Employment Guarantee Scheme. What is interesting, however, is to see the corporate social responsibility voluntary guidelines coming out of the ministry of corporate affairs in December 2009. To quote Salman Khurshid, minister of state for corporate affairs \"... the corporate sector is also standing in the midst of a sustainability crisis that poses a threat to the very existence of business. What we have before us is a crossroad where one path leads us to inclusive growth and the other may lead to an unsustainable future. ... the business sector also needs to take the responsibility of exhibiting socially responsible business practices that ensure the distribution of wealth and well-being of the communities in which the business operates.\" This is indeed a very commendable approach.
On the other hand, we have a rapidly evolving set of public-private partnership models wherein the government is assuming onto itself the responsibility of the vexed process of land acquisition and environmental clearances so as to attract large scale investments into a range of sectors. In the process, corporate entities have been provided with an escape route wherein they can wash their hands off the process of land acquisition and the resettlement and rehabilitation of people affected by these projects. Where does that leave the people affected by such projects? Can they ever be assured of a reasonable compensation? Mamta Banerjee has been credited with singlehandedly nixing the land acquisition bill objecting to even 30 per cent of the land acquisition needed for a project being facilitated by the government. Her stance is that private promoters should acquire 100 per cent of the land needed for a project.
The Posco project in Orissa is one of the high profile projects, which faces this responsibility trap. Posco, a South Korean company, is interested in setting up a large integrated steel plant that requires acquisition of 4,000 acres and involves displacement of an estimated 2,000 families. Irrespective of whose responsibility land acquisition was, or of the extent of encroachment that may exist on the land, the reality is that Posco has committed time and effort and some investments into the project. It is today five years behind schedule on the project. Given the project investment cost of Rs 55,000 crore, back-of-the-envelope calculations would yield an opportunity cost of a one year delay in project implementation, assuming a modest return on investment of 10 per cent, to be about
Rs 5,500 crore. This single year opportunity cost would be a few hundred times larger than the cost the company would have to incur for a one-time reasonable settlement with the affected families. What prevents companies from taking a longer-term holistic perspective on the issue?
What is also obvious from a review of such cases is the huge trust deficit that exists between project-affected people and companies and, unfortunately, also the local administration. What should be the role of the government, at its various levels, in the cases of land acquisition? Should the local government (district administration) be mandated to be primarily and exclusively responsible for the welfare of local communities, while the state and national governments push for investments so essential for development? Should the resettlement and rehabilitation policies of the various state governments be clearly recognised as the minimum guidelines to protect societal interests? Who, under the corporate affairs ministry’s CSR norms, would be responsible for ensuring that companies do \"not engage in business practices that are abusive, unfair, corrupt or anti-competitive\"?
While these tangles are being resolved, the voluntary CSR guidelines seem to apply largely to post-establishment activities of a company. CSR as it is practiced today defines our understanding of the concept. But why should resettlement and rehabilitation activities not form part of CSR? How do we coordinate across the various ministries dealing with these inter-linked subjects to get a coordinated approach to inclusive development as it revolves around the corporate sector?
Opt for integrated energy pricing
26 Feb 2010 |
Dr Leena Srivastava
| Financial Chronicle
The expert group report on pricing of petroleum products put out in early February 2010 called for a \"viable long-term strategy for pricing major petroleum products\". Recognising the fact that oil imports are increasing and that oil prices are \"generally expected to rise\" the group has recommended that \"domestic prices of petroleum products have to reflect the international prices\". This, they say, must be done to \"limit the fiscal burden on government and keep the domestic oil industry financially healthy and competitive\". The group then recommended that both diesel and petrol prices must be market determined both at the refinery gate and the retail level.
Cut now to the issue of bio-fuels - the vision and goals of the national policy on bio-fuels, put out towards the end of 2009, when paraphrased, are to reduce dependence on petrol and diesel thereby contributing to India\'s energy security while at the same time contributing to climate change mitigation and environmentally sustainable development.
This would obviously contribute to keeping ecosystems and populations healthy. The important proviso, of course, being that the \"accelerated development and promotion of the cultivation of bio-fuel\" plantations would be done in an environmentally sustainable manner. The policy calls for an indicative target of 20 per cent blending of bio-fuels - both by bio-diesel and bio-ethanol, by 2017, with bio-ethanol already being made mandatory.
The sugar industry has apparently quoted a price of Rs 27 per litre for ethanol to the oil marketing companies and they have asked for this price to be locked for a period of three years to remove uncertainties in revenue. However, it appears that this particular demand of the sugar industry would not be accepted by the government due to expectations that international ethanol prices may drop. Note that India allows duty-free imports of ethanol. The question that arises that while on the one hand, India is concerned about its oil import dependency and vulnerability relating to international oil markets, on the other hand, it is willing to expose itself to the vagaries of the international ethanol market. If the objective of bio-fuel blending with transport fuels is to reduce vulnerability to international oil prices in the short and long run, it would obviously make sense to peg the domestic price of ethanol and bio-diesel to the refinery gate prices of diesel and petrol and not to the movement of international ethanol prices. On the other hand, with more countries looking at the option of bio-fuel blending with petro-fuels, it can also be expected that international prices of ethanol will align themselves more closely with international oil prices. The refinery gate price of petrol is ~ 31 per litre at an international crude price of $75/bbl, which makes the ethanol price at Rs 27 attractive even if oil prices were to drop to about $70/bbl (which is unlikely).
The question also is - why should the price of bio-fuels not be market determined as in the case of petro-fuels? If the policy on bio-fuels is stable and has a long-term vision, as it seems to have, then the minimum demand for ethanol is established. What the regulatory system may then need to specify is a floor price for bio-fuels so as to lend some stability in price expectations to farmers but leave the cap to be determined by the demand-supply situation.
It is another matter that suspicions are high that the decision of ethanol blending was driven largely as a support measure for the sugar industry. And whether sugarcane production in India is environmentally sustainable in all the regions where it is grown or is it a function of the distortion in input prices of water and electricity and the support price provided to sugarcane are possibly matters of a separate debate. We would then be entering into the very tricky area of agricultural pricing. However, what the above factors highlight are the huge distortions that we have created in the pricing system in the energy sector and the challenges of sending the right signals for a sustainable development of this sector.
Will deregulation in oil sector benefit consumers? Impact on agriculture and the poor need to be considered
18 Feb 2010 |
Dr Leena Srivastava
| The Economic Times
The unsustainability of the pricing regime for petroleum products being followed in the country has been obvious to the decisionmakers for at least a couple of decades now. The Kirit Parikh Committee’s (KPC) recommendations on deregulating prices of the auto fuels, petrol and diesel, would lead to an increase in the prices these products by about Rs 7 and Rs 4 per litre respectively.
While recognising the inelastic demand for petrol and the relatively higher paying capacity of petrol users, the KPC virtually dismisses considerations of the impact of diesel price increase on agriculture by saying that the government can make good this higher cost through a higher minimum support price for agriculture.
IPCC plays safe, turns to governments: A rebuttal
18 Feb 2010 |
Ms Suruchi Bhadwal
| The Hindustan Times
Apropos your article in the Hindustan Times of February 15, 2010 of the above title, that results in a gross misrepresentation of facts.
As a lead author to the WGII Fourth Assessment Report, I can say that the procedures adopted by the IPCC have been very clear which begins with a transparent process of nomination of experts by country focal points in Ministries from each country to contribute to report writing. These have been in existence since 1990 and followed systematically from the time of the First Assessment Report.
Science of climate risks
16 Feb 2010 |
Dr R K Pachauri
| The Asian Age
The recent news about the decision on Bt brinjal has received a great deal of attention from the public and the media. Issues involving radical change often invoke radical reactions. That the use of genetically modified (GM) foods is a major departure from long-standing practice and belief is clearly a reason for the very diverse views being expressed by different sections of society. It is also a fact that major technological changes of this kind would need to be tested against a number of unknown and unseen impacts that could emerge only over a long period of time and with safeguards being fully established.
Scientific innovation and scientists today are accountable to society at a level that has not been seen before. It is also true that scientific innovation now invites deep concerns and suspicions that have not been seen in the past. Much of this, of course, is the result of unfortunate experiences that societies have had in the past, such as those that were brought to light by Rachel Carson, eloquently exposed in her book The Silent Spring. Indeed, Carson\'s work laid the foundation of widespread global concern on environmental damage caused by increasing use of chemicals of various kinds in our daily lives.
But in her lifetime Rachel Carson faced enormous resistance and dangers, because those responsible for the production of the chemicals and products that she had exposed clearly saw her as a major obstacle to continuing profits from business as usual in the future. But that resistance turned out to be short-lived because society in the developed countries, in particular, realised some of the perils associated with growing use of chemicals and other products which had very high potential for environmental damage and adverse effects on human health. Yet, today we know that with the population of this planet approaching seven billion people, and with incomes reaching higher levels, the adoption of lifestyles and consumption all across the globe are often a replica of what the developed countries did historically in the past. If we continue on present trends, the dangers of blindly emulating the developed nations would leave us with very few options to bring about timely change. If change is to be brought about, and we are to restore the balance and move human society towards a distinctly sustainable pattern of development, then some "disruptive" technologies would become essential and desirable.
Large-scale solar energy use would come from such disruptive technologies. How can scientists cope with the challenge of innovation that would bring into place radically different technologies from those employed today and yet be able to ensure acceptance from the point of view of human health, economic well-being and environmental protection? This would require a great deal of coordination between research organisations, industry as well as government. What would also be essential is a broad policy-driven approach to scientific innovation because, almost at the stage of conceptualising new technological innovation, its implications for society across the board would need to be understood with some degree of thoroughness. The elimination of risk would have to be an important part of technological innovation throughout the process by which it is produced.
While change may bring risks of a certain kind, society also has to look at the risks associated with no change. For instance, this is truly the case with human-induced climate change. The scientific community and the Intergovernmental Panel on Climate Change (IPCC) have provided overwhelming evidence of the manner in which human actions are affecting the earth\'s climate and a detailed account of the impacts that would be felt if nothing is done to alter the current system and to stabilise the concentration of greenhouse gases (GHGs). Business-asusual, in this case, would create risks, the probability of which in several instances have been estimated as significant.
Yet there is an inertia in the system which seems to be preventing the induction of technologies and processes that could make a difference in the right direction. Even in the case of, say, transportation technology, there are countries in the world which have advanced significantly while others are lagging behind, largely because of differences in the policy framework which in one case promote energy efficiency and low-emissions solutions while in the other there is an inert continuation of systems that have been largely responsible for the problem in the first place. The question is often asked whether anyone who has a rational basis for behaviour and action would ever get on a flight which has even a five per cent chance of a crash? In the case of mitigating the emissions of GHGs and thereby tackling the growing problem of climate change, several sectors of society are hesitant to take action even when the likelihood of adverse impacts are very much higher than five to 10 per cent. There is something disproportionate in the way that people perceive risk. For instance, continuation of practices that might result in risk appear to be discounted heavily as against those that might require change.
The biggest challenge in bringing about change within a democratic system lies in sensitising the public on choices that are explicitly to be exercised.
Unfortunately, there is a gap between the work of scientists and the public at large, which despite an increase in the speed of information flows has not been bridged. Often, therefore, misinformation or extreme shades of information fill in the existing gap. Rationality as a result becomes a casualty. In the absence of proper information we could have situations where the undesirable impacts of technological innovation would surface well after the decision has been made.
The same thing to a much larger degree would happen in the event of indecision which may be the result of political, attitudinal or other forms of inertia. In the case of climate change this clearly is the issue that the public must understand.
A delay in taking steps that would lead to higher levels of energy security, lower levels of air pollution and in general a sustainable energy future need to be taken with a sense of urgency. These, incidentally, would also stabilise the concentration of GHGs in the atmosphere.
India's energy price challenge
09 Feb 2010 |
Dr Leena Srivastava
| Financial Chronicle
The report of the expert group on pricing of petroleum products released a few days ago has made some extremely bold recommendations particularly in terms of increasing prices of LPG and kerosene and they need to be lauded for it. As pointed out by the committee, the benefits of subsidies on these petroleum products by and large do not reach the targeted populations at all. On the other hand, adulteration of diesel with kerosene has resulted in a significant worsening in urban air pollution apart from the huge financial losses on this kind of consumption.
S L Rao: Behind the attacks on Pachauri
04 Feb 2010 |
Prof S L Rao
| Business Standard
The anti-climate change lobby is using the flaw in the IPCC study to condemn not just the Teri chief but the idea of climate change itself.
For the first time, Indians are experiencing an organised, systematic and vicious attack by powerful and well-funded lobbies in the developed world. These lobbies are aiming to diminish the perception of the impact of global warming and climate change on our common future, and the consequent need to change our lifestyle. Such lifestyle changes will damage the future of many industries, so there are vast resources and stakes in continuing present consumption styles.