IASbaba’s Daily Current Affairs – 24th Oct 2017

ENVIRONMENT

TOPIC: General Studies 3:

Conservation, Environmental pollution and degradation, environmental impact assessment.

Determining environmentally-desirable growth rate

Background:

There is a silver lining to a lower growth rate from the perspective of the sustainability of the economy in the long run. It can bring significant economic welfare through improvements in environmental quality. Economists concerned about sustainable development advocate low levels of economic growth since with large expansions in national income come negative environmental consequences such as pollution. These adversely affect the environmental quality and economic welfare of individuals and households dependent on the environment for their basic livelihood.

The Environmental Kuznets Curve (EKC) hypothesis:

It appears that it is the Environmental Kuznets Curve (EKC) hypothesis that underlines almost all our development policies, which are directed towards pushing double-digit income growth with little concern for environmental capital. The EKC hypothesis is shown in an inverted U-shaped curve depicting the relationship between per capita income and environmental deterioration. It suggests that during the initial period of economic development, where per capita income is low, deterioration of environmental quality caused by rapid industrialisation and urbanisation is inevitable. Society will have to accept a certain level of environmental damage arising from income-generating activities because large-scale income growth is essential for achieving other development goals such as generation of mass employment and poverty reduction. Once per capita income reaches a higher level, the trade-off between income growth and environmental quality will cease to exist. With increased financial and technological capabilities, we can restore the environmental quality to desired levels. So, income growth on a higher path brings a win-win outcome in the long run where poverty is reduced and environmental quality is improved.

Issue with the EKC hypothesis:

In reality, the EKC is a near myth since an increase in per capita income does not bring desirable levels of improvement to the environment. In fact, empirical evidence across countries reveals that various attempts to increase per capita income causes more environmental deterioration.

The Indian context:

Studies that have attempted to estimate the economic costs of environmental damages in India have revealed some striking findings. For example, a 2013 World Bank study highlighted that in India, a higher level of economic growth maintained in the past imposed Rs. 3.75 trillion worth of environmental damage cost, which is equivalent to 5.7% of the country’s GDP at 2009 prices. Another study by the World Bank found that India’s air pollution alone caused welfare loss equivalent to 7.69% (approximately Rs. 31,316.2 billion) of its GDP in 2013.

Issues:

The values reported by the above studies are underestimates since they do not capture the wide range of economic impacts on the environment due to non-availability of data. For example, the environment generates a range of ecosystem services such as provisioning services (food, irrigation, drinking water), regulating services (climate regulation, water quality regulation), cultural services (recreational and religious services) and supporting services (nutrient recycling, soil formation). Identifying and quantifying them for the purpose of damage assessment is a difficult task in the absence of relevant data. In India, millions of households and economic activities utilise these ecosystem services for production and consumption. Though economically highly valuable, ecosystem services are not traded in the markets and, therefore, their true values are not reflected in the system. Therefore, the actual value of economic welfare lost due to loss of ecosystem services will be much higher than what is being currently estimated.
Another issue is that the current method of GDP estimation treats environmental damage costs as income. Since development policies give more priority to income and employment generation, implementation of pollution control policies are very poor. For example, pollution control measures implemented in the bleaching and dying units in Tiruppur, Tamil Nadu, for more than 25 years did not achieve any pollution reduction. In fact, the measures led to not only the closure of these units in 2011 but had already caused significant irreversible damage to the health, agriculture and livestock sectors in that region. Regional poverty and inequality in income are caused by such ineffective policies.
Adequate reforms in the area of pollution control with a larger role for market-based instruments such as pollution tax and tradable pollution permits are yet to be carried out in India. At present, the price of a commodity from a polluting unit covers only the private cost of production, not the damage cost. This makes the commodity relatively cheaper leading to more demand and output, and more pollution and environmental damage cost. Increased output and demand increases the value of GDP, but the corresponding environmental damage cost is not adjusted in the GDP estimation.
More environmental damage may lead to an increased level of purchase of market goods contributing to expansion of the GDP. When individuals become sick due to water pollution, the demand for medical services will rise; increase in the purchase of these market goods and services will expand the GDP size. So, more pollution damage leads to higher GDP.
The size of environmental social costs is significantly higher than the social benefits being brought about by GDP growth. This means, if we try to increase income and employment in traditional sectors, we lose them in other sectors that are dependent on the environment. Sometimes, the economic losses are much higher than the gains of income growth.

Conclusion:

Since GDP growth and environmental damage have a strong positive relationship, lower growth in GDP could afford benefits. Though there is an uncertainty in determining environmentally desirable growth rate. Maintaining 5-6% growth rate with strict environmental regulation is supposed to reduce environmental damage significantly. A proper assessment of environmental social benefits and social costs of income growth is warranted so that policies can be directed towards setting environmentally sustainable growth rates. Efforts to develop environmental accounting and green GDP for India can help us achieve sustainable development in future.

Connecting the dots:

What is the Environmental Kuznets Curve (EKC) hypothesis. Do you agree that income per capita and environmental degradation relationship can be depicted by an inverted U-curve? In this light discuss the need of determining environmentally desirable growth rate.

GOVERNANCE / WELFARE

TOPIC: General Studies 2:

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes.

Solving the issue of homelessness

Background:

One of the most challenging problems of our times is homelessness. The challenges for India are daunting: An estimated 65 million people, or 13.6 million households, are housed in urban slums, according to the 2011 Census which estimated that an additional 1.8 million people in India were homeless. India is urbanising fast. Around 38 per cent of India will be urbanised by 2025. This would mean some 540 million people will be living in urban areas by 2025. Experts estimate that 18 million households in India are in need of low-income housing. This paired with a shrinking supply of land and high construction costs is leading to a growing slum population. Experts estimate that by 2025 more than 42 per cent of India’s population will be urban. Currently, the level of public services offered in slums is seriously deficient. An estimated 58 per cent of slum areas have open or no drainage, 43 per cent transport water from outside communities, 34 per cent have no public toilets, and an average of two power outages occurs each day.

Owning a house: Bedrock of possibilities

Providing stable, affordable housing is a major first step to establishing and sustaining a basic standard of living for every household.

Many who live in slums have little to no control over or ownership of the property they live on. The formal financial sector is unable to serve them. Once titled, they could obtain access to several public benefits including loans.
Housing is often the bedrock of other development interventions: owning land boosts health profiles, educational outcomes and gender equality. The converse is equally true.
A decent habitat for the poorer sections of society will not only contribute towards their well-being and real asset creation, but also catalyze overall social and economic growth.
The priority for housing ought to be higher than education and health. For many people in the developing world, the land on which they live is their only asset. If that property is not publicly recognised as belonging to them, they lose out on social benefits.
Giving slum-residents basic property rights would encourage residents to invest in home improvement and encourage municipalities to provide infrastructure and better services.

Way ahead:

Upgradation rather relocation should be an option. Several attempts to relocate slum dwellers to the city’s fringes have failed because the location restricts the access of residents to employment, schools and other amenities. Slum-dwellers favour upgradation of existing facilities and secure tenancy.
The Government should improve the legal and regulatory environment and increase the supply of affordable, legal shelter with tenure security and access to basic services and amenities.
The Government should undertake physical upgradation of informal settlements sometimes accompanied by the provision of public services, such as access to roads, electricity, water supply and sanitation. These services create a high level of perceived tenure security. There is extensive need for repair of dilapidated housing stock and the provision of essential services.

Property rights:

Conventionally, property rights mean the right to use, develop and transfer property. However, a different set of property rights for informal housing, one that gives the owner-occupant mortgageable status can be provided. The Government could also permit the owner-occupant to have only the right to use the property and access basic services as in public housing. Alternatively, it could give property rights on lease. It could restrict use and exchange of such property to only between low-income groups. This can bring unplanned settlement into acceptable relation with the planning norms. Titles could be regularised in exchange for acceptance agreed urban planning guidelines.

Case study:

The Odisha government recently took a revolutionary decision by providing urban poor residing in 3,000 slums land rights for residential use that are heritable, mortgageable and non-transferable. Endowing slum dwellers with mortgaeable titles can open the gates to many opportunities for improving health, education, employment and providing entitlements to social programmes.

Conclusion:

The stresses on account of homelessness are mounting. Solutions will come from pairing passion with entrepreneurship and digging deep into the challenge at hand.

Connecting the dots:

Homelessness is a serious challenge in India. Discuss the importance of owning a house and the ways government can ensure ownership rights for maximum population including those living in slums.