A Hard Tradeoff

Economic growth v/s cost to the environment. In Missing in Action, Pranay Kotasthane takes a stab at this very complex and important topic.

 

One, he says, the way a $2,000 per capita income country looks at the environment cannot be the same as the way a $50,000 per capita income country. Because the State doesn’t have the resources to enforce many measures (just framing laws doesn’t help). And because people cannot be condemned to stay poor because, hey, the alternative is bad for the environment.

 

Two, don’t create some clearance process that evaluates all projects for environmental impact. Because the State doesn’t have the resources for it. Clearance of projects will become the bottleneck and even worse, it will lead to corruption in clearing projects. It would be better to set limits on pollution or environmental damage; and then penalize companies that breach them. The approach should be like how tax returns are evaluated – randomly, because the State simply cannot review every individual’s tax returns.

 

Three, reduce the number of exceptions allowed to the environmental laws. Otherwise, every industry will lobby to get itself added into the exception list.

 

Fourth, the mechanism for citizens or environmental groups to raise concerns about violations must be through the courts, not via some environmental committee. Again, the reason is because the State doesn’t have the resources for endless committees.

 

Are these measures perfect? By no means. Can they be circumvented and twisted? Obviously. But are they more realistic than creating clearance committees that take forever to clear projects, slow down growth, scare away investments, and prevent people from getting better off? That, says Kotasthane, is the question we need to ask. Perfect solutions don’t exist in policy making. Realistic solutions, implementable solutions, acknowledging other considerations matter too (like reducing poverty levels), and picking the least bad options – this is how policy making should happen.

 

He ends with a chilling reminder of what Sri Lanka tried in 2020 – overnight, it banned chemical fertilizers and called for a switch to organic farming. Good for the environment, right? It was also the last straw - it pushed Sri Lanka over the edge into an economic disaster, compounding the slowdown in economic growth due to the COVID pandemic and associated drop in tourism. It’s a situation from which the country has still not recovered.

 

Kotasthane ends by recommending what most Indians feels:

“For the foreseeable future, the balance should tilt towards growth.”

Hopefully, once we get richer, we too, like China, can speed up the transition towards eco friendly projects, from solar to wind to electric.