Watch The Shades Of `Green Economy’

Oct 27th, 2011 | By | Category: Adaptation, Advocacy, Bhutan, Biodiversity, Capacity Development, Carbon, Development and Climate Change, Ecosystem Functions, Environment, Experts Speak, Financing, Forest, Governance, Green House Gas Emissions, India, Information and Communication, International Agencies, Land, Lessons, Livelihood, M-20 CAMPAIGN, Nepal, Opinion, Pakistan, REDD+, Research, Rio+20, River

Dr. Sudhirendar Sharma IndiaSudhirendar Sharma: Writes about the potential of mountain states in India in terms of their natural wealth and kind of benchmark for the services provided by them. By taking examples from developed countries his doubts are about insignificant valuation of tangible ecosystem services, therefore the unlikely transaction of such payments in near future. His discourse is also about such ecosystem valuation in economic terms as ‘green economy’, and apprehensions on commodification of natural services.

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With Gangotri and Haridwar as its spiritual and religious abodes, a small state of Uttaranchal is at a strategic advantage ever since it was culled out of the most populous state of Uttar Pradesh in the year 2000. That 64 per cent of its total landmass of 51,125 sq. km is forested adds to its ecological significance. Haven’t text books prescribed 66 per cent forest area as ecological benchmark for any landscape to be perfectly in sync with nature?

Indeed that has been the case but what is `strategic’ about it, if at all? According to S P Singh, a bio-scientist and former vice-chancellor of the Kumaon University, the total value of ecosystem services, including food production and raw materials, that accrue from these forests is worth US $ 2.4 billion each year. Should these services be paid to the State with immediate effect and distributed equally among its inhabitants, most migrants would return en masse to their homeland!

Whether or not migrants return home, the state economy will surely make a dramatic upsurge should such remittances ever reach it. For a State that has been managing within an annual budget of an estimated US $ 200 million, payment for ecosystem services from its forests alone will boost its economy manifold. Its annual revenue collection, pitched at 25 per cent of its current GDP, will seem minuscule against such transactions.

But the million-dollar question is whether or not the State will ever get billions accruing as services out of its natural capital? Since most of the benefits are indirect, like climate regulation and nutrient recycling, the tangible worth of ecosystem services amount to no more than 25 per cent of the estimated $ 2.4 billion. According to a Green India States Trust report, ecosystem value from a hectare of forested areas is in the vicinity of just US$ 125, or about Rs 6,255 only.

Despite the fact that the net worth of tangible ecosystem services is not significant, such payments are unlikely to be transacted in near future. Even in a developed country like Switzerland where the value of its 80 per cent forested area has been adequately assessed towards protection against avalanches and landslides, the forest owners get only between US$ 25 and 35 million per year for managing some 1.24 million hectares worth of forests, about $ 30 per hectare.

Present assessment of ecosystem services are largely based on an authoritative review paper published in renowned journal `Nature’ in May 2007 by Robert Costanza and his colleagues from the University of Maryland, who were clear in their assessment that should an attempt be made to replace the services of ecosystems, one would need to increase `gross national product’ as much as the assessed value, if not more. It is a tall order by any means!

Though such valuations have yet to be authenticated, the worth of ecosystem services were never in doubt although these have been economically quantified only recently. The mute question is: does valuing ecosystem services lead to effective nature conservation or does it attract additional investment for maintaining the services? Either way, there is little doubt that mountain environments need to be preserved for millions of up and downstream beneficiaries, now and in future.

As the world braces to bring `green economy’ on the global agenda as an antidote to current climate negotiation imbroglio, mountain regions are being projected as a new growth opportunity with ecosystem valuation as the potential driver of change. Donor-funded projects are working overtime to amplify the gains from small ecosystem services transactions into ambitious green pictures that are anything but unrealistic on the ground at this moment.

Even Indian Government’s gesture of transferring US$ 200 million over a five-year period to its mountain states for maintaining forest cover is being counted as a `green economy’ initiative. While such contributions must increase over the coming years, it is quite unlikely that such remittances would at anytime upstart new economy in the mountain regions. Unless it is clear where this money has indeed been invested, it would be preposterous to jump to any conclusions.

Valuing `natural capital’ is fraught with dangerous uncertainties, something that its proponents have conveniently tried to overlook. Flow of water from the mountains is counted as an important ecosystem service, warranting lower riparian to compensate its upstream counterpart for maintaining flow in the rivers. Far from being able to make any payments of this kind, Bangladesh may well seek payments for draining rivers through its territory. And, why not?

Putting price tag on natural services can open a Pandora’s box of conflicting situations. Once nature and its services are commodified, their likelihood of trade-off in a capitalist market cannot be ruled out. CAMPA is one such compensatory afforestation scheme in India that allows forest bureaucracy to justify diversion of protected/forested areas for mining and tourism activities on the pretext that it offers better returns from the same patch of land.

It would indeed be tough to withhold speculations and suspicions emerging on account of ecosystem valuation of natural services. The value of forests as `carbon sinks’ is equally dangerous as it allows financing companies, in connivance with the government, to legitimize the enclosure of forests from all use by people, based on often unauthenticated carbon storage figures. Can green economy be built at the cost of the livelihoods of the poor?

In the run up to the Rio+20 conference next year in Rio, the world is likely to be painted green with optimism. For the west it offers an opportunity to divert attention from the core issue of curtailing its carbon-guzzling lifestyles. But should the developing world fall prey to the over-hyped but unsubstantiated gains from green economy projections is a billion-dollar question that must be asked.

Featured Photo credit: Dr. Piyush Rautela, Dehradun Uttarakhand India.

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About Author: This article has been written by Dr. Sudhirendar Sharma for Climate Himalaya’s Expert Speak Column. Dr. Sharma is a development analyst based in New Delhi, India.

Disclaimer: The views expressed in this article are personal and do not necessarily reflect the views of Climate Himalaya Initiative’s team.

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2 Comments to “Watch The Shades Of `Green Economy’”

  1. Suman K A says:

    Dear Sharma ji. Very substantiated piece on why PES cannot be a viable solution for mountain regions.

    I must admit I was naive to put PES as one of the solution pillars in a not so recent paper on the Himalayan Adaptation and Mitigation Framework!

    But over time as my limited mountain view expanded, I turned around to think that putting a ‘price’ tag on ‘priceless’ natural capital is fraught with many challenges associated with market capitalism.

    The only upside of the ‘valuation’ argument to me appears that ‘one must value it for what it is worth’ with an intention to protect and sustain it for the future.

    The notion of valuation goes against our cultural ethos of ‘Prakruthi Raksho Rakshita’.

    Thank you for this concerned piece.

  2. Sudhirendar Sharma says:

    I’m glad you liked my views. PES is just one of the means to an end and not an end in itself as has been projected. It has some strength but amplifying it can weaken it. It can perhaps be selectively applied but scaling will dilute it.

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