Pay-offs to progress

-- in 1993 , Manmohan Singh, India's then finance minister, had proudly proclaimed that the country's economic growth rate over the last year was around four per cent. India's minister of state for environment and forests in the same government, Kamal Nath, could have easily pointed out to his ministerial colleague that almost all this economic development had come at the cost of extensive environmental damage and high health costs to the Indian people. He, however, like all dutiful soldiers of the ruling party, chose to keep quiet.

A study recently completed by two World Bank ( wb ) staffers, Carter Brandon and Kirsten Hommann ( b&h ) -- The Cost of Inaction: Valuing the Economy-Wide Cost of Environmental Degradation in India -- estimates that environmental damages amounted to a total of us $9.7 billion (about Rs 34,000 crore) per year, or 4.5 per cent of the gross domestic product ( gdp ), in 1992. There are two things about this figure which immediately strike the reader: firstly, that it is a considerable underestimate of the actual costs. Inadequate data has been responsible for many damages not being estimated at all, and many being underestimated (see: No records ).

Secondly, this estimate puts India's annual environmental damage costs on the higher end of estimates arrived at by other countries, including China. The figure for China has been estimated at 2.6 per cent of its gdp , for Mexico at 3.3 per cent, upto five per cent for countries in eastern Europe and less than one-two per cent for industrialised nations. Environmental costs are measured in terms of

• health costs incurred because of growing pollution of the environment, and

• cost of losses in production because of natural resource degradation.

The study has, therefore, estimated the health costs of air and water pollution and economic losses occurring due to degradation of croplands and grazing lands, as well as owing to deforestation. It has also calculated the losses to the Indian economy because of reduced opportunities for international tourism revenue, as tourists tend to maintain a safe distance from countries with contaminated air and water.

The estimates that appear in the wb paper reveal that the largest share of economic and health costs emerges from the growing pollution of water and air -- about us $7 billion (Rs 24,500 crore) a year. Besides, land degradation and deforestation result in foregone production costs of about us $2.7 billion (Rs 9,450 crore) annually. Water degradation, on its part, results in the highest health toll across the country, accounting for health costs worth a stupendous us $5.7 billion (Rs 19,950 crore) a year, or about 59 per cent of the total environmental costs. Every other cost pales into insignificance before the health impact of water pollution. This is where the increase in cost of supplying clean water because of growing water pollution and due to rising scarcities of water resources, has not been estimated.

But b&h do produce data to show how high these costs can be in the future. In Bangalore, the cost of supplying one cubic metre of water in the current water supply scheme was only about 10 us cents, but in the next scheme it will be over 20 cents. Similarly, in Hyderabad, the costs have zoomed from a little less than 20 cents in the current scheme to over 60 cents in the subsequent scheme.

Air pollution: riding high
In most of the 23 Indian cities with million-plus populations, air pollution levels exceed World Health Organization ( who )-recommended health standards. And in almost every city, the levels are getting worse because of the growing number of vehicles, energy consumption, unbridled industrialisation and burning of wastes.

Six of India's 10 largest cities -- Bombay, Calcutta, Delhi, Ahmedabad, Kanpur and Nagpur -- face severe air pollution problems, with the annual average levels of total suspended particulates ( tsp ) at least three times as high as the who standard. In fact, in Delhi, Kanpur and Calcutta, they are over five times the standard. Nationwide, over 90 per cent of the monitoring stations for which annual mean concentrations of tsp are reported by the Central Pollution Control Board ( cpcb ) exceed 75 microgrames (mg) per cubic metre (cu m), the mid-point of the who standard. tsp and pm 10 -- particles less than 10 microns in diameter which can penetrate the lungs more easily and are, therefore, more relevant than total particulate matter for human health -- have been associated with both premature mortality (death from respiratory illness and cardiovascular diseases) and increased morbidity (high incidence of chronic obstructive lung diseases, especially bronchitis, and of upper and lower respiratory tract infections).

However, concentrations of sulphur dioxide and nitrogen oxides are generally low compared to ambient standards. Carbon monoxide ( co ) and ozone -- pollutants which can have serious health impacts -- as well as hydrocarbon levels, are not routinely monitored in India. co readings at traffic intersections often have been found to be in excess of 5,000 mg per cu m -- 50 times higher than the one-hour who standard, which is 100 mg per cu m. As co , ozone, lead and hydrocarbons are related to vehicular emissions, their levels can increase rapidly with a concurrent increase in vehicular transport in the future.

As far as exposure to pollutants is concerned, t he final analysis by b&h revealed some 40,000 premature deaths in 36 cities of India, with Delhi alone accounting for about one-fifth of them. To value these deaths, it was assumed that each of the individuals who had expired, would live for another 10 years. Then, using the figures used in the us for a human life -- which range from $1.6-8.5 million per life -- the analysts used the ratio of national per capita incomes to obtain the value of life in India, which came to us $4,208 to us $40,017 per life. The monetary estimate of the loss resulting from these premature deaths, thus, came to bet-ween us $170 million (Rs 595 crore) and us $1,615 million (Rs 5,652.5 crore).

Similarly, estimates were arrived at of the increased sickness because of high particulate levels; using the cost-of-treatment approach, the cost of these impacts was totalled at us $350-490 million (Rs 1,225-1,715 crore) per year. Health impacts resulting from the levels of sulphur dioxide and lead in the air were also estimated. Of the total health costs resulting from pollutant levels exceeding who guidelines, which were estimated at us $517-2,102 million (Rs 1810-7,357 crore) per year, pm 10 and sulphur dioxide accounted for 95 per cent and lead for another five per cent. The impact of current ambient lead levels was estimated (in 10 cities for which data was available) at 200,000 cases of hospitalisation and 0.5 million lost iq points. This would result in us $7-18 million (Rs 24.5-63 crore) per year in foregone earnings.

The data generated by b&h show that though the total costs of health impacts arising out of air pollution are generally correlated with city size, per capita air pollution costs are significantly higher in some of India's secondary cities like Agra. The cost of health impacts for Delhi alone, despite the fact that those arising out of sulphur dioxide, nitrogen oxides and ozone were not taken into account, was an astronomical us $100-400 million (Rs 350-1,400 crore) a year.

Water pollution: wreck-all
Almost all surface water in India (both in the urban and rural areas), except that in the mountainous areas, is unfit for human consumption today. Some of the pollution in our waters comes from organic sources because of improper disposal of human wastes, but an increasingly large part of it comes from highly toxic industrial wastewaters and agricultural runoff.

Polluted waters lead to various gastrointestinal problems, liver infections, tropical diseases and terminal diseases like cancer. Children are often the worst affected, dying in large numbers because of diarrhoea. In the absence of adequate data, the wb study does not take into account the health costs arising out of the cancer incidence in India. It looks only at a few diseases like diarrhoeas, intestinal worms, trachoma, hepatitis and a certain cluster of tropical ailments.

Health impacts of water pollution are often measured in daly s, or disability adjusted life-years, which is a combination of

• discounted and weighted years of life lost as result of death at a given age; and,

• disability as a result of sickness, adjusted by severity.

The Bank study estimates that some 30.5 million daly s are lost each year in India due to poor water quality, sanitation and hygiene. After a major review of studies published worldwide, who concluded in 1991 that improved water supply and sanitation produced an average reduction of 25 per cent in sickness rates and 65 per cent in death rates. Further reduction comes only with improvements in personal hygiene.

Using these figures and the data provided by the government on the proportion of the population which enjoyed access to safe water and sanitation -- 73 per cent and 14 per cent respectively -- b&h have calculated the economic costs of sickness and deaths arising from water pollution. However, the facts that the Bank researchers have not taken cancer incidence into account and that they have relied on the above figures provided by the government, create a problem; they point to the possibility of the researchers having grossly underestimated the costs of water pollution.

What do we mean by safe water? If a community gets piped water supply, government statisticians would immediately uphold it as an example of one which has been provided with safe water. By that token, a large proportion of the richer sections in Delhi ostensibly get safe water supply. But this fails to explain why thousands of households in the capital spend money on installing and using water purification devices. Moreover, even when these devices are installed, they only serve half the purpose by helping in reducing microbial contamination. The issue of chemical contamination, on which little data is available, remains unattended.

Despite these weaknesses in the wb researchers' calculations, the final results are quite amazing. With improved water and sanitation services, there would be an estimated 47 per cent reduction in the incidence of water-related daly s. Translated into economic costs, this means a saving of us $3.1 to $8.3 billion or Rs 10,850 crore to Rs 29,050 crore a year, depending on what one assumes to be the value of one daly .

Apart from the weaknesses mentioned above, the authors themselves point out that they have not built into the above cost figures the increase in costs that takes place -- with the rise in pollution -- in providing safe water. The reason for this is that water supply agencies have to access unpolluted water sources further and further away or undertake expensive water treatment measures. Given the fact that the wb has found in its various projects that the cost of a unit of water supplied from 'next projects' as compared to 'current projects' is two-three times higher and public investment in developing countries in municipal and industrial water supply systems is five-six per cent of total public investment, the authors argue that "even a small cost factor associated with environmental degradation is likely to be highly significant. Also, with the high rate of urbanisation taking place in India, these costs are rising very rapidly".

Land: uncertain scenario
Land degradation is another serious environmental problem which has considerable economic repercussions in rural economic activities like agriculture and animal husbandry. According to the wb study, half of India's land is suffering from some form of degradation. The economic impact of land degradation has been estimated using data generated by the Food and Agriculture Organization (fao ), which has prepared estimates that relate only to agricultural land. Certain Indian estimates, which pertain to all lands, have thus obtained a lower and higher figure of economic costs.

On-site costs associated with land degradation are reduced agricultural yields (if agricultural inputs are kept constant or extra cost is incurred to put in more inputs to compensate for the loss in soil fertility), and/or economic losses resulting from the farmer being forced to move towards cultivation of lower value crops. Off-site costs include siltation of drainage channels, irrigation canals and human-made reservoirs, and effects of changed hydrology resulting in floods in the monsoon season and reduced water availability in the dry season.

The study does not take into account any off-site costs because of lack of data, yet these costs can be quite severe in certain years with heavy floods or bad droughts. To estimate the reductions in yields, the study identified various forms of land degradation; following that, the yield reduction factors were estimated crop-by-crop and region-by-region, using various studies from India and Pakistan. Finally, these yield losses were converted into economic costs based on data from Africa and the us . Owing to the lack of data from India, statistics from Pakistan have been used to estimate the carrying capacity of natural rangelands foregone because of rangeland degradation.

The estimated productivity losses due to land degradation are between 4.0 per cent and 6.3 per cent of total agricultural output per year, which represents an annual production loss of us $1.5 billion (Rs 5,250 crore) to us $2.4 billion (Rs 8,400 crore). Rangeland degradation losses fall in the range of us $238 million to us $417 million per year, based on a 20 per cent to 35 per cent decline over time in the carrying capacity of natural rangelands. "These are estimates of the current annual losses in agricultural output due to soil degradation that may have taken many years to develop," say b&h .

Erosion-induced losses, for example, accumulate over time and are not reversible in the short- or medium-term. Over time, the agricultural losses due to land degradation could be as much as us $30 billion (Rs 1,05,000 crore) to us $50 billion (Rs 1,75,000 crore), which highlights the necessity for immediate investment in soil conservation and land regeneration.

Forests: hypes and holes

b&h provide some interesting figures on the state of India's forests which is quite contrary to the general impression that the government has tried to create. The State of Forest Report 1995 produced by the ministry of environment and forests has repeatedly claimed that forest cover in India is more or less constant or slightly increasing. But b&h quote the fao Tropical Forest Resource Assessment Report to point out that between 1981 and 1990, India suffered a rate of deforestation to the tune of 0.6 per cent per year, which is equivalent to about 3.37 million ha (mha) or about one-third of an mha a year. Of this, 15 per cent tropical rain forest, 11 per cent moist deciduous forest, 64 per cent dry deciduous forest and 11 per cent hill and mountain areas have been lost during the 1980s.

Commercial plantations mainly consisting of eucalyptus, teak and pine have been compensating for this loss to some extent. Since 1981, the area under commercial plantations has increased at a rate of 15.5 per cent per annum. In 1990, 27 per cent of the total forest area of 70.6 mha was under commercial plantations. The fao report shows that five countries -- India, Indonesia, Brazil, Vietnam and Thailand -- corner about 85 per cent of the world's tropical plantations. India at the end of 1990 had 18.9 mha of plantations, Indonesia 8.8 mha, Brazil 7.0 mha, Vietnam 2.1 mha and Thailand 0.8 mha.

So while the forest cover may be increasing, valuable and unique natural forests of the country are being steadily destroyed. b&h conclude: "The trend shows that forest resources rich in flora and fauna are decreasing." Only a small portion of India's forests have a crown density of 40 per cent or more. Most of the forests are degraded forests. What are the economic costs that this massive deforestation engenders?

Because of lack of data, b&h have not calculated the costs of loss of biodiversity. They have restricted themselves to the 'user cost' approach to forestry valuation. User cost represents the foregone future incomes owing to deforestation. There are two ways to calculate this cost. One is the 'replacement cost' method which tries to estimate the cost of generating a forest equal to the area deforested. As the complex ecosystem of a natural forest is difficult to recreate, all that this approach does is to capture the economic value of future timber resources lost due to deforestation. b&h have collated data on creating plantations in India to estimate the replacement cost, which provides the lower end of the economic cost of deforestation.

The second approach tries to estimate the market value of sustainable yield of the reforested land. This estimate provides the annual value of a sustainable forest yield and forms the upper boundary of the economic cost of deforestation. It is obvious that both these approaches grossly underestimate the total costs resulting from deforestation. These costs accrue to the nation as a whole and to local communities which have complex economic and survival relationships with forests and suffer impacts as a result of deforestation, ranging from increased work burden, foregone opportunities for female literacy, serious health impacts on women, male migration, increased chances of spread of diseases like aids resulting from male migration, and so on.

Because of these methodological shortcomings, b&h come up with the low estimate range of us $183-244 million (Rs 641-854 crore) as the yearly replacement cost of India's deforestation over the period 1980-90. Since deforestation-related losses cannot be reversed in most cases within 10 years, they point out that over 10 years, the economic losses would range from us $1.4-1.9 billion (Rs 4,900-6,650 crore). These losses will grow with time because of continued deforestation and absence of adequate maintenance of existing forest areas.

Tourism: losing ground
The final calculation that b&h make is related to the economic losses occurring because international tourists prefer to stay away from countries which have high levels of water and air pollution. International tourism is still a small component of India's foreign exchange earnings -- us $1.4 billion in 1992 or 7.1 per cent of total exports -- despite its high potential. In fact, in real terms, India's international tourism receipts have been negative since 1988. Assuming that a reduction of 10-20 per cent in international tourism revenues is quite plausible, b&h estimate foregone tourism revenues per year as us $142-283 million (Rs 497-991 crore).

What does this mean?
A lot. In fact, so much that it should shake us out of our stupor. It means that India is today home to one of the most degraded environments in the world and is paying a very heavy health and economic price for it. It is precisely to emphasise this element that I have repeatedly pointed out that in a variety of ways what b&h present in their study for the wb are underestimates; in fact, in many ways, gross underestimates -- because many costs of ecological services provided by the different components of the environment have not been taken into account. Nor have the social costs resulting from environmental degradation, which poor communities suffer from in particular, been dealt with. These costs also get transformed into economic costs finally. For instance, if deforestation affects the hydrological cycle and results in greater impacts of rainfall fluctuations -- normal to a region -- leading to more intense floods and droughts, there will be major economic costs.

Moreover, b&h have underestimated the environmental costs further by focussing only on a limited set of issues. For instance, destruction of wetlands in the eastern Indo-Gangetic plains is a principal cause of increased floods. But the subject of devastation of wetlands has not even been considered by b&h . In addition, inland fisheries are in a state of crisis in India both because of wetland destruction and because of engineered changes in riverine ecology. With the construction of dams, the hilsa has disappeared in the upstream region of the Ganga. Construction of embankments along the Brahmaputra and its tributaries in Assam has led to the death of fisheries in the local wetlands called bheel s, to a point that this poverty-stricken state today imports hundreds of crores of rupees worth of fish from the aquaculture farms of Andhra Pradesh.

Although b&h call their exercise a "back-of-the-envelope" approach and there is no doubt it is one, it is nonetheless a good initial piece of work. The most revealing part of the exercise has been the light thrown on the high cost of water pollution -- an area that continues to be grossly neglected. Rajiv Gandhi's pet scheme, the Ganga Action Plan, has more or less crashed. Despite all the paper laws that have been created, none of our rivers have become cleaner. Water treatment systems for drinking water supply are still so rudimentary that they can only get rid of bacteriological contamination; they have hardly any capacity to deal with the growing chemical contamination. This means massive health problems like cancer and reproductive and endocrinological disorders in the future which will creep upon this country slowly and exercise a growing impact on future generations.

To my mind, the foremost implication of the study is that environmental costs are no longer being borne only by the poor communities of India, though they may suffer these costs in a disproportionate measure. It shows a substantial part of these costs, especially the health costs, have to be paid by this country's middle class, possibly the crassest in the world, which equates life only with worldly goods. If anything, it is this group which must wake up now. What is the point of going to every possible length and stooping to the lowest depths -- from corruption to cheating -- to amass wealth for providing the dowry of a daughter, if she and her children are going to die premature deaths suffering from horrendous diseases?

Unless, of course, the hidden agenda of the Indian middle class is to educate its next generation and pack it off to better climes in Europe and North America, leaving all the long-term costs to be suffered by those who stay behind. Sounds cynical, but it is simply a way of saying that the Indian middle class -- if it is a serious middle class and not a flippant, self-centred one -- must, firstly, confront the reality that it is responsible for and, secondly, do all it can to change it.

Note: b&h have provided the figures in their study in dollars. They have been converted to crores by using Rs 35 as the conversion rate to us $1