People often say that nature is kind. It gives without asking, puts up with without asking, and takes in without complaining—until it can’t anymore. Right now, India is at a turning point. Rivers are getting clogged, cities are gasping for air, and farms are losing productivity slowly but surely. But in the middle of this growing crisis, one thing stands out: the economy is still running as if nothing is wrong.
The problem isn’t lack of knowledge. It’s bookkeeping. India’s development model still treats damage to the environment as if it were free. A factory that pollutes a river is not to blame for the health problems that people who live downstream have. A city that fills in wetlands doesn’t think about the floods that will happen as a result. A farmer who is taking water from the ground doesn’t think about how much it costs to drain an aquifer that took generations to build. These failures are not just one-time events; they are part of a larger problem. The main problem is that the environment isn’t being monetised.
In economic terms, environmental harm is referred to as an “externality”—a cost that is not reflected in market pricing. However, outside of textbooks, this abstract concept has very concrete effects.
Consider air pollution. For years, it was dismissed as an unfavourable result of growth. However, the expenditures are anything from trivial. Hospital admissions increase, productivity declines, and lives are cut short. Families pay via medical expenditures and lost income, while the economy bears the brunt of the impact. However, these costs are rarely considered when policies are developed or industries are controlled.
Or consider groundwater. In huge portions of India, particularly in agrarian regions, water is harvested with no regulation, often using subsidised energy. What appears to be help for farmers has resulted in a bigger problem. Falling water tables result in higher extraction costs, lower yields, and eventual scarcity. However, because groundwater is not priced, the system continues to encourage misuse. In all cases, the pattern is the same: the damage is real, but the cost is hidden.
A simple rule guides most economic choices: anything that costs money gets attention. This idea is the basis for efforts to put a price on the environment. Putting a price on ecosystem services and environmental damage makes these costs clear. It changes the reasons why people do things.
Companies will be more likely to invest in cleaner technologies if pollution costs money. People use groundwater more carefully and efficiently if they know it has value. If you see forests as valuable because they provide useful services like storing carbon, controlling rainfall, and keeping soil stable, the logic behind cutting them down changes.
This isn’t about turning nature into a product. It is about fixing a problem where the economy benefits from using the environment but doesn’t take into account the damage it does to the environment.
India hasn’t been completely absent in this sector. Mechanisms such as compensatory afforestation try to ascribe value to forest diversions. Environmental impact assessments are used to assess the ecological repercussions of proposed projects before they are approved. There has also been talk about modifying GDP to reflect environmental damage. However, these initiatives remain scattered.
Compensatory funds do not necessarily lead to ecological rehabilitation. Impact evaluations are frequently viewed as procedural impediments rather than decision-making instruments. Furthermore, broader economic metrics continue to understate the loss of natural capital.
As a result, environmental issues exist in policy but do not have a fundamental impact on outcomes.
If you ignore environmental costs, they don’t go away; they just get put off. The effects are already clear. Cities are flooding every now and then because they lost their natural drainage systems. The quality of soil and water is getting worse in farming areas. Heatwaves and changes in the weather are putting even more stress on infrastructure and people’s lives.
Each of these costs money. Costs for disaster relief, health care, infrastructure maintenance, and lost productivity all add up. But the bigger picture is lost because these problems are seen as separate issues instead of as linked effects of environmental damage. India is paying for damage to the environment, but not in a way that changes what it does.
People understandably don’t like the idea of putting a price on the environment. They say that nature has value that can’t be measured. Forests are not just places to store carbon; rivers are not just places to move water; and biodiversity is not just an economic resource. This feeling of discomfort is valid.
But not having value has not protected nature. If anything, it’s made it easier to stay away from. In an economy that is based on numbers, things that can’t be measured are often ignored.
Environmental monetisation does not claim to represent the complete value of nature. It offers a way to make some of that value visible—enough to change decisions that might not have taken it into account at all.
Environmental monetisation needs to be more than just a technological effort to work in India. It needs to be a part of making and carrying out policies.
This means that when you look at the costs and benefits of a project, you should include the costs of the environment. It means thinking about subsidies that encourage people to misuse resources. It means setting up accounting systems that can keep track of both natural and financial assets.
It is just as important who gets to decide what is valuable. People who depend on natural resources, like farmers, fishermen, and people who live in forests, need to have a say. Their experiences often uncover aspects of environmental degradation that formal models neglect.
Without this, monetisation could end up being just another top-down tool that isn’t connected to real life.
The economy has always been helped by nature. The problem is that the economy doesn’t often return the favour. Environmental damage will keep being seen as less important until it has a price. And as long as it isn’t stressed, the costs to the economy, society, and environment will keep going up.
The main question is not if nature has a value in money. The question is whether India can keep acting like it doesn’t matter at all.
Anusreeta Dutta is a columnist and climate researcher with experience in political analysis, ESG research, and energy policy
Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth