Published: Monday 15 June 2009

Being environment friendly is turning out to be good economics, but where is the regulator?

THE Greendex survey by National Geographic comes as no surprise. The second of NatGeo's annual sampling of consumer behaviour that affects the environment found an increase in environment friendly behaviour in 13 of the 14 countries surveyed. Since 2008, consumers are more likely to make energy-saving efforts like adjusting thermostat settings and minimizing freshwater use.

Consumers in developing countries were more willing to take green steps. On housing, for example, people in these countries are greener partly because their houses tend to be smaller and do not require heating. Western countries have a highly consumptive model for their economies, and developing countries--although trying to get there--have efficiencies that come from being under-developed.

The survey reflects the impact of the global economic slowdown. "Cost is by far the most frequent explanation offered for the reduction," the survey showed. Money is a far stronger incentive to change consumer behaviour than increased environmental awareness. Given that, environmental good will result only when a price is put upon it. Or through innovation that aims to make or save money by using fewer resources. Take the trend in India's sugar mill sector to adopt cogeneration. It is the kind of simple, green solution that makes one wonder why people did not think of it earlier. A sugar factory can generate power without too much alteration. In fact, in bad times it is power generation that makes some factories economically viable.

Consumer choices are dictated by the same impulse that governs industry getting more for the money. This can lead to greener choices only when environmental interest is profitable. But what happens when there is a contradiction? Mining, for example, is required for India's growth. And yet there are no examples of mining that do not disrupt the environment and/or do not displace people.

The State has a critical role to play. It needs to create the fiscal environment that pushes innovation and adaptive thinking, like in cogeneration. It also needs to put a value on goods and services that industry and consumers can never value in money terms. Clean air, for instance, does not have a price but is so essential that explaining its significance is an exercise in the ridiculous.

In India, governments lack even the basic understanding of the role of a regulator. So the State errs without exception on the side of industry (and consumption). It fulfils its social and environmental responsibilities by certain low-impact, high-visibility activities, like publishing advertisements in newspapers on Environment Day.

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