This is a very important volume for all the students and scholars interested in the field of Environmental Economics as it is a compendium of articles by eminent persons in the field, who have dealt with the theory and practice of the subject. Insofar as the coverage of the practice is concerned, the volume is of use to policy makers and even laymen who are keen to know more about the state of natural resources, the manner in which they are sought to be valued, the economic instruments that may help in their sustainable development and the related issues of equity, human welfare, science and technology, national and international endeavour in pollution abatement, etc. The overview chapter with which the book begins mentions that environmental economics extends to areas of economics which should be more appropriately named as ‘Environmental and Resource Economics’ as both resources used in production and the impacts on environment by way of pollution are two sides of the same coin. This introduction sets the tone for the rest of the chapter and even of the whole compilation.
The editors cover the origins of this discipline in Economic Theory and ongoing Developments, Environmental resources and developmental concerns with focus on Land and Water, Valuation and Accounting with an understanding of the non-market nature of environmental resources, Energy and industry and international concerns in Trade and Environment. The editors make the distinction between the analysts and the activists in the field of Environment and the manner in which policy makers can tune their responses to the challenges. They recognize that this subdiscipline of Economics (as they call it) cannot solve the ‘environmental problem’ and guide policies involved taking a holistic view based on economics, ethics, law, sociology and physical sciences.
The erudite chapter on ‘Environmental and Resource Economics—Some recent developments’ by Partha Das Gupta and Karl-Goran Maler deals analytically with Welfare economics of imperfect economies, role of markets in pollution, concept of ‘inclusive wealth’. They examine if the current economic development is sustainable as it is a subject on which there is divergence of opinion and aver that the divergence can be narrowed by adopting an inclusive measure of wealthinstead of only the GNP per head and Human Development Indices. The rural poverty and the local resource base, including the Commons are flagged as issues which link the evolution of the local resources base and the needs of the poor. One could join issue when they argue that the range between a need and luxury is ‘context-ridden’ as the distinction Mahatma Gandhi made between ‘need’ and ‘greed’ is so well understood, especially in the developing world. The reference to non-convexities in Nature as well as the problems that the poor, unlike the rich, face, because of the nonsubstitutability of their natural resource base, again a nonconvex phenomenon, as well as the spatial dimensions of nonconvexities has been made to stress the need for economists to recognize them in their analysis. There is a noteworthy admission here that economists have been ambivalent towards the nonconvexities of Nature in spite of the strictures of ecologists!
The section on land and water with contributions from Amita Shah and Tushaar Shah, deals with the present status of land and water resources and the property rights regime as well as the Groundwater irrigation economy and the challenges of balancing livelihoods and environment. Amita Shah finds on a review of property rights on land and water and some watershed management projects that management of common property resources on a sustainable basis and equitable sharing of benefits remain a major challenge. Tushaar Shah points to the need for better management of groundwater resources rather than only their development and how good supply of information can supplement this.
In the section on Accounting and Valuation, Vikram Dayal sketches recent developments in Natural Resource Accounting in India. It is pointed out that conventional accounts have neglected inputs and outputs which lack market-determined values andprices. Experience has been gained on accounting for pollution and natural resources but the difficulties due to lack of data and the complexity in the case of ecosystems due to uncertainty about them are to be recognized. The article by Purnamita Dasgupta on Valuation of Ecosystem Services underscores this but offers hope in the advice that researchers have to make judgments on this and also use the precautionary principle—which was emphasized in the Earth Summit at Rio de Janeiro—in cases involving ecosystem changes that could significantly impact ecosystem services such as those related to biodiversity.
Moving on to Energy and Industry, Ramprasad Sengupta, when dealing with High Economic Growth, Equity and Sustainable Energy Development draws from the projections made by the Expert Committee of the Planning Commission on Integrated Energy Policy in 2006. A weakness in the studies seems to be the non factoring of any monetized value of the adverse effects of negative externalities of use of different fuels. The conclusion that India’s dependence on fossil fuels, particularly coal, will continue and therefore, carbon emissions will increase, justify the finding that environmental sustainability requires the weakening of the linkage between rise in energy resources useand economic growth and the decarbonization of energy. The linkage between energy use by the poor and deforestation is somewhat disputable as the fuelwood requirements of the urban areas have also been catered to by the rural poor who use less inferior part of the biomass for their own energy requirements. While the latter would increase, the demand can be met by a mix of dedicated fuelwood plantations and use of improved ovens by the poor. The sustainability of the exercises has to keep in mind the scenarios after fossil fuels are exhausted in the coming decades.
The article in the section on Industry by M.N. Murthy on water and air pollution abatements deals with the externalities at the local, national and international level of pollution and its impacts.The theoretical framework sketches different approaches to the study of air and water pollution based on some case studies of air pollution in Delhi and water pollution in the river Ganga. Designing taxes and legislative measures for abatement of industrial water pollution abatement is a subject which has received much attention in this paper. But there is a sobering conclusion that there is still a need for more useful research for appropriately measuring these externalities.
The penultimate section on international concerns has three contributions. Meeta Keswani Mehra has one on developing country perspective on Trade, Environment and Natural Resources. It explores the theory of the contribution on international trade to the redistribution of pollution and the related ‘pollution haven’ hypothesis and states that recent evidence confirms that trade has a more definitive bearing on both the level and geographical distribution of pollution. Interesting coverage of the distortions of trade and environment due to governmental policies, lobbying and even corruption enriches this presentation.
The paper by Jayashree Roy on climate change has exhaustive coverage of the developments leading to the present discussions on climate change. It says climate change is a development issue and can be solved by coordinated action, especially at the international level. A factor which has received little emphasis in the negotiations so far viz., historical emissions and responsibility for these has been rightly highlighted. K.S. Kavikumar has a paper on climate changes Negotiations and Adaptation Policy in which it has been made out that for de-carbonizing the world economy, mitigation and adaptation by developing countries is a must, and that without that the developed world would also be affected. So, from ethical and legal perspectives, developed countries may have an obligation to provide resources for the adaptation in developing countries.
The last section on interdisciplinary issues has Sharachandra Lele arguing the case for sensitivity to equity concerns and the findings of ecologists while valuing environment. The exercise focuses on the multidimensional nature of the socio-economic problems.
The volume edited by Kanchan Chopra and Vikram Dayal, draws the attention of all economists to be sensitive to environmental goals and needs. But making ‘environmental economics’ as a stand alone discipline or a sub discipline of development economics does not seem to be the right approach. Rather it should be an integral part of Economics itself if it is not to be dismissed, along with environmental activism, as a fringe issue! A little more treatment of sustainability from the ‘future generations’ angle might have been in place instead of just a passing reference to ‘bequest motive’ in the paper on air and water pollution. But the editors are modest in saying: ‘There will never be one great morning when we awake to say “eureka” based on a super interdisciplinary understanding of reality . . . environmental economics needs to evolve with other disciplines taking into account the most recent findings from them.’ Amen.