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High GDP growth centered paradigm and GHG emissions

Shankar Sharma, ORF Energy News Monitor

Whereas many conventional economic analysts argue that in order to have adequate human development index the country’s economy has to grow continuously at an appreciable rate, a densely populated and resource constrained society such as ours cannot afford to ignore the implications of high energy / material consumption (which will be a consequence of high growth of the economy). As the table below indicates, whereas the economy will grow by 300% in 36 years at Compounded Annual Growth Rate (CAGR) of 4%, it takes only 18 years to grow the economy by 400% at 10% CAGR. In this context it is essential to address the question how much energy / material consumption increase is considered acceptable?

Time taken for economy to get multiplied at constant CAGR

The consequences of high GDP growth rate year after year need to be kept in mind w.r.t the true welfare needs of the communities in the state, which is possible only if the GHG emissions and all the associated problems are targeted to be contained within the manageable limits. A question arises whether this ultimate objective can be compromised for any reason, since it involves the existential threat to the man kind in the form of Climate Change. Successive governments have proceeded with the assumption that India needs to sustain a high economic growth over next 20 / 30 years (and possibly beyond) to eradicate poverty and to meet its human development goals. It appears that the social, economic and environmental impacts associated with such high GDP growth on the vulnerable sections of our society were not considered objectively. It is a fact that a sustained high GDP growth rate will mean the manufacture of products and provision of services at an unprecedented pace leading to: setting up of more factories/manufacturing facilities; consumption of large quantities of raw materials; unsustainably increasing demand for natural resources such as land, water, minerals, timber etc.; acute pressure on the govt. to divert agricultural/forest lands for other purposes; huge demand for energy; accelerated urban migration; clamor for more of airports, air lines, hotels, shopping malls, private vehicles, express highways etc. Vast increase in each of these activities, while increasing the total GHG emissions, will also add up to reduce the overall ability of natural carbon sinks such as forests to absorb GHG emissions. There will also be increased air and water pollution along with huge issues of managing the solid /liquid wastes.

These consequences, such as shrinking forests and agricultural lands, will result in depriving the weaker sections of the society even the access to natural resources, while driving the fragile environment to a point of no return. Does our society need such an eventuality? Is this what we want from Global Warming perspective?

Since the primary objective of high GDP growth centered policy is to create jobs, it is worth repeating what Tamil Nadu State Action Plan on Climate Change (TNSAPCC) has said about the importance of agriculture to TN’s economy. “Global development experience reveals that one percent growth in agriculture is at least two or three times more effective in reducing poverty than the type of same growth emanating from non-agricultural sector.”

Most states in the Union, being traditionally agrarian economies, should consider the role of agriculture and allied sectors, such as animal husbandry, horticulture, floriculture, beekeeping, social forestry etc. in providing vast employment opportunities in parts of the country. The perspective that good agricultural practices will lead to much reduced overall GHG emissions than the best set of industrial practices becomes highly relevant.

The net effect associated with high GDP growth target will be that the total GHG emissions will increase by considerable margin, even if we adopt most energy efficient processes, and even if reduced emission intensity of the state’s GDP is feasible. The desirability of such high GDP growth rate scenario to our society needs to be questioned in the context that the increase in total GHG emissions will be closely associated with the increased pollution of air, land and water; and the increased denial of access to natural resources to the vulnerable sections of the society. Reduced area and density of forests, dammed rivers, polluted air, forced displacements which will all be the consequences of a high GDP growth are bound to impact the vulnerable sections of our society. Since the vulnerable sections of the society are also the most impacted lot due to climate change, the larger civil society has a crucial role to ensure that their legitimate interests are protected adequately.

A quick look at the possible impact of sustained high GDP growth on the critical sectors of the Indian economy can reveal a disturbing trend. The transport sector will demand much higher consumption of energy such as diesel, petroleum and LNG. These products which already have about 80% import content can only increase with disastrous consequences on energy security. The pollution loading of vastly increased consumption of petroleum products, which has given rise to concerns in urban areas already, is likely to reach extremely unhealthy levels. Along with increased GHG emissions and much higher levels of suspended particulate matter, the pressure on the transportation infrastructure can become unmanageable. Increased use of private passenger vehicles, which is already a huge concern, will escalate to choke our roads and lungs.

Industrial activities, as a consequence of high GDP growth rate, will put unbearable demand on land, fresh water, energy and other raw materials. Such a demand on land (such as in SEZs, coastal industrial corridors, large size coal power plants, nuclear power parks, IT&BT parks etc.) have already given rise to a lot of concerns to social scientists, and already has witnessed social upheavals as in Narmada valley, Singur in West Bengal, Niyamgiri Hills in Orissa etc. The industrial sector, which is already responsible for about 21% of GHG emissions, will contribute hugely to the increase in total GHG emissions. Similarly, high GDP growth rate will lead to steep increase in demand for building activities in the form of factories, transportation infrastructure, offices, hotels, airports etc. which in turn will put huge demand for construction materials and energy. In this scenario can the increase in GHG emissions be contained adequately?

The most telling impact of frenetic economic growth over the next 20 / 30 years will be on forests, rivers and other natural resources, which in turn will lead to reduced capacity of nature’s carbon sinks. As against National Forest Policy target of 33% of forests & tree cover, the country (and most of the states) has less than 20% of the same, whereas these are considered to be the most important sinks of CO2. The demand for additional lands and minerals for the increased activities in all the above mentioned sectors will further reduce the forest & tree cover, which in turn will severely impact the availability of fresh water. The impact of vastly reduced forest & tree cover on human health and on all aspects of our society is well known, and hence requires no detailed elaboration. Whereas the increased economic activities associated with high GDP growth rate will certainly result in vastly increased GHG emissions, the same will also reduce the ability of forest & tree cover to absorb GHG emissions from the atmosphere. In this scenario it is anybody’s guess as to how the net GHG emissions can be reduced to an acceptable level.

The base line assumption (in Integrated Energy Policy of the erstwhile Planning Commission, 2006) that the country needs to sustain an economic growth of 8 – 9 % over next 20 years to eradicate poverty and to meet its human development goals will lead to very many intractable problems for the society from social and environmental perspectives. Such a high growth rate has never been found in developed economies, where even at the highest growth period they are reported to have registered only 3-4 % growth. The so called “trickle down” benefits to vulnerable sections of our society through 8-9 % growth will be negligible as compared to the all round benefits associated with inclusive growth of a much reduced rate, say 3-4%, if we harness our natural resources responsibly and equitably. Hence the obsession with target GDP growth rate of 8-9 % should be replaced by a paradigm shift in our developmental objective, which will give priority for inclusive growth aimed at sustainable and responsible use of natural resources.

All sections of our society need to appreciate the fact that there is a limit to the nature’s ability to support human activities / desire. Such a demand on the nature must be carefully managed, which is not possible if we set a target of 8-9 % GDSP growth rate year after year for a huge population.

A World Bank report of June 5, 2013 has highlighted how the environment has suffered in India consequent to past decade of rapid economic growth. The report with the title “Diagnostic Assessment of Select Environmental Challenges, Economic Growth and Environmental Sustainability: What Are the Tradeoffs?” has many revelations of critical importance to the future of our communities; provided our leaders take cognizance of it.

Salient features of the report are as follows:

➣    Although the past decade of rapid economic growth has brought many benefits to India, the environment has suffered, exposing the population to serious air and water pollution.

➣    Environmental degradation costs India $80 billion per year or 5.7% of its economy.

➣    Green growth strategies are needed to promote sustainable growth and to break the pattern of environmental degradation and natural resource depletion. Emission reductions can be achieved with minimal cost to GDP.

➣    Simultaneously, poverty remains both a cause and consequence of resource degradation: agricultural yields are lower on degraded lands, and forests and grasslands are depleted as livelihood resources decline. To subsist, the poor are compelled to mine and overuse the limited resources available to them, creating a downward spiral of impoverishment and environmental degradation.

➣    Environmental sustainability could become the next major challenge as India surges along its projected growth trajectory.

➣    For an environmentally sustainable future, India needs to correctly value its natural resources, and ecosystem services to better inform policy and decision-making.

In this context it can be added that in the medium to long term such emission reduction measures can even add to GDP through positive feedback impact.

The report also says that Green growth is eminently feasible: Green growth is necessary; Green growth is affordable; Green growth is desirable; Green growth is measurable. It can be argued that without green growth, India’s future development however measured will be at great risk.

➣    A low-emission, resource-efficient greening of the economy should be possible at a very low cost in terms of GDP growth. A more aggressive low-emission strategy comes at a slightly higher price tag for the economy while delivering greater benefits.

➣    Emissions reduction would have a minimal impact on GDP which would be offset by savings through improving health while substantially reducing carbon emissions.

➣    A 10% particulate emission reduction will lower GDP only modestly. GDP will be about $46 billion lower in 2030 due to interventions, representing a loss of 0.3 % compared to business as usual.

➣    A 30% particulate emission on the other hand reduction will lower GDP by about $97 billion, or 0.7 %.

➣    GDP growth rate will be negligibly reduced by about 0.02 to 0.04% in both scenarios. There will be significant health benefits under both scenarios which will compensate for the projected GDP loss.

➣    The savings from reduced health damages will range from $105 billion in the 30% case and by $24 billion with a 10% reduction.

➣    Under both the scenarios, another important benefit would be a substantial reduction in CO2 as a co-benefit which has a potential of being monetized.

➣    Taken together the CO2 reduction and the health benefits are greater than the loss of GDP in both cases.

UN’s Cocoyoc Declaration (Mexico, 1974); and the report “Prosperity without growth? – The transition to a sustainable economy” by the Sustainable Development Commission (SDC), which was the UK Government’s independent adviser on sustainable development have come to the similar conclusions. The fact that high GDP growth rate cannot be pursued indefinitely and hence cannot be sustainable is being acknowledged widely.

Keeping in view the dire need to contain the GHG emissions and the vastly increasing pollution loading, the relevance of a high GDP growth rate paradigm for the state/country need to be effectively discussed at the societal level from the perspective of overall welfare of every section of our society.

Views are those of the author
Author can be contacted at shankar.sharma2005@gmail.com

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