What is the value of a 100 year-old Banyan tree sustaining countless animals and providing oxygen, shade as well as aesthetic reprieve to people? What price would you assign an entire mangrove forest that buffers a city from bearing the full impact of sea storms, preventing loss of life and property, personal grief and tragedy? Or that of the oceanic blue-green algae that sequesters gigatonnes of carbon from the atmosphere each year? Or even a river that literally sustains civilisations?
Economics largely a study of human behaviour surrounding use of resources and scarcity of these resources. Photo credit: WCT
You may be right in thinking that talk of assigning monetary value to nature’s creations and its services is demeaning to nature’s true worth which is essentially unquantifiable and magnitudes more than we can fully comprehend. But, in today’s market-based economy that focuses on profit and short-term gains, our society’s view of progress and development is synonymous to mindless use of scarce natural resources. So, understanding the costs and benefits of preserving ecosystems (or demolishing them) for human purposes, is crucial. Here is where economics comes in.
Economists are helping to translate environmental values of complex ecological systems into the language that policy makers, industrialists, development project proponents and most others will best understand. They are working with social scientists and ecologists to understand and analyse human behaviour surrounding the use of natural resources. They are quantifying the unquantifiable, the intangible, attaching value to the invaluable and the highly complex. Economists are grappling with the daunting task of understanding how much of nature can be feasibly exploited for economic and societal gains and how much needs to be protected so that ecosystems can function and offer their life-giving services such as clean air, water, climate control, food security, pollination, etc. They are helping to inform economic and development policies.
I spoke to economists Aniket Bhatkhande and Pooja Dewoolkar who work with the Wildlife Conservation Trust (WCT). Aniket heads the Conservation Behaviour division of WCT that Pooja is a part of. Together with the team’s social scientists, development researchers and ecologists, they are combining the frameworks of economics with that of psychology, sociology and anthropology. The team has pioneered impactful projects in the past half a decade to address a range of complex conservation issues such as forest degradation due to unsustainable fuelwood consumption; human-wildlife conflict; psychological health of the forest staff which determines the quality of forest protection; and lack of financial incentives to protect ecosystems other than forests.
What is Economics? Not everybody has a firm grasp on its definition. Could the both of you start by putting it into simple words for the readers?
Pooja: I struggle with being able to encompass the scope of the subject within one singular definition, as in my understanding it has expanded from what it was etymologically supposed to be – the ‘science pertaining to management of a household’. Historically, the subject has been an interest of and influenced by different philosophies, interacting constantly with social context across different time periods. This has had a tremendous effect on its scope and application and as a result, what is studied within it. Thus, its nature is ever evolving. What we see today is a focus on scarcity of resources, its optimal usage and implications of that for future generations. An applied component of it that we in the Conservation Behaviour team explore is Ecological Economics, which sees human systems as a subset of ecological systems and thus forces us to recalibrate the connection between us humans; the institutions that govern us, and the available resources.
Aniket: Economics is the science of allocation of resources to optimise their utility. Put simply, it tries to figure out the best way to use resources so that everyone benefits. The dominant approach of economics in our times, i.e. Neoliberalism, believes that services provided by nature can be created through human inputs and technology. Ecological economics on the other hand believes that the economy is a subset of ecology thus bound by its limits. We at WCT are guided by the latter perspective in our approach to economics.
Aniket Bhatkhande is an Economist and heads WCT’s Conservation Behaviour division. Photo Courtesy of Aniket Bhatkhande
How does an economist even begin to calculate the value of an ecosystem such as, say a river, which provides a multitude of services like food, water, employment, irrigation, recreation, etc. to people, and whose ecological impact ties into the health of other ecosystems in the landscape, biodiversity, microclimate, and much more?
Aniket: To calculate the value of an ecosystem an economist has to quantify the various benefits that accrue from the ecosystem. For this, the tangible benefits (e.g. firewood obtained from a forest; or fishery from wetlands) received can be accounted for through empirical data, existing records, satellite imagery, etc. The quantification of intangible benefits (air purification, water security, spiritual upliftment, etc.) is trickier to quantify and economists will use a variety of methods for the purpose.
Let me give an example, the sea view from a flat has an intangible value for the owner but by comparing to a similar flat (perhaps in the same building) that is not facing the sea will allow to put a price on that view that the owner has paid for. For something like irrigation, the yields without irrigation can give us a comparative amount for valuing the irrigation service offered by the ecosystem. Economists use valuation studies as a tool for analysis where money is the language of conveying the results. Money allows to compare assets that will otherwise be difficult to compare. The resulting value is to be understood only in the context of the methodology followed. The limitations of such studies state outrightly what services are included in the valuation.
Both of you, along with rest of your team at WCT, have worked on the pioneering ‘Heater of Hope’ (sustainable water heater) project in Maharashtra that has sparked a promising behavioural shift among local communities. Could you tell us what role, you as economists played in addressing the issue of forest degradation due to firewood extraction?
Pooja: It would be difficult to isolate the role of economics in this process as we really intended for it to be collaborative effort among the social sciences and at times beyond those as well. If one must look at the process solely from an economics perspective, the intention was to understand the demographic details such as incomes, amount of education, livelihood opportunities, livestock holdings and land asset of the communities. This helped in providing a quantitative snapshot of the background of the peoples that we intended to work with. Additionally, the design of the baseline study also focused on understanding energy usage profiles of the communities – including their dependencies on forest resources such as firewood. Overall, this helped to quantitatively gauge and understand the interactions between these parameters.
Aniket: We conducted large quantitative surveys through which we built a household-level understanding of LPG (Liquefied Petroleum Gas) usage by the households, reasons for continued use of firewood, the role of income in firewood usage, etc. These studies give an insight into the decision making and preferences of a representative household in the landscape. This allowed us to identify water heating as a policy gap. While, in subsidised LPG, there was a relatively cheaper alternative to firewood for cooking, the households had no affordable alternative to heating water. This led to continued need to collect firewood. This is how the environmentally sustainable, energy-efficient and affordable water heating intervention was conceptualised. This is not a one-time process and we continue to engage with the communities. I request Pooja to shed some light on how we evaluate the impact of the intervention and how that completes the feedback loop.
A village resident in the Chandrapur District, Maharashtra, uses a sustainable biomass-fired water heater distributed among households in select villages post rigorous socio-economic and psychological surveys as part of WCT’s work towards arresting forest degradation in the region by providing alternative to firewood. Photo credit: Prathamesh Shirsat/WCT
Pooja: Sure! We wished to isolate how our intervention was affecting firewood consumption on the ground, notwithstanding the effect that other socio-economic variables had on it. To do this, we used difference-in-differences (DID) method. What that means is we conducted surveys in villages that had been introduced to the intervention, i.e., ‘treatment’ villages as well as a ‘control’ village to understand differences across villages. Additionally, we surveyed all the households in the village to account for differences within villages between treatment and control households. Differences from the baseline figures across parameters were compared to identify the on-ground changes which could be attributed to the intervention.
Is environmental protection part of the India’s plans for future economic growth? Why is it important that it be so?
Pooja: Globally, issue of devising a sustainable development plan (i.e. a plan that considers the cost of development on its natural resources) without impinging on the rights of its citizens is difficult to achieve. To add to it, countries that have a colonial history have been influenced heavily by a settler’s perspective with respect to natural resource management – a classic example of this is the precedence that forests get over other ecosystems when it comes to budgets being allotted towards its protection. With a significant population battling the poverty trap, India must strive for a fine balance between investment in human capital without burdening its resources. The negative consequences of economic policies cannot be dealt with in isolation and these costs must be included when designing these policies themselves. ‘Pollute first, clean up later’ cannot work.
As a country we do ascribe to environment protection beyond purview of policies. We have communities that have cultural and social ties with the resources around them that go beyond the economic gain that they get from them. On a national front we have agreed to adhere to incorporating the Sustainable Development Goals (SDGs) and aim to improve the indicators defined for achieving these goals. However, the grassroots conditions present a distorted picture. While our environment policy focuses on penalising negative consequences, it fails to incentivise people to opt for positive ones. Our institutions create sub-optimal outcomes for both the people as well as the environment – a prime example of this is channelling of state funds in plantation drives without understanding the ecosystems that these drives are being conducted in. Given that achieving sustainable growth is a long-term goal, the outcomes of our actions need to put in that time frame.
What is wrong with India’s present environmental protection model that largely focuses on funding forest protection while neglecting other types of ecosystems?
Pooja: India’s environmental protection model focuses on improving its forest cover. This is troublesome for a major reason – it ignores all the other ecosystems that add to our rich biodiversity and work in tandem with forest ecosystems for providing necessary ecosystem services. At best (i.e. least worst) it results in forceful ‘greening’ of ecosystems that ecologically are not forests – such as deserts and grasslands. An uninformed execution of this results in introduction of plant species which are alien to that habitat and therefore have a negative effect on the ecosystem. At worst, the regions are left accumulating pollutants and residual wastes and eventually turn to wastelands. Thus, the services provided by these ecosystems go unaccounted for.
Habitats such as the saline desert plains, salty marshlands, thorn scrub, etc. are ecosystems in their own right which harbour myriad, specially adapted species, and provide important ecosystem services. Seen here are Demoiselle Cranes, a migratory bird species, wintering in the grasslands of Little Rann of Kutch ,Gujarat. Photo credit: Dr. Anish Andheria
6. How is WCT’s ‘Fiscal Principles’ project working to address the ecological and economic inequities perpetrated across various states in India due to such a forest-focused model?
Aniket: To ensure that India’s economic growth is sustained, it is crucial to safeguard its environment. This will demand reforms in its current policies by incentivising environment protection and promoting it as an allied objective. Ecosystem services that are private goods such as water supply have immense potential to directly contribute to economic growth, whereas, those that are public goods such as temperature regulation and air quality management are fundamental inputs for India’s cities that drive its growth. The importance of maintaining ecosystems to ensure benefits that emanate from it is increasingly seen as vital in both poor and rich countries alike. India recognised this importance almost 50 years ago and instituted laws protecting our forests. However, to have a sustained conservation of resources, there is a need to look beyond the existing mandate of forest protection to address inequity concerns.
Blackbucks in the Velvadar National Park which is among the few protected grasslands in India. Grasslands are one of the most neglected and threatened habitats in the country. Photo credit: Dr. Anish Andheria
There is no incentive for any state government, local bodies, communities, and individuals to conserve non-forested yet equally critical ecosystems. The near extinction of the Great Indian Bustard and decline of grasslands, which are more reliable carbon sinks than forests, is indicative of this neglect. Unless the government addresses these misplaced incentives through equitable distribution of funds incentivising protection of all types of ecosystems, critical natural habitats and species dependent on those habitats will be pushed to the brink.
WCT’s project, undertaken in partnership with HT Parekh Foundation, aims to drive policies that create incentives for governing bodies (from centre to the third tier) to achieve developmental goals without compromising on ecosystem services. Providing evidence-based and scientifically robust policy recommendations to the Finance Commission on fund devolution is a good way to do this.
Economist Pooja Dewolkar (standing) addresses a team of surveyors during a training session held at the Sahyadri Tiger Reserve. Photo Credit: WCT
7. Lastly, as economists, how do you see economics furthering the cause of conservation?
Pooja: Economics brings forth an important perspective to understanding human interaction and decision making. Alongside other disciplines, it can help to understand the status quo and aid in transforming human behaviour to best achieve optimal conservation outcomes. If used well, the governing principles can help our species to make better decisions that can correct our current course.
Aniket: As we spoke about in the early part of the interview economics is the science of optimising resources. The need for conservation arose because we are in trouble and are worried whether these natural resources will be available in the long run. We need experts from across disciplines for what lies ahead and economists will have to work in tandem with them to achieve an understanding of this complex and unique system which is the Earth.
This article was originally published in the August 2022 issue of Sanctuary Asia magazine.
About the author: Purva Variyar is a conservationist, science communicator and conservation writer. She works with the Wildlife Conservation Trust and has previously worked with Sanctuary Nature Foundation and The Gerry Martin Project.
Disclaimer: The author is associated with Wildlife Conservation Trust. The views and opinions expressed in the article are her own and do not necessarily reflect the views and opinions of Wildlife Conservation Trust.
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