The economics of empowerment

14/03/1994

"For a long time now, we have been calculating the number of people below and above the poverty line. And, these numbers have become a hot political issue. But the important thing is to eradicate hunger. This can be done by identifying the critical areas of poverty and helping the local people to manage their resource base. Several projects show that good watershed management brings high rates of return."

This statement by an eminent economist, made at a seminar on environment and economics organised by the Centre for Science and Environment, reflects an important change in the thinking of several economists, especially those who have been watching the country trying to deal with its environmental problems over the 1980s. This change reflects a move away from the economics of welfare to the economics of empowerment.

It was only in the late 1970s and the early 1980s that people began to understand that the country was suffering from an acute ecological crisis. Simultaneously, people began to appreciate the biomass dependence of the poor and therefore, the adverse impact of land degradation, deforestation and misuse of water resources on their daily survival. NGOs and government agencies undertook numerous ecological regeneration programmes to reverse this process of ecological degradation.

The results have been quite gratifying. A survey of several watershed projects a few years ago, according to Jawaharlal Nehru University vice-chancellor Y K Alagh, revealed an average rate of return of 30 per cent. The early projects like Sukhomajri and Ralegan Siddhi, which began in the late 1970s, are now bringing substantial financial benefits to the villagers. The khair forest now standing in the watershed protected by the villagers of Sukhomajri and the neighbouring settlements can yield several crores worth of katha every year on a sustainable basis. The savings of the villagers of Ralegan Siddhi, once a destitute village dependent on migration and bootlegging, now run into several tens of lakhs from agriculture in an otherwise precarious region.

The key element of success in all cases was an effective village institution -- an organisation of villagers that managed the resource base, brought about discipline among the villagers in the use of the environmental benefits and ensured equitable and fair distribution of the benefits resulting from ecological regeneration. Not surprisingly, most participants at the seminar emphasised the importance of community management of the environment. Even the phrase people"s participation sounded passé. Most participants understood the phrase to mean people"s control, management and ownership of resources.

This is undoubtedly a major change in the thinking of economists as compared to, say, a decade ago. Faith in state agencies to deliver the goods is definitely on the decline. This, however, does not mean that everyone dealing with resource management is convinced that community management is the answer. It is interesting to note that those economists who still have doubts about community management are those who are studying fugitive resources, that is, resources like stream water, groundwater or fish that move from one village ecosystem to another. Since management in these cases would demand inter-community coordination and not just intra-community coordination, these researchers continue to believe that the state has an important role to play. Undoubtedly, there is a lack of successful multi-community resource management efforts like, say, ten villages jointly managing the watershed or the aquifer. But do we necessarily conclude from this that there is space here for decision-making by the state?

This could also mean that there is scope not just for community or village-level decision-making but also for multi-community level decision-making in the form of a watershed council or an aquifer council. Such experiments have never been attempted, but as the groundwater crisis grows, institutional innovations will definitely be tried out. It is hard to believe that any state law that empowers and creates groundwater inspectors will be able to save the groundwater system from being overused by interest groups.

The most heartening aspect of the seminar was not just the ideas it produced on community resource management systems but also on how communities can map their resource base and take decisions about its use. The work of the Kerala Sastra Sahitya Parishad was widely appreciated. The Filipino idea about community accounts not just being a tool for communities to manage their resource base but also a basis for national accounts was indeed revolutionary and brings into question the usefulness of current efforts to develop national natural resource accounts. National accounts are a consolidation of enterprise accounts and because of the nature of modern enterprises, these accounts externalise the ecological and social costs. But community level accounts, in which enterprise accounts are subsidiary, will capture these costs and so will the national accounts, which are a consolidation of community accounts.

Of course, the central issue will remain. Accounting systems cannot do much unless communities have legal control over their environment so that the use of their environment is determined by the communities. In other words, communities will then become powerful players in the market-place.

The second major issue raised by the participants of the seminar was prices. The market cannot deal with environmental problems, they said, unless we get the prices right, that is, prices that incorporate the full ecological and social costs of our production and consumption. This is a key area in which public policy analysts must work to identify steps that are needed to ensure that subsidies in resource use do not lead to distorted consumption patterns.

In fact, the two issues of community control and getting prices right may be related to each other. Sovereign communities with full control over their resource base will not underprice their resource base and continue to suffer the resulting consequences of displacement and ecological degradation. Communities will ideally fix prices better than the state.

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