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Idle India

  • 30/05/1997

In a harsh indictment, the World Bank's review of the five years post Rio states that while around 100 countries have by now prepared national sustainable development strategies, the government of India is conspicuous by its silence over the issue ( Five Years After Rio: Innovations in Environmental Policy , March 1997) . Environment policy is at heart concerned with changing the incentives that individuals and institutions face. Experience in many countries has shown that involving and informing the public can be a very effective way to protect the environment.

There is also a need to convert priorities from policy to action. Among the most powerful policies are those that use the pricing mechanism because environmental resources are more often than not underpriced. Recent successful examples of doing away with this underpricing include energy and water pricing reforms in many countries. Even Bangladesh and Indonesia have taken steps to reduce subsidies on pesticides and fertilisers. Brazil has ended subsidies that led to excessive land clearing. China and the Netherlands have imposed environmental taxes on industrial emissions. Sweden has come up with an innovative tax on the sulphur content of fuels. This tax was extremely successful in Sweden and helped reduce both sulphur emissions and energy use overall.

The third category, after pricing reforms and environment taxes, is user fees. This recognises that many individuals receive important benefits from the environment but pay very little or nothing for this right. For example, stumpage fees (logging fees) for forestry activities are commonly being increased in order to capture part of the revenue associated with logging operations. Indonesia, the Philippines, Brazil and Costa Rica, countries having large wildlife tourism-oriented businesses, have increased user fees in the form of admission fees, water and sanitation fees among others, all to be paid by visiting tourists.

Markets are also useful in the establishment of a performance bond. In this, a financial bond is used to guarantee compliance with the desired outcome of meeting an environmental requirement like replanting forests after harvest or correct disposal of waste products. These systems can be seen at work in Japan and Taiwan.

It is not all taxes. Targeted subsidies can also be seen at work. They are used to promote reforestation in Costa Rica and pollution control in Brazil, India and China. But this system fails to penalise the polluter. What is surprising is that Indian initiatives are confined to such measures.

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