Gambling Between Cost and Benefit


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“…. wherever we are, whoever we are, and we all share the same responsibility: Let’s make our planet great again. ” – Emmanuel Macron

The words that reflected a powerful thought of mutual responsibility and positive attitude towards environment, Emmanuel Macron has rightly stressed upon the need of more responsible attitude towards environment in ‘making it great again’ from what we have degraded the environmentfor human ease and comfort to a more mutually sustaining, contributing and enduring human-environmental relation. Over the period of time, the world has witnessed major environmental disasters and its aftermath, which implied great repercussions on the mankind both environmentally and economically. Though the much sought after and debated word ‘Sustainability and Future generation’ is still in popularity, sometimes it takes real-life experience for the human beings to rethink their responsibility towards making a better environmental decision.

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Modern-day developmental projects and innovations highly focus on economic feasibility aiming at reducing cost and gestation period of big-budget projects and bringing in more efficient output. Are these developmental projects economical in the real sense? Experience has responded with a no. Many of the developmental projects have largely compromised on environmental cost. The structural transformations begun from the second five year plan has completely altered the proportion of forest cover in India. Increased urbanization and industrialization resulted in huge environmental degradation and pollution. Though the economic growth stimulated was very high, its implications on environment were much larger. The increased use of plastic bags and non-biodegradable products are increasing the stress on environment. Even after lot of awareness and efforts, many of the large-scale projects still ignore the environmental cost. Though highways can be constructed at a reduced environmental cost by reducing the number oftrees felled off or making the path a bit longer by ignoring a forest area, the idea of reducing monetary economic cost doesn’t fit to the idea of reducing environmental cost. The discounting principle often goes opposite in the case of environment. The future cost when discounted gives very little motivation for the people to act differently. This is largely because of the pleasure inflicted in the short term but direct benefit and ignorance involved in the future cost and repercussion. This is when the real economics of environment and disaster came into picture.

The recent Kerala flood is one of the most recent examples for the humankind to bear in mind. Though the rescue operation and rehabilitation went successfully, gaining praises and admiration, the economic side of the disaster has to be well understood. The present Ernakulam district of Kerala was once a marshland and it was irrevocably converted to the residential and industrial area. Likewise, many of the lower lands and marshy terrains were artificially elevated and restructured. In the case of other districts especially in the case of hilly areas, the situation is not so different. The major proportion of the population is situated in the environmentally sensitive areas that are highly prone to landslides and earthquakes. Then the question arises from the engineers and others: Where to accommodate this growing population? Even then the answer should not be at the cost of environment. The fact is that even this growing population is not as such a good idea. Development and progress must proceed but at a lower cost of the environment by giving less stress to the future generation. The implications of climate change and global warming is not the result of the action of the current generation but we are just taking a share of the result of irresponsible behavior of the previous generation. The cost of development and innovation at a higher environmental cost for the increased current benefit and the reduced current economic cost has, in fact, reduced the future benefit and increased the future cost to a multiplied rate. A comparison of the amount of investment in the projects years before and the cost presently incurred in tackling the disaster will present a fair idea of real term economic analysis of cost and benefit.

Also, a study of the performance of developing and the developed economy shows a paradoxical result. The loss associated with environmental disaster is comparatively lower in the high incoming countries, thanks to their highly prioritized welfare schemes and policies. But many of these large economies also are the highest contributors to environmental pollution. The walking out of America from the recent Paris Climate summit is just an evidence of the selfish economic motive of a developing economy. But the idea of the environment as a public good shouldn’t be ignored. Also, the positive response of a country towards the environment will make other countries beneficial to the benefits of better environmental conditions and vice versa. Sometimes the impact of this environmental disruption largely propelled by developed economies, fall on lower-income countries and other environmentally prone countries due to their ineffective tackling conditions and geographical locations. Thus, the cost of extreme events reflects not just environmental conditions but the global distribution of wealth and income.

Hence, towards this cause, a more sustainable and sensible approach has to be taken. Wherever there is a human intervention, there is a cost associated to it as well. Development and progress must proceed but it should not be at a high future cost. Because there is a huge amount of opportunity cost associated with this future cost that could have been better diverted for more necessary aspects like education, healthcare, welfare schemes, poverty alleviation, Research and development and what more. Policies must focus on mitigation as a priority and adaptation as a necessity. Let the economic and policy decisions be more ‘green’ in nature at a multi-sectored and multi-dimensional aspect involving more individual response coupled with national and local governmental interference.

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