CAREER BANKER AND environmentalist Pavan Sukhdev, 51, was appointed to lead The Economics of Ecosystems and Biodiversity (TEEB) in 2008 by the EU Commission. Since then he has founded GIST Advisory, an environmental consulting firm. Sukhdev spoke to TEHELKA in an extensive conversation from Brazil about the potential of a green economy for India.
Why is it important to view the environment through an economic lens?
The main reason is because nature is economically invisible and everything that comes from it — nutrients, fresh water, forests, fields, new discoveries of medicine — comes for free. These are not market goods and services but they are vital. If we don’t apply economics, it’s impossible to explain things to policy-makers since today economics is the currency of policy. When we apply economics, we find policy-makers do respond.
What is the idea of a green economy?
The green economy is where you target increased well-being and social equity, meaning a better distribution of income and wealth. At the same time, you target reduced ecological scarcities like depletion of fresh water, drinking and irrigation water and environmental risks like pollution, chemical hazards and climate change. So a green economy is one that improves human well-being and reduces poverty but does so while also reducing the massive risk factors. This is typically what our current economy isn’t geared to do. All it does is add wealth and the aggregate isn’t geared to reduce poverty or environmental risks and hazards.
On the global policy stage, we view environmental issues as an expensive luxury but back home, ordinary people resist development projects on grounds of displacement and environmental damage. How do we reconcile this?
The reason why city people see the environment as a luxury is because their consumerist lifestyle makes them think they are right — but they’re wrong. If you want to understand lifestyle, ask a villager whether it’s a good idea to extract fresh water from the soil, whether it’s a good idea to cut the forest nearby — you’ll get the right answer. He will say ‘No’ to both. Unfortunately, we don’t listen to villagers, we listen to ourselves, and that’s the challenge. The green economy is about recognising the importance of nature to the poor, their rights of access to nature and our right to keep enjoying things in a way that doesn’t destroy our opportunity for future enjoyment.
Another common perception is that green means slow development. What’s the potential for developing societies like ours to embrace the green economy and also retain healthy growth levels?
Let’s look at an example. China has 40 million homes powered by solar water heaters. The rationale for this is rather complex — partly because of health reasons. In China, old people suffer from arthritis and the way to solve it is to heat water in homes. Today 60 percent of the global players in solar water heaters are in China. Six lakh jobs — that’s huge! We have GDP growth but not employment growth. When the flip happens from houses heated by coal to houses heated by solar water, who do you think is going to win the business opportunity there? Who has the economies of scale? India? Australia, where this technology was born? It’s China, of course. But India also has the technology, the solutions and the 1.1 billion people who are a consumer market. These are some of the challenges where employment and growth and innovation are coming in the direction of green. Greening is the next industrial revolution.
Projected Green Jobs By 2050*
Waste management & Recycling
Source: UNEP, 2011, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication (Online advanced release),
* Global Figures
Economic policymakers often argue that urbanisation and industrialisation are the only way for development. Are these positions sustainable for India?
I’ll have to distinguish between the two. Firstly, industrialisation. India has 350 million people who are subsistence farmers, dependent either on forests or coastal fisheries. If you lose the forests and deplete the coastal fisheries, who is going to provide jobs for 350 million people? There is a development model possible — one where the value of nature is seen as a safety net for the poor. Two major studies have pointed towards a high yield coming from crop rotation, multi-crop techniques, recycling farm water and common sense techniques. In Bangladesh, four lakh villages have solar panels. If Bangladesh can do it, why can’t we? As for urbanisation, migration is happening from village to cities. India will need to build new cities, create urban spaces within smaller areas and recognise the role of slums. We need to look at city opportunities in terms of technology, innovation, green building and transportation, which will generate new jobs. We have to look at alternate forms of development. Take energy. Today the oil industry has generated 2.2 million jobs globally — extracting, drilling, refining, etc. Renewable sources already employ 2.3 million people, half of which are in farming. In Brazil, people are growing sugarcane and there’s ethanol production, and in China there are solar water heaters. Renewable energy provides a tiny fraction of energy need — 2-3 percent. Just imagine how many jobs it could create. This is in a context that oil is going to be $150.
‘Today the oil industry has employed 2.2 million jobs globally, while renewable energy employs 2.3 million’
Can green technologies compete with traditional ones at a price level?
If you remove subsidies, we might. There are huge amounts of subsidy supporting an oil-based economy — fossil fuels have subsidies of $650 billion globally. On top of that, there are indirect subsidies which are part of subsidies to agriculture ($275 billion). Some will argue it’s their right to produce the oil, control the prices and that subsidies only help the poor. Mexico has huge subsidies on oil but most of it is on the refining and production of oil overseas. So who is getting the subsidy? It’s the rich. In India, we have subsidised kerosene. That’s why we can’t promote the Bangladeshi model. We subsidise kerosene but Bangladesh does not. The cost of a litre of kerosene is 40 in both India and Bangladesh, but the market price of a litre in India is 9 because we have subsidised most of it. Only a third of that subsidy is reaching poor households. The others who are benefiting are those who use kerosene for small-scale industry.
Economists like Joseph Stiglitz have argued that we need to redefine the idea of GDP to include human well-being. What is the idea of green accounting you’ve been working on?
The GDP is a measure of total consumption, of goods and services flow. It doesn’t give you an idea of how the flow is being distributed — how much are the rich and the poor getting. It also doesn’t tell you anything about natural goods and services, for instance, if village households are receiving benefits in the form of fuel, nutrients or fresh water from forests, whether or not it’s consumed directly. You cannot manage what you do not measure and if you cannot measure what you manage, then you can’t manage. That is the reason why Rajiv Sinha, Sanjeev Sanyal and I came up with the idea of green accounting. We focussed on bringing the analysis to the state level and now people have woken up to the fact that GDP isn’t the answer to everything. Unfortunately, Stiglitz’s work does not cover the natural environment. It only covers the social aspect.
‘Uganda has more than two lakh organic farms. Bangladesh has four lakh village homes powered by photovoltaic cells’
What do you make of the deep fear that if you give an economic value to the forests and ecosystems, they’ll turn into tradable commodities?
I don’t agree with the classical economic thinking that everything has a price. Valuation does not mean commodification. There are several ways of valuing — you can value as society, as a policy-maker or by paying money. For instance, if the Niyamgiri are sacred hills or forests worshipped by the local community, you have to respect that. End of story. You cannot take away from people what is sacred to them. It is against the tenets of human society. But what if there is some land not considered sacred, which does have a forest and can provide some demonstrable benefit. The Nakivubo swamp in Kampala, Uganda, is a natural sewage treatment facility. At one point, local government decided that the swamp could create more land for agriculture. Then an economist discovered that the value of the swamp as a sewage treatment facility was $2 million a year and its value as an agricultural was one eighth of that. So they didn’t close the swamp. This is an example of how a demonstration of value changed a policy decision.
Can we make a case to corporates that they can profit from a green economy?
In some sectors, you can. Green economy investments could be successful in the renewables and hydroelectricity. If we invest in solar power with our advantages of high-tech production, skilled manpower, good scientists and support from the government, I am sure we can compete with China. Uganda has organic agriculture. A tiny country like that has 2.3 lakh organic farms. Bangladesh has four lakh village homes powered by photovoltaic cells! Why are green economy successes making an impact in other countries? For us, it’s just a question of getting the incentives aligned and getting out of the subsidy situations and getting a few visionary entrepreneurs to take the plunge. Tulsi Tanti of Suzlon was a cotton miller who used to make cloth. His problem was insecure energy supply and then he thought of the wind approach. Here is an entrepreneur who understands an opportunity that came out of a problem.
What is the biggest scepticism stopping corporates from entering the green economy?
The government believes everything can be set right with GDP growth. Well, it hasn’t worked in the past 60 years and isn’t going to work in the next 60 either. Today we are a human capital success story thanks to the Indian insistence on education. The telecom and Internet revolution happened. Suddenly the capacity of the Indian middle family has gotten plugged into a global employment opportunity. And that is the success of our outsourcing. But we are still struggling to continue with the creation of human capital. We have poor investment in high-quality education. If you want growth, then you must focus on natural, human and physical capital. Also, companies themselves have to be placed in a position where they see opportunities on both sides. There are only a few companies who realise that there is a long-term opportunity in solar panels, retailing to villages, windmill, etc.
What are the figures on the basis of which you claim new jobs created in the green transition will exceed the losses of brown economy jobs?
The obvious ones are the renewable jobs. As a result of providing jobs in the renewable space, you would be able to replace jobs or prevent further job growth in the oil and gas place. That small renewable percentage of 3-4 percent is generating as many jobs as the oil and gas sector should tell you a story. There are situations where jobs have improved, money has increased and this has been done not by design but by default. South Korea created nine lakh jobs out of their stimulus package in which two-third of those jobs were in the green economy. Three lakh in fresh water and forestry and a couple of hundred thousand more in transportation. Frankly for every situation in the world that I can think of, there are more green jobs being created than brown jobs lost. There are two exceptions — global fisheries and Chinese coal mining are two examples where there will be loss in brown jobs and not necessarily an increase in green jobs. You talk about a world of six billion people; you talk about new sectors that are generating close to 20 million jobs. The worst situation I am giving you is that close to 1.5-2 million jobs may be lost. To stop the transition to a green economy because of two worries would be foolish.
Gaurav Jain is a Literary Editor with Tehelka.