Heard of Green Accounting?
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COMMENTS 
In India, the Gross Domestic Product has been the key indicator of growth. However, this kind of accounting overlooks vital components of national wealth such as environmental resources and changes in the quality of health and education
India's 'green accounts' were presented for the first time at the Delhi Sustainable Development Summit (DSDS) held in New Delhi on February 3-5, 2005. Pavan Sukhdev of the Green Indian States Trust (GIST), a Chennai-based NGO which presented the Green Accounts report, said: "One novel way to strike a balance between poverty alleviation and environmental conservation is by adopting the system of green accounting."
Green accounting follows a broad framework that reflects, in economic terms, not just depletion of natural resources and the health costs of pollution and effects on livelihood but also additions to human capital through education.
In India, the Gross Domestic Product has been the key indicator of growth and a guide to policymakers for making changes in poverty alleviation policies. However, this kind of accounting overlooks vital components of national wealth like changes in the quality of health, education and changes in the quality and extent of India's environmental resources.
Why have these aspects been ignored? What kind of impact do these components have on development and poverty reduction? Can inclusion of these factors help in formulating better policies for income-generating opportunities and livelihood security for the poor? These were some of the concerns raised at the DSDS organised by the Delhi-based NGO The Energy and Resource Institute (TERI).
"Poverty is the worst polluter. There is a nexus between poverty and environmental degradation because the poor are dependent on natural resources like soil fertility, fresh water, air and forests," said Prodipto Ghosh, Secretary, Ministry of Environment and Forests. "Environmental degradation impacts the health of the poor, affecting employment and schooling and accentuating gender inequalities. Therefore, the draft environment policy (which is being finalised by the government) seeks to strike a balance between economic, social and environmental needs for sustainable development," he said.
GIST developed the green report through its Green Indian Accounting States Project (GAISP). Under GAISP, proper accounting of forest resources was done. GAISP studied the value of timber, carbon, fuelwood and non-timber forest products to evaluate the gross state domestic product. By treating forests as both productive and non-productive economic assets, GAISP found out on an average how many people were dependent on forests for timber, fuelwood, fodder, fruits, bamboo/cane/reeds and honey. It also studied the effect of logging, forest fires, encroachments and natural calamities to calculate a proper measure.
This measure was termed Environmental Adjusted State Domestic Product (EASDP). According to GAISP, states should use EASDP to evaluate the Net State Domestic Product (NSDP) since it takes into account changes arising from environmental degradation. The gap between NSDP and EASDP indicates the extent of environmental degradation caused by economic activity like illegal logging.
GIST felt the present national accounting system did not appropriately value degradation of forest resources, a necessity especially since forests also influence local and regional climate. According to the Green Accounts report, proper accounting of forest resources can help policymakers. They will get a picture of real welfare losses arising out of clearing forests, especially for the poor who are dependent on these forests for survival.
According to the Green Accounts report, if the ratio of EASDP to NSDP is less than one, the economy is doing well in terms of environment. But if it is higher, then it means that economic growth has come at the expense of environmental degradation in these states.
Leena Srivastava, Executive Director, TERI, says that while adopting a green accounting policy is one way for a state to ensure sustainable development, it also needs to focus attention on other factors which either contribute to or are a fallout of environmental degradation like the decreased availability of water. "It is a well-known fact that access to drinking water, sanitation and hygiene are the prerequisites to ensuring good health and socio-economic development. However, both the quality and quantity of safe drinking water is inadequate compared to the needs of people both in rural and urban areas," felt Srivastava.
One of the key factors in improving the quality of water supply is community participation. "If government schemes are designed and operated in partnership with the water users, needs can be more efficiently addressed," she said.
A sustainable management of water resources is also key to food security. According to Dr Mruthyunjaya, Director, Indian Agricultural Research Institute, high population growth and rapid urbanisation will lead to greater demand for water for domestic and industrial consumption. "There will be large-scale groundwater mining and this will compromise food security. In order to minimise groundwater mining without compromising on food security, there must be reduced dependence on groundwater for irrigation," he said.
Studies have shown that the lives of women can be transformed by ensuring the availability of safe drinking water. Globally, there are 30 million households with illiterate mothers that lack water and sanitation facilities, according to Warren Evans, Director of Environment, World Bank. Half of these households are in India. It is obvious that education targets cannot be met when these women spend so much time looking for safe water.
Although economic growth is necessary for sustainable development, it cannot take place without addressing environmental issues that impact negatively on poverty alleviation.
(Women's Feature Service, February 2005)