Resource Economics
If economics is primarily
concerned with allocation of resources among competing wants, it ought to be
concerned with the health of resources & ensuring their continued supply.
It does nothing of the kind but mainstream economics tries to interpret &
analyze the working of Industrial Capitalism and that too without any attempt
to probe the foundations on which Industrial Capitalism stands.
Ideally environmental
economics should fill in these gaps but again it seems to be content in finding
out & advocating certain palliatives which tend to bring in distributive
justice in societal wealth distribution. The concept of sustainable development
is introduced to counter the increasing depletion & deterioration of
resources and promote their wise use. Resources are divided into man-made
capital and natural capital. Economic sustainability is ensured if & when
man-made capital substitutes for natural capital. But environmental
sustainability cannot be achieved. Therefore the two are not perfect substitutable.
Certain other requirements are to be fulfilled if environmental sustainability
is to be achieved.
Ultimately it all boils
down to putting restrictions on economic activity and irrational preferences
expressed in the market. A centrally directed planning approach cannot be
accepted as it involves denial of consumer sovereignty and individual liberty.
Some writers adopt a view that ecosystem requirements are more important than
consumer sovereignty. But it is by no means easy to judge ecosystem requirements
when natural ecosystems are hard to find as most of them are impacted and
modified by human activities and fulfilling ecosystem requirements may prefer
and satisfy wants of certain consumers which denying those of others.
A more realistic approach
would be to recognize that environmental problems have emerged essentially as
and when technology was geared to increase the scale of economic activity to
gigantic proportions. It is in response to the necessity of continuously
increasing production to satisfy on the one hand the increasing wants of
consumers and on the other the belief that increase in production will lead to
a trickle-down effect to achieve a better distribution of wealth in a society.
Scaling down economic
activity may involve use of efficient technology to minimize energy and
material use, use of alternative sources of energy and even materials and
properly ascribing prices to environmental (free goods) and nature’s services.
It is a moot question however, if distributive justice and societal welfare can
be achieved if all this is adopted.
A fourth approach which
prescribes local resources use to satisfy local wants is likely to bring in far
more social equity than the thrice approaches mentioned above. The problems of
limiting consumer sovereignty and reducing the scale of production are sought
to be addressed here not by establishing a central planning authority but- by
decentralizing authority as well as investment. If priority is given to use of
local resources their care, maintenance and enhancement should also have top
priority. Under Panchayat Raj adequate powers are available to grass root
institutions to achieve this. Some enlightened Panchayats are already taking
advantage of powers conferred on them.
If wise utilization of local
resources results in an agricultural surplus over and above the basic
necessities of the local population, it can be marketed and profits can accrue
to the Panchayat. Local resources thereby will be given a value which is
honored by the market. This value can be enhanced, local purchasing power
increased, if local cultivars can be demonstrated to possess a unique taste,
high nutritional qualities and durability. Marketing of such products will
bring in higher profits and large purchasing power to grassroots organizations
and rural public, thereby enhancing their interest and capacity to care for the
quality and quantity of local resources.
Demand and supply will
have then an organic relationship with such basic resources as soil and water
and will not be driven solely by advances in technology as happens today.
Mainstream economics has
been accused of not caring for the quality of consumer choices and the
resultant composition of output. Irrational consumer preferences propelled
slowly by technological advance have resulted in a product- mix containing
mainly of intermediate goods demanded by the rich and privileged when much of
the resources are allocated to such production, the owners of resources are
only interested in the amount of rent that they would collect and not exactly
care and maintenance of resources. They will be more interested in high
short-term gains and not lower but assured gains over a longer time.
When demand and supply are
organically related the character of demand and the composition of supply are
likely to be different giving priority to satisfaction of basic needs of the
masses than production of higher values, intermediate goods meant for the rich.
Eventually industrial
capitalism and fossil fuel economy are likely to be replaced by natural
capitalism and carbohydrates based economy.
All this of course is
easier said than done. A complete change of paradigms is in order. The legal
emphasis needs to change from laws protecting exploitation of resources to laws
protecting conservation of resources. Technological content needs to change in
a similar fashion. We need greater doses and variety in what today is called
appropriate technology- small scale and energy and material efficient. Likewise
radical changes are needed in our educational system. It may be easier to
motivate groups of children in rural areas to take care of their own local
resources such as the hill behind the village, the stream flowing through it,
the quality of soil in their fields and the wild flora and fauna in and around
the village. City children are already goaded to demonstrate against air
pollution and traffic indiscipline. They can be further exposed to the
realities of city’s impact on the surrounding countryside and how resources and
landscapes destroyed during city’s expansion can be restored and regenerated.
Such a paradigm change may
also involve tremendous saving- in terms of reduced or abolished subsidies, in
terms of saving in energy and materials use, in terms of transport and traffic
and in terms of reduced waste and garbage and obviating the need for
centralized gigantic projects.
As resources are diverted
away from production of unnecessary or intermediate goods, the entire culture
based on demand stimulation and promotion of a voluptuous life style should be
replaced by one which emphasizes quality of life including adequate medical
care, healthy and nutritious food for all, outdoor games and healthy recreation
care of the aged and disabled and promotion of arts and crafts.
The present political parties
both in power and in the opposition are incapable of bringing about such a
paradigm change. A properly organized Green Party with strong rural roots and
urban branches appears to be the harbinger of change.
Something needs to be
stated about the ownership of natural resources. It is not necessary to do away
with individual ownership. At the village level individual ownership of land
etc. can be retained but its use should be according to the needs of the village
plan. Water may be individually allocated according to the crop pattern decided
by the village. (Phad (fxD) system from north Maharashtra which implies exactly these
things needs to be popularized)
As villages become
self-reliant in resource use, as quality of life in villages is enhanced, the
supply of resources to cities (having top priority today) will be reduced
putting a stop to today’s unending urban growth. It may even result in reverse
migration from urban to rural areas.
Lastly a word about the
necessity of globalization, integrating Indian economy with the emerging world
order. Ideally this paradigm also needs
to change.
India is location in the
world is unique, a fact recognized by travelers who crisscrossed India from
east and west since ancient times. The result is high biodiversity and resource
availability. With their proper care and utilization Indians can be
self-sufficient despite the population pressure. Globalization is sought by
countries which are or have become poor in resources and biodiversity. They
need resources from other countries to satisfy the needs of their pampered life
style. They cannot survive without export and import- export of technology and
weapons and import of natural resources. India however, can be quite selective
in adopting globalization. We need technology and knowledge to bolster our
security needs. We do not need technology and knowledge which guzzle our
resources and cater to individual ego (like expensive cars). On the other hand
we can export knowledge based on the study of biodiversity such as their case &
maintenance & innovative uses for medicine, as raw materials etc.
In essence care & wise
utilization of resources opens up tremendous opportunities of employment,
increase in purchasing power of the masses, and enhancement of the quality of
life in rural areas.
Prakash Gole
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