The Pune to Mumbai train journey in the 1990s had a highlight at Monkey Hill, a picturesque stop where trains halted for brake checks. The thrill for passengers was spotting troupes of monkeys. In 2023, Monkey Hill in Maharashtra’s Bhor Ghat is conspicuous in its absence of monkeys, a clear indication of the global primate extinction crisis. Today, the Pune to Mumbai journey is overshadowed by signs of an impending ecological apocalypse.
At Bhor Ghat, a silent yet fierce battle is raging between economy and ecology.
Ancient forests are being hacked away by yellow JCBs to make room for dhabas, upscale gyms, and new apartment complexes. Severely polluted rivers and water bodies suffer eutrophication from improper fertiliser use, leading to excessive growth of algae. Burning forests, degraded agricultural land, and piles of rotting trash contaminate our air, water, and soil.
This situation is not uncommon. As most of our planet is rapidly urbanising, forests, grasslands, bogs and marshes are being replaced by a characteristic metropolitan sprawl of highways, apartment complexes, parking lots and commercial spaces. India, however, faces a unique situation. On the one hand, it is one of the most megadiverse countries in the world, home to 7-8 per cent of all recognised species of flora and fauna and representing four of the 34 global biodiversity hotspots (like the Western Ghats). On the other, it has one of the largest and youngest populations in the world — a population that demands jobs, coupled with rapid technological and urban development. These competing and often conflicting demands have led to an urgent need for harmonious economic models that consider both the aspirations for population prosperity and the deteriorating environmental situation. After all, just in 2021, the country lost $159 billion due to rising temperatures and heat waves (Climate Transparency Report 2022).
Climate risks for India
Left unchecked, climate change is expected to be particularly disastrous for India. Its vulnerability stems from the country’s tropical location, long coastline, disproportionate dependence on agriculture, and high poverty and inequality levels. A 2022 Intergovernmental Panel on Climate Change (IPCC) report predicts India’s per capita GDP to be 92 per cent lower than projected by 2100, with nearly 50 million people at risk of coastal flooding.
The circumstances, however, are not all grim. The World Economic Forum identifies climate action as an $11 trillion opportunity for the Indian economy, while Time magazine hails India as the most important country in the global fight against climate change.
The economic transition into more sustainable models of development that promote renewable energy, a circular economy, green livelihoods, climate-resilient crops like millets, and climate adaptation strategies like agroforestry will require massive financial investment from the government and private sector. While the private sector increases its investment in environment and sustainability, global climate finance remains woefully inadequate in supporting vulnerable countries’ mitigation and adaptation efforts. The International Monetary Fund (IMF) estimates that $3 to $6 trillion annually is needed until 2050 for climate change actions, while current global climate finance stands at about $630 billion. Many argue that the massive underestimation of the true cost of environmental externalities is what led us to our present predicament.
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Carbon credits to offset damage
One market-based mechanism for addressing environmental externalities is the use of a “credit” system, which allows polluters to offset their damage or trade emission certificates. Through this system, companies can decarbonise their supply chains as much as possible and purchase offsets or credits for the remaining emissions, thereby promoting overall sustainability.
Currently, various markets for carbon credits, plastic credits, and biodiversity credits are emerging. Among these, the carbon credits market is the largest. A carbon offset or credit is a tradeable certificate representing one tonne of carbon dioxide that has been sequestered, reduced, or avoided from being emitted into the atmosphere. Carbon offsets can be obtained through various projects such as planting trees, solar energy installations, or discontinuing the use of chemical fertilisers. Meanwhile, in regulatory cap-and-trade system (like the European emission trading scheme), where emission limits are set for companies, carbon credits can be traded between high and low emitters on an exchange.
Pricing intangible assets like nature, carbon, or biodiversity has always been tricky. One concept that has gained traction in the US is the “social cost of carbon”, representing the economic damage from emitting one tonne of carbon. India has the highest estimated social cost of carbon globally at $86 per tonne, according to Nature Climate Change, although this value is likely underestimated. While these numbers and credit concepts may be abstract and not entirely accurate, they help us understand and to some extent quantify the economic consequences of uncontrolled environmental damage. Making environmental destruction costly, either through a carbon tax or mandatory offset credits, can discourage activities like real estate developers destroying virgin old-growth forests — an invaluable carbon sink — for something like a resort.
Along the Mumbai-Pune train route, a lone red silk cotton tree stands tall and proud. Its thorny, creamy-white branches are denuded of leaves in the winter, but its pillowy, pink flowers are in full bloom. This single tree provides thousands of dollars worth of ecosystem services by sequestering carbon, enriching the soil, and offering shelter and food to pollinators like birds, bees, and ants.
Insects, known for pollinating more than 75 per cent of global crops, provide ecosystem services valued at $577 billion annually, according to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. Unfortunately, our global economic models have been shamefully bereft of accurately accounting for these indispensable services provided by nature. While some may find it distasteful to assign a financial value to our invaluable natural ecosystems, it is important to recognise that we operate within a primarily market-based system. Accurately pricing nature’s services accurately and being mindful of the immense ecological damage caused by our consumption are absolutely essential for solving the climate mess we find ourselves in.
Shubham Gupta is a 2019 batch IAS officer currently posted as Assistant Collector, Etapalli and Project Officer, Integrated Tribal Development Project, Bhamragad. He tweets @ShubhamGupta_11. Krutika Ravishankar is a co-founder at Farmers for Forests, which protects and restores biodiverse forest cover in close collaboration with communities. Views are personal.
This is the first article of a three-part series that explores India’s climate crisis and the potential of carbon credit markets to mitigate environmental damage and spur economic development. Read all the articles here.
(Edited by Prashant & Zoya)