A development is sustainable, if it meets the needs of the present generation without compromising the ability of future generations to meet their own needs. When the term development is used in general, it refers to rising aggregate consumption and output but also includes aspects such as environmental quality, social factors, and the distribution of income. Thus, the utility function, which denotes the preferences of the representative agent, not only includes consumption possibilities but also environmental quality.
The statement above emphasizes the strong relation between economic growth and environment quality. Measures to safeguard the environment are often considered to be economic spoilers as they entail putting restrictions on economic activity such as shutting a polluting factory or scrapping old vehicles. What is not taken into account while making these calculations is the cost imposed on people living in regions where pollution and environmental degradation is higher. For instance, uncontrolled expansion of economic activities has now caused global warming and climatic changes across the world.
Taking India’s context, the country suffers from some the worst air pollution in the world. The construction boom, increasing car traffic and coal-fired power plants are all contributing to rising pollution levels, especially the presence of deadly fine particles that can lodge in the lungs.
Pollution is no longer an isolated environmental issue. It affects health and well-being and has immense economic and social implications. Pollution pushes people into poverty, via increased medical costs in a context of out-of-pocket medical expenditure for the most part. It also affects cognitive capacity of children and diminished productivity in adults, given that pollution affects organ systems such as the heart, lungs and brain.
The latest data from the Institute for Health Metrics and Evaluation (IHME) links air pollution to the deaths of 1.6 million people in India in 2016. India leads the world in pollution-related premature deaths, accounting for 2.51million of the nine million worldwide in 2015. Air pollution is the top culprit: there were 6.5 million deaths globally in 2015, and India’s share is about 28%, or 1.81million.
Today, Delhi and the National Capital Region saw a sharp decline in air quality levels and recorded ‘very poor’ air quality with average Air Quality Index (AQI) being 411 at 9 am. The Indian Medical Association (IMA) declared the city in a public health emergency state and urged schools to stop all outdoor activities to keep children out of hazardous air pollution levels.
International Organizations including World Bank in 2013 projected that pollution and other environmental degradation costs India USD 80 billion a year, nearly six per cent of gross domestic product. About 23 percent of child mortality and 2.5 percent of all adult deaths in the country can be attributed to environmental degradation. Further, 2016 World Bank study calculated India’s total welfare and productivity losses due to air pollution alone at 8.5 percent of GDP. Another study by the World Bank and the Institute for Health Metrics and Evaluation at the University of Washington revealed that India’s air pollution alone caused welfare loss equivalent to 7.69% (approximately ₹31,316.2 billion) of its GDP.
Although it is not empirically possible to determine the cost of economic degradation since ecosystem services are not traded in the markets. However, it is pivotal to understand that the actual value of economic welfare lost due to loss of ecosystem services will be much higher than what is being currently estimated as millions of households and economic activities utilise these ecosystem services for production and consumption in India.
Going ahead, the need of the hour is should no longer be acceptable to ignore the adverse impacts on health and well-being in the pursuit of economic growth since pollution itself endangers growth.