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Issue Date: 2004
Abstract: The ability of the environment to influence the economy has been the subject matter of discussion of numerous academic excercises. The issue has been actively debated at global consortiums by economists and environmentalists alike. The current rate of technological progress and innovation has led to higher growth rates for economies across the globe. But these trends are also associated with newer stresses and higher degree of impact for the natural environment. The natural sphere is interlinked with the economic sphere by the three essential sendees that it provides. These are a), provider of raw materials, b). provider of amenities (such as recreation) and c). receptacle of waste. The delivery of these services can influence the income earning capacity of an economy. Recognizing the integration between environment and economics, the dissertation examines the issue of 'sustainable national income'. The study reinforces the fact that making adjustments for the environment in the standard measure of national income can help us arrive at a sustainable measure of income. This should be the considered, dunng policy formulation, as the actual level of income available for use. Adjustment to the national income can take varying forms. One argument made by environmental economists suggests that natural assets should be meted the same treatment as capital assets. Thereforejust like provisions are made for wear and tear of capital assets, similar depreciation allowances should also be made for natural assets. The dissertation studies this concept of inclusion of depreciation of natural stock to yield a sustainable level of income. Addition of a depreciation allowance will lower the national income by that amount. The dissertation takes the analysis a step beyond and looks at how use of an environmentally friendly technology will lead to a higher level of sustainable income. To achieve the above listed objective, the study adopts the case study of conversion of public transport vehicles to CNG fuelled vehicles in Delhi, India. Conventionally diesel had been the popular choice of fuel for public transport vehicles. Its lower price as compared to petrol works favourably with this category of vehicles that make multiple trips in a day. However diesel combustion is associated with the emission of very fine particulate matter (PM) that is harmful to human health, even in small concentrations. As a result of a boom in vehicle numbers in the city, Delhi was ranked as the fourth most polluted city in the world by the WHO (in terms of suspended particulate matter). Faced with an increasing demand for mobility and the rising concern with diesel combustion emissions, the Delhi government, under direction of the Supreme Court was forced to take corrective action. One of the measures introduced was the mandatory conversion of all public transport vehicles in the city to CNG fuelled vehicles. Within a few months of the programme's implementation, a perceptible change was evident in Delhi's air quality. But besides cleaner air, we can also assess the monetary implications of such a move. As mentioned before, providing for the depreciation of natural resources is one possible way of arriving at a figure for sustainable national income. Being a nonmarketed commodity, it is not easy to compute depreciation for natural assets. One way in which this could be done is to equate the allowance for depreciation as being equal to the cost of damage incurred by different activities. In our case we calculate the cost to the environment caused by automotive fuel emission under two scenarios. One, when CNG is being hypothetically used for all public transport vehicles in India and Two when diesel is being used for the same. This is then accounted for in the national income. The penod being considered is 2000-2010. The results of the analysis show that when diesel is used, the sustainable income is much lower than the standard measure, as expected. With use of CNG, the damage to the environment is lower and consequently a lower allowance for depreciation is required. As a result the 'sustainable income' is higher. Thus not only are there qualitative improvements with investment in environmental technology, there are also positive monetary implications as proved in this study. Such information is very useful while conducting a cost benefit analysis for various options such as adoption of renewable sources of energy. The dissertation successfully proves it's laid down objectives and establishes the fact that environmental sustainability and economic gains can be achieved simultaneously. One need not come at the cost of the other.
Appears in Collections:Master's Theses (Restricted)

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