1

National Biodiversity Authority, Chennai

Expert Meeting on Linking Economic and Ecological IndicatorsJanuary 18, 2012

Outcomes of the Meeting

Dr P Balakrishna, Chairman – NBA welcomed the participants to the one day meeting, and outlinedthe context and overall mandate of the National Biodiversity Authority. Highlighting the fact thatNBA is the apex body to oversee the implementation of the National Biological Diversity Act, 2002and the Rules, 2004, Dr Balakrishna stated that the NBA has three primary roles which can bedescribed as advisory, regulatory and that of facilitation. Of the three roles mandated to the NBA,the advisory role is rather progressive since it envisages mainstreaming of biodiversity issuesacross sectors, agencies and departments. In this context, he briefly highlighted the cross-sectoral consultative process since 1992-93 that led to the enactment of the Convention onBiological Diversity and the subsequent response of India to the Convention through the enactmentof the Biological Diversity Act, 2002.

The impetus to the current meeting, he added, is the note of the Comptroller and Auditor General’soffice that was sent to the Ministry of Environment and Forests in September 2010. In addition, theresults of the Global Study on The Economics of Ecosystems and Biodiversity (TEEB) presented tothe 10th Meeting of the COP at Japan, the launch of the national TEEB study and the interest ofPlanning Commission of India to come up with an Environmental Performance Index (EPI)provided the opportunity for the NBA to provide a possible advisory in mainstreaming biodiversityand ecological considerations across relevant sectors/departments. With the NBA leading therevision of National Biodiversity Action Plan (NBAP), the consultation was organized to bring theeconomic and financial assessment of biodiversity and related linkages for implementing the Act.

2

Dr Balakrishna emphasized the fact that the current meeting was essentially to deliberate andprovide concrete inputs to COP 11 that is scheduled to be held at Hyderabad during October 2012.Following this, an overview presentation titled ‘Convergence of Economic and EcologicalIndicators’ was made by the Chairman, NBA. Using the framework of biodiversity links todimensions of poverty, Dr Balakrishna highlighted the following:

1. Biodiversity and ecosystems offer a great addition to economic potential of a country,2. Ecosystem services and contributions of biodiversity to development is often either ignored

or overlooked because of lack of information of their potential and value to securingeconomic gains,

3. The role ecosystems, its goods and services and biodiversity offer a great opportunities forcountries to rewrite their national economic equations in a manner that GDP is not justbased on traditional internalities but also includes externalities such as those involvingecosystems and biodiversity, and

4. The cost of inaction to secure and preserve ecosystems and biodiversity will outweigh thecost of investments now.

The current practice of using GDP and GDP per capita does not augur well for gauging theecological and environmental issues, especially in the context of emerging climate changescenarios. It also fails to account of resource efficiency, social inclusion and sustainablemanagement of natural resources and biodiversity. There is hence a need to include naturalcapital that supports GDP measurement corrected for ecological security and depreciation ofbiodiversity.

The failure to capture the benefits of biodiversity and ecosystem services into national accountingprocesses was also detailed by Dr Balakrishna. Of the many dimensions to the issue, the need tomake conservation work for the poor in terms of tangible benefits and the need to make ecosystemservices visible were highlighted by him.

Dr Balakrishna also highlighted the suggestions of the CAG in this regard through a four phasedapproach viz. ecological audits, ecological reporting, ecological accounting and integration ofecological issues into financial accounting. The road map could therefore be articulated as follows:

Development of an Environment Performance Index (EPI) for States in India that includesfocus on ecosystems and biological diversity

3

Establishing national ecosystem management and biodiversity targets and relatedindicators

Identifying a road map with actions and responsibilities, as appropriate, for developing thebiodiversity and ecological audit frameworks for India, and

Suggesting studies to overcome the knowledge and data gaps in the area of linkingecological and economic performance audits so that national policy and planning isresponsive to all the elements of sustainable development.

Dr Indrani Chandrasekaran’s presentation on ‘Towards Inclusion of Environmental Performance asa Criteria in the Allocation of Central Assistance to State Plans’ (via Skype) highlighted theperspective and approach of the Planning Commission of India in mainstreaming biodiversity,ecological and environmental considerations into development paradigms for the country.

Dr Chandrasekaran’s presentation while providing an overview of some of the key legislations thatguide our current practice of handling waste and pollution dwelt at length on EnvironmentalPerformance Index (hereafter referred to as EPI). Under active consideration is the proposal to

Adopt Environment Performance Index.{ PC-EPI } as proposed and Rank States &UTs .

Devolve funds , to incentivize Environmental Performance , based on EPI ranking ofthe States/ UTs.

Include “ Bio-diversity Conservation” as a criteria and identify indicators.

The criteria used for developing State level EPI are as follows:

Criteria Indicators IndicatorNo.

Air Pollution NOx, SOx, SPM/RSPM 3

Water quality % Sewage Treatment and River water quality (DO & TFC) . 3

Forest TFC as % of state GA & contribution to National average,increase in forest cover, area under Protected Area Network (PA)and Afforestation efforts

4

4

Waste % MSW, Biomedical and Industrial Hazardous Waste collectedand disposed.

3

Climatechange

Existence of SDMAs, % of Renewable Energy including Hydel-Production in Total Energy Consumption, and GHG emissions-(CH4) entric.

3

Total 16

Dr Chandrasekaran referred to the Aichi bio-diversity target (Strategic Goal A, No.3) whichmandates that incentives for conservation and sustainable use of bio-diversity be developed. Thetarget is stated as follows “ By 2020 , at the latest,, incentives, including subsidies ,harmful to bio-

diversity are eliminated, phased out or reformed in order to minimize or avoid negative impacts,

and positive incentives for the conservation and sustainable use of bio-diversity are developed and

applied, consistent and in harmony with the Convention and other relevant international obligations,

taking into account national socio economic conditions.”

A state wide performance sheet of EPI was also presented by Dr Chandrasekaran, wherein statesand Union Territories were scored and ranked for their performance. Suggested list of indicatorsfor mainstreaming biodiversity considerations into the EPI include the following:

Reduction in loss of forest cover / bio-diversity endangered species in the state Reduction in the rate of opening up of forests, Fish availability and % catch i.e. efforts made for sustainable fishing in the state . Efforts towards elimination of invasive species by the state. Nutrient levels in water bodies in the state. Change in area under Wetland and lakes. Loss of eco-system services/livelihood due to mining Reduction in area/cycle under Jhum Cultivation Change in livestock population.

Dr Chandrasekaran’s presentation was followed by a brief discussion, which is summarized asfollows:

Dr S Balaji emphasized on the need to revisit some of the indicators that are used/or beingproposed for the EPI and the manner of according weights to the same. This was especially in thecontext of the character of the state in terms of biodiversity wealth as well as parameters normallyconsidered for measuring development such as rate of urbanization, industrialization, presence of

5

mega industries etc. A primary driver for states complying with environmental laws could be theincentive mechanisms that are tailored to compliance.

Concurring with the concerns of Dr Balaji, Dr Gopal Kadekodi emphasized on the need to use statespecific parameters and suggested that Multi-criteria analysis would be more appropriate for thepurpose. Dr Paul Appaswamy strengthened this point by adding dimensions of time and goaldriven approach. Dr Jayshree Vencatesan suggested that the Planning Commission may considerincluding status of agrobiodiversity as one of the indicators in view of the mandate of the BiologicalDiversity Act of 2002.

Responding to the Chairman’s query on whether we continue to handle the issue on a state-specific mode or adopt an inclusive approach that is incremental, especially in view of the non-availability of strong data, Mr Deepak Kriplani stated that while the issue is complex in its character,the EPI needs to be simple so that it is acceptable across sectors. A two tiered structure of one setof generic indicators supported by a set of specific indicators would be a viable option to consider.

Mr Sunil Kumar elaborated on the need to consider ‘out of the box’ approaches rather thancontinue to adhere to existing approaches, or in the worst case scenario, modify and adapt existingapproaches. This was followed by a general discussion of how states would perceive the EPI, andthe apprehension that, if not articulated in a proper manner, may offset the purpose ofmainstreaming biodiversity across sectors. Dr Maria Saleth highlighted the importance of arrivingat a ‘bottoms-up’ approach and placed on record his apprehension about comparing states whichhe felt would dis-incentivise the process.

Dr U Shankar spoke on the efficacy of using the Gadgil formula (addition of a weightage point of2% to the performance indicator to devolve funds for the States) and suggested a re-look at thesame given the current socio-economic, environmental and political situation.

On the issue of valuing forests, there was an overall concurrence to the points raised by DrJayshree Vencatesan, Dr Balaji and Mr Sunil Kumar that we need to move away from timber basedvaluing of forests and instead consider the approach of complementarity which was elaborated byDr Kadekodi.

6

Dr Deepak Kriplani’s presentation titled “Measuring & Accounting for Ecological Performance” wasbased on a framework comprising of current corporate assets and valuation, ecological assets andtheir impact on valuation, evaluating ecological performance, translating ecological performance toeconomic value and presented a brief case study of Puma. He detailed the Land, Energy, Water,Waste, Air and Carbon (LEWWAC) process which is a measuring and accounting process forEcological Assets. To summarize, Dr Kriplani stated that

The interplay of physical assets, intangible assets, human resources, and financialassets drives today’s corporate valuation

The emergence of ecological assets which corporate sector will use will change thevaluation paradigm

Ecological assets comprise LEWWAC

The first step is to measure the performance of the ecological assets – NatureSecureRating

Ecological performance would eventually need to be converted into economic value –“Naturenomics Valuation”

Reporting and Valuations will get increasingly integrated with both economic andecological parameters

“Is Current Pattern of Growth Sustainable? - An illustration for Indian States” was the topic ofpresentation of Dr Haripriya Gundimeda. The framework for the presentation was a pioneering andongoing study on Green Accounting for Indian States Project (2004-2007) scheduled to bepresented at COP 11. The indicators of biodiversity used for the study are at the three knownlevels viz. genetic, species and ecosystem, with provisions for accommodating variables withineach level. For instance, at the level of species, both the diversity and variability have beenaccounted for. Similarly, approaches for value genetic diversity accommodates known use valuesas well as aspects such as bioprospecting, value arising out of trading raw material, potential valuein terms of newer formulations being discovered etc.

Following the presentations, the group decided to deliberate in detail on the issue of linkingecological and economic indicators. Drawing upon the rich experience of Dr U Shankar who

7

outlined the framework, with inputs from Drs Gopal Kadekodi, Maria Saleth, Paul Appaswamy, KaviKumar, Haripriya Gundimeda the following decisions were arrived at:

1. The realm of uncertainty needs to be factored into any assessment since we need to bewary of misuse or the inability to understand the local context on issues of biodiversity andecology. Ecological indicators hence need to be treated separately and one need toassess all parameters of using an integrated approach to combine ecological andeconomic indicators.

2. There is a need to consider performance measured by outputs at state level at the cost ofecological imbalance and or damage,

3. There is a need to re-assess our current valuation methods of ecosystems such as forestswhere one needs to ask the question “Is the value of each bio-resource relevant when theyare alive than when dead (eg. Is a tree more valuable than timber?)”,

4. Need to link asset with performance (currently the asset valuation is relatively weak in EPIapplication – eg. Having forests is an asset while making them work for providing localdevelopment is performance) needs to be ascertained with proper methods and tools,

5. The possibility to develop a ‘GDP +” than mainstreaming ecological and biodiversityindicators and indices directly into GDP which may not work properly needs to be lookedinto,

6. There is also a need to look at ‘complimentarity’ than ‘additionality’ in includingecology/environment based issues in national accounting due to the nature ofenvironmental and ecological issues in economic and accounting terms. Complementarityaddresses the multi-use and multi-user aspects of biodiversity.

7. It is important to arrive at better understanding of better discounting of ecosystem goodsand services, which at the moment is unclear (ecological value can be added to GDP onlyif we decide on discounting),

8. The need for a technical meeting with ecologists and economists to deal with points 5 and6 above soon is a requirement to move forward the discussion,

9. A meeting with banking sector is also important to seek their inputs in light of the RBI notesent to them in December 2008,

8

10. The following can be suggested as key ecological/biodiversity indicators for EPI in itscurrent form

a. Land Use and Land cover Change: specifically to focus on fragmentation,conversion and modification.

b. Status of rare, endangered, threatened and endemic speciesc. Status of invasive alien plants and animalsd. Status of wetlands and lakes

The following are suggested as stage 2 indicators since more baseline information isneeded for assessing these

a. Status of invasive alien animals and other speciesb. Rate of loss of ecosystem goods and servicesc. Percentage availability of inland and marine fisheries

The participants also suggested that few indicators suggested in the current text of EPIpaper on biodiversity are already included in the overall matrix of environmental indicatorssuch as extent of protected areas; forest cover etc. and therefore need not be duplicated inthe list on biodiversity indicators again. The group concluded that the following action willbe needed to move forward the convergence discussions.1. Undertaking pilot, site based multi-component analysis (MCA) studies – suggestions

for Melghat, Western Ghats were made as sample sites/ecosystems.2. Preparation of a brief paper on the issue of Additionality and Complimentarity issues3. Development of ‘Experimental Ecosystem Accounts’ on the lines of UN Department of

Statistics studies for India4. Suggesting an ‘Ecological Assessment’ to CAG rather than ‘Ecological Accounting’

parameters5. Development of appropriate baselines of data and information where needed.

The participants concluded that the (EPI) mechanism is called for , could be the starting point withmodifications and that changes / modifications can be incorporated in the indices subsequently.

The meeting concluded with the Chairman NBA thanking the participants.

9

Appendix 1

Agenda of the Meeting

NATIONAL BIODIVERSITY AUTHORITY, CHENNAIAgenda

Linking Economic and Ecological Indicators18 January 2012, Chennai

10:00 10:30 Assembly

10:30 10:40 Welcome remarks – NBASelf-introductions

10:40 10:55 Overview Presentation- Dr. Balakrishna Pisupati, NBA

10:55 11:10 Indicators on Environment – Planning Commission perspective – Dr. IndraniChandrasekharan, Planning Commission

11:10 11:35 Discussion

11:35 11:45 Measuring & Accounting for Ecological Performance – Mr. Deepak Kriplani, TCS

11:45 11:55 Discussion

11:55 12:10 Is Current Pattern of Growth Sustainable? - An illustration for Indian States – Dr.Haripriya Gundimenda, IIT Mumbai

12:10 13:00 Discussion

13:00 14:00 Lunch

14:00 16:00 Overall discussion, identification of way forward

16:00 16:15 Closing remarks

10

Appendix 2List of Participants

1. Dr. Balakrishna PisupatiChairmanNational Biodiversity Authority

TICEL Biopark, Taramani – 113chairman@nbaindia.in

2. Dr. Ulaganathan SankarHonorary Professor,Madras School of Economics,Chennai – 600 0259380160830(M)

usankar@msc.ac.in

3. Dr. Paul P. AppasamyVice Chancellor,Karunya University,Karunya Nagar, Coimbatore-641 114, Tamil Naduppasamy@gmail.com

4 Dr. Indrani Chandrasekharan, (Participated through Skype Call)Advisor (E&F)Planning CommissionNew Delhiindu@nic.in,

5 Dr. Haripriya GundimedaAssociate Professor,Department of Humanities and Social SciencesIIT Bombay, Powai,Mumbai, India – 2572254haripriya@hss.iitb.ac.in

6 Mr. Dipak Kriplani,AdvisorTata Consulting and Solutions(TCS House) Raveline street21 DS Marg, Fort MumbaiMumbai – 400 001ranjit.barthakur@tcs.com

11

7 Mr. N. Sunil Kumar,Vice PresidentThe Royal Bank of Scotland N.V.Director – RBS Foundation India4th Floor, Sakhar Bhavan, Nariman Point, Mumbai – 400021n.sunil.kumar@rbs.com

8 Dr. Gopal K KadekodiHonorary ProfessorCentre for Multi-Disciplinary Development ResearchDr. B R Ambedkar NagarDharwad-580004, Karnataka, Indiagkkadekodi@gmail.com

9 Dr. S. Balaji, (Sr.) IFS.Principal Chief Conservator of Forests and Director,Tamil Nadu Forest Academy, Coimbatorebalajisrinivasagopalan@gmail.com

10 Dr. Kavi Kumar,ProfessorMadras School of EconomicsGandhi Mandapam Road, Behind Government Data Center, Kottur Puram ,Chennai -600 025kavi@mse.ac.in

11 Dr. R. Maria SalethDirectorMadras Institute of Development Studies79, Second Main Road, Gandhi NagarAdyar, Chennai - 600020, Tamil Nadusaleth@mids.ac.in

12 Dr. Jayashree VencatesanCare EarthManaging Trusteejvencatesan@careearthtrust.org

13 Dr. C. Thomson JacobExpert ConsultantNational Biodiversity AuthorityTICEL Biopark, Taramani – 113ecbd@nbaindia.in