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India Adapts



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Deepak Lal has a typically thoughtful essay in New Delhi’s Business-Standard this week. He finds there are many reasons for India to rethink its energy policy, but that global warming is not one of them:

By contrast, the estimates I made for the Planning Commission in the early 1970s (see Lal: Prices for Planning, HEB, 1980) based on the same methodology as the Stern Review, but with more plausible parameters, yielded a social discount rate of 7 per cent for India. At this discount rate, the present value of Re 1 accruing 75 years from today would be worth nothing, making most of the speculative economic costs and benefits, and the apocalyptic predictions of the Stern Review, irrelevant for India.

This does not downgrade the serious current environmental problems caused by rapid growth in India and China. Anyone who has choked in the fetid air of Chungking, Xian, Beijing or Delhi will know that no climate scares are needed to provide a case for dealing with their unhealthy air pollution. Similarly India and China face a growing water crisis irrespective of what is happening to global CO2 emissions. Subsidies to energy and water use need to be removed for efficiency reasons. Whilst, given the political instability and growing political determination of supplies of fossil fuels from the countries where they are concentrated, it is sensible to diversify energy sources. Both nuclear power and India’s coal reserves provide more secure alternatives. Bio fuels, by contrast, have the disadvantage of competing for limited land with essentials like food. However, the sun, which most probably controls the climate, also offers the backstop technology which will provide the unbounded energy for India’s continuing economic growth. In thinking about all these economic issues, the changing climate is a red herring.

It appears the Indian government is following Prof. Lal’s advice, while still giving lip service to “climate change.” Its emerging policy is focused on adaptation, not emissions targets:

The growing needs of the Indian economy put pressure on national resources, he said.

The council will work on a strategy to offset the impact of melting Himalayan glaciers which feed many of the country’s rivers and are a major source of water and power.

A tree planting programme will also be launched to replenish 15m acres of degraded forests.

And the council will come up with a road map for energy-efficient approaches to economic development.

But no mention was made of cutting carbon emissions.

India has long resisted signing up to any mandatory cuts, saying the impact on its growing economy will be too severe.

As the developing world seeks to square long-run environmental and resource concerns with the immediate necessity of lifting billions rapidly out of poverty, the Indian model is likely to be much more attractive than the carbon-constrained model favored by European technocrats.



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