Background
Environmental Economic Policy Unit is designed within an overall policy framework for sustainable development. Environmental resources constitute the ‘natural capital’ dimension of the development process which is being recognized as an essential aspect of human well-being by all schools of development theory and practice. In the context of the economy of Sri Lanka, among others, land, water, forest, fisheries and mineral resources serve as important sources of economic inputs while air, water and surrounding ocean act as sinks for absorbing the effects of pollution and spill-over effects. Extravagant demands made by the economy in the recent past upon these systems have not only placed them under severe stress but also threatened even the most fundamental life support systems. Hence the country is confronted with the challenge of finding a sustainable path of economic development that can accommodate environmental concerns in an effective manner so that the well-being of both present as well as future generations is ensured.
Research Programme
EEP programme aims at strengthening the national effort in meeting this challenge by generating essential scientific information necessary for rational policy decisions. As a measure to achieve this objective in a successful manner, the research agenda of EEP Unit is logically organized under five major themes within which priority areas of research are identified. The themes are as follows. Policy and Institutions for Integrated Management of Natural Resources One major role of environment is the supply of natural resources for regular functioning and growth of the economy. In the process, some resources are used up (e.g., mineral resources, fossil fuels), some are renewed and replaced subject to utilization or stocks get depleted due to over-exploitation (e.g., forests, fisheries) while others are being degraded in terms of quantity and quality (e.g., land and soils, water, air). Therefore, various policies have been introduced and are being proposed continuously to manage and sustain the use of environmental resources in the economy, which is a cumulative process. In its entirety, Sri Lanka’s policy on environment and natural resources is comprised of a large body of legislative enactments, plans and programmes which have been introduced from time-to-time to address the perceived problems of using environmental resources in the economy. Despite this capacious body of environment policy, however, it is no secret that environmental resources are continuously being damaged, over-exploited and degraded at a rapid rate for economic purposes. There are three important reasons, which are responsible for this situation. Firstly, despite the fact that environmental resources are physically and socio-economically interconnected with each other and therefore should be managed in an integrated manner, policies are being continuously formulated and implemented in isolation. Secondly, the integrated management of natural resources implies appropriate institutions, which are flexible enough to change and evolve to match emerging realities. Finally, economic as well as environmental conditions change rapidly thereby frequently rendering existing policies obsolete. Hence, existing policies should be monitored, reviewed and updated regularly, which is not taking place in timely manner. One major objective of the EEP research programme is to review and examine the broad realm of environment policies in the country with the view of making them more sustainable and responsive to emerging realities. Accordingly, emphasis is given to integrated management and institutional aspects of the policies concerned. As these studies interfere directly with the mandate of certain state, private and non-governmental organizations, attempt is always made to design and undertake studies in close collaboration with relevant stakeholders.
Policy for Overcoming the Challenge of Pollution and Safeguarding the Life Support Systems
While utilizing the natural resources as raw materials and inputs, various economic activities generate waste materials and harmful by-products which are freely disposed to the environment, particularly into air, water and ocean resources. As these same resources constitute the essential life support systems for humans and other life forms too, the welfare of masses is largely impaired due to problems created on health, livelihoods, cultural and on various other aspects. Being public goods with non-market characteristics these resources are abused for emission of pollutants and other wastes by all sectors of the economy in indiscriminate manner. Sri Lanka has witnessed a rapid increase in pollution of all forms such as air pollution, river and stream pollution, marine pollution, pesticide pollution and urban solid waste pollution. Even though the government responded with introducing the National Environment Act and other policy measures, problems seem to continue to grow. As far as Sri Lanka’s policy is concerned it is more biased towards the command and control (C&C) approach while many countries are now opting towards ‘market-based instruments’ (MBI) as the effectiveness of C&C approaches have been found to be questionable under many circumstances. Many environmental problems do not have ready-made solutions and often possess unique and specific characteristics that cannot be addressed by policies imported from elsewhere. Therefore, finding an optimum mix of policies to address the environmental problems that Sri Lanka is currently facing is a challenging task, which needs significant research and scholarly effort. To fill this wide information gap, EEP focuses on exploring novel approaches for environment management and policy in Sri Lanka. Given that the research undertaken in this subject area in Sri Lanka is quite limited there is a vast ground to be explored and covered. EEP aims at finding innovative approaches which are effective and practicable under local conditions so that national aspirations towards sustainable development are met successfully.
Integrating the Macroeconomic Policy and Environment
Despite the recent emergence of environment policy as an important aspect of sustainable development, in the practical arena of economic policy making, it still remains a far-flung field. However, there are no essential reasons to maintain this state of affairs as such since recent developments in environmental economics have introduced numerous contributions to fill this gap and thereby opened innovative ways to integrate environmental concerns into macro-economic decision making. The exercises on green accounts to modern integrated assessment models exemplify this. Besides, recent advances in MBI have provided various practical means to incorporate environmental concerns into macroeconomic policy in the form of taxes, incentives, subsidies, quotas etc., which are tools familiar for decision makers on fiscal and monetary policies. This is one of the least explored areas in the economic policy in Sri Lanka, even though it is fast becoming one of the important areas of economic policy research. If neglected continuously, the gap between macroeconomic and environmental polices can create conditions that can potentially negate the expected fruits of economic growth due to dire environmental consequences. There is an increasing number of examples for this effect from centres of high economic growth in South East and East Asia. For Sri Lanka, as a nation which is aspiring to emulate a similar rate of high economic growth, it is imperative to learn from their mistakes too. Exploring the ways to link macroeconomic and environment policies is one important theme of the research agenda of the EEP Unit. Accordingly, research studies are designed to examine the ways to integrate these broad spheres of policy, based on inputs from work done by both macroeconomic policy and environment policy research programmes, so that more fruitful macro level policies are formulated. Many of the studies coming under this theme are collaborative efforts with other IPS divisions as well as with external collaborators.
Facing the Challenge of Global Environmental Threats
National economies are fast being integrated into the global economy. On the other hand, as best captured by the idea of ‘spaceship earth’, the environment is naturally a true global system that overrides arbitrarily created national boundaries. Except for a few, many environmental phenomena play a part in the global system and therefore are interdependent on each other. Globalizing of national economies strengthens and deepens this interdependency further. As economic activities become global in their scale, the environmental consequences of them are felt increasingly beyond national boundaries. Unfortunately, many of these global environmental impacts are adverse in their nature, which is exemplified by the issues of global warming-climate change, depletion of ozone layer, loss of global bio-diversity and pollution of global commons such as atmosphere and oceans. Numerous nations are destined to be unwilling victims to these impacts disregard of the level of their contributions to problems concerned. Sri Lanka is not an exemption. One example is the issue of global climate change. This is a global incident for which affluent nations in the North are the main responsible party through their high-level emissions of green-house-gases (GHG). However, Sri Lanka, being a tropical island located in a lower latitude region of the globe, is among the more vulnerable group of nations to ensuing climate changes even though its contribution for global warming can be considered as negligible. Therefore, finding ways to overcoming and minimizing the ensuing damages becomes an inevitable task that should be taken into consideration by policy makers involved in all spheres of activity. Research designed to examine the impacts of these global environmental issues on the economy of Sri Lanka and to identify optimal ways to face them through mitigation, modification and adaptation of our economic actions constitute an important part EEP research agenda. It is envisaged that knowledge gained from such studies would enhance better decisions towards a sustainable future.
Sustainable Development Alternatives for overcoming Poverty
Recent period has witnessed many economic alternatives that are being advocated on the grounds of their positive environmental contributions (or lack of adverse effects thereof). These alternatives can be found in all sectors of the economy. Recycling of industrial materials and waste, eco-tourism, integrated pest management (IPM) and organic agriculture are a few of them. A few number of such green alternatives, have been introduced to Sri Lanka also recently, especially in the agriculture sector. Among them are attempts to introduce conservation farming and agro-forestry as alternatives for chena cultivation, SALT technique for controlling soil erosion in up and mid-country areas and IPM to reduce pesticide pollution. Also among such efforts are attempts on recycling solid waste and promotion of eco-tourism. Despite the fact that these alternatives have well demonstrated their technical effectiveness, none of them gained the momentum necessary to generate expected results. Many argue that in spite of the technical and physical suitability, socio-economic aspects have largely been ignored in the introduction of such alternatives. This argument has a strong element of truth as non-acceptance by target groups was the major reason behind these failures on many occasions. Therefore, the assessment of socio-economic viability of potential green alternatives becomes an important aspect of environment policy research. Assessing the socio-economic viability of existing and potential alternatives for sustainable development is identified as an important area of research interest by EEP research programme. While helping to identify reasons for past failures, it can also suggest necessary precautions for successful introduction of new alternatives. Emphasis is always given to assess pro-poor aspects of alternatives concerned and therefore to appraise the potential for using them as instruments of poverty reduction. |
