Cost Benefit and Cost Effectiveness Analysis
Question:
Provide an overview of the potential for applying cost benefit analysis and cost effectiveness analysis to assess relevant climate change mitigation options in India , examine whether such analyses have already been performed, review the national climate change mitigation policies in India with respect to cost benefit analysis and cost effectiveness analysis and reflect on how cost benefit analysis and cost effectiveness could be applied to improve the national climate change mitigation policies of India.
Climate change is arguably the most pressing issue that is facing every country at the moment. Climate change is projected to drastically alter the entire environmental balance and, in turn, could also shift the current power equations of the globe. It is a fact that some countries would be facing much difficult times ahead as compared to the others when it comes to putting up with the consequences of global warming and climate changes (Keohan and Olmstead 2016). India is one of the largest emitters of carbon di-oxide and is ranked at 126th position out of 132 countries on the scale of environmental performances and its measures to control the environmental degradation. India is also the fifth largest greenhouse gas producer in the world and accounts for almost five percent of the world’s total greenhouse gas emissions. The following discussion relates India’s national policies on climate change to a cost benefit and effectiveness analysis framework to understand the extent to which these are impacting and what are the actual positive outcomes that may be resulted from the policies.
The cost benefit and cost effectiveness theories are economic theories that try to equate the cost of a certain economic policy to the benefits that are reaped by the society and the community. Cost effectiveness theory is a significant aspect of the cost benefit analysis. The cost benefit analysis is essentially a term that is used to understand how much a society or community is gaining from a certain economic policy (Dunn 2015). This is judged by looking into the cost of the economic policy and the social advantages that are originated. Cost effective analysis, on the other hand, is more related to the health benefits of the society as a whole. Since it is inappropriate to monetize health effects, cost effectiveness analysis can help to understand the proportion between the cost of a measure and the health benefits resulted by the same (Dunn 2015). It is a ration where the denominator is the health gains as induced by an economic measure and the numerator is the cost that is necessary to ensure positive health gain outcomes. The current discussion would be beneficial in terms of these two analyses methods as economic and environmental policies will be looked into and shall be equated against the health benefits that they yield.
The UNFCCC (United Nations Framework Convention on Climate Change) defines climate change as a change in the climate and the environment that is both directly and indirectly related to human activities, that alter the atmosphere of the globe (Nordhaus 2014.).
India’s National Policies on Climate Change
The Government of India acknowledges the Paris Treaty and accepts it wholeheartedly so that active contribution on their part can be made towards the global strife for preserving the environment and maintaining an ecological balance (Intergovernmental Panel on Climate Change 2015). With this in mind, the Indian Government has formulated the National Action Plan on Climate Change (NAPCC), which is at its core a compilation of the different ways that the climate should be protected and the different policies that are aimed to achieve simply that (Plevin Delucchi and Creutzig 2014). These policies cover a number of different aspects of environmental degradation and lay down protocols and policies that have the potential to reduce the harmful effects of the human activities upon the environment.
The NAPCC is published by the Prime Minister’s Council on Climate Change, which is also a segment of the Government of India, and is aimed towards spreading awareness among the people and their representatives, as well as the different departments and agencies within the government, different industries and the general community and the society as a whole. The purpose of the document is to educate the masses on the evils and threats as posed by climate change as well as elaborating upon the steps that have been proposed by the Indian Government to counter these vital issues (Chandel et al 2016).
The document is based upon a few simple principles, which serve as the guidelines for the policies and to exert as to how should the policies be adopted and implemented: both by the government and the citizens of the country (Thaker and Leiserowitz 2014). These principles state that:
- A development strategy should be devised that is in accordance to the changing climate and is sustainable in nature, so that every segment of the society, including the poor and the vulnerable ones, can be included when the overall community is stepping towards a better economic condition
- Balancing between and achieving national growth through ecological sustainability
- Coming up with efficient and cost-effective strategies, that would be using demand side management principles
- Adopting and implementing proper strategies for countering the effects of greenhouse gas emissions
- Creation of new forms of market, innovating regulatory methods and mechanisms that would be facilitating in the promotion of sustainable development
- Implementing private-public partnerships, and,
- International collaborations for research, development and sharing of technologies.
At the core of the NAPCC, there are eight essential National Missions, which are focused on a long-term integrated approach to attain the goals relating to the context of climate change. These missions are inclusive of: National Solar Mission, National Mission on Sustainable Habitat, National Mission for Enhanced Energy Efficiency, National Water Mission, national Mission for a Green India, national Mission for sustaining the Himalayan Ecosystem, National Mission on Strategic Knowledge for Climate Change and National Mission for Sustainable Agriculture (Plevin Delucchi and Creutzig 2014).
Every economic and environmental policy has some degree of social and economic implications that have significant impacts on the community in various degrees. Evaluation of climate policies have become an important application of the CBA (Cost benefit analysis). Even though the CBA was used in this context, it was not at all designed for fulfilling this purpose, as the spatial effects of climate changes transcend international borders and also often general generational scales (Dunn 2015). However, there are still measures and methods that would enable a person to estimate the social benefits of the policies.
The Indian climate change policies do have an attractive model and genuinely good heart, however, the societal implications are not always in accordance to the original plans of the policies. In many areas, construction of a dam has been seen to be both economical and environmentally healthy in terms of generating electricity (Powlson et al 2014). However, upon commencing the task to build the dam, it was understood that local communities would be irreversibly harmed both during the process of the construction, as well as after it was completed. Also, the regional ecological and environmental balance was projected to be heavily hampered due to the construction of the dam (Kriegler et al 2014). While the construction of the dam is justified by the Indian environmental policies and economic theories, a larger take on the aspects would establish that sustainable development is not being reached as the local communities and ecology are being adversely affected.
From this viewpoint, the cost-benefit analysis goes on to show that the benefits that are being achieved from the environmental policies, are often coming a much larger social cost, thus rendering the entire process not to be profitable at all. On the other hand, the health hazards that are projected to befall upon the members of the society as a result of a certain policy being implemented also shows that the cost effectiveness aspect of the CBA is also non-existent (Betsill et al 2014).
Conclusion
From the above discussion, it could be concluded that, India is on right direction regarding acknowledging the environmental issues. The government has adopted several national policies that are specifically focused towards making sure that the climate change problems are mitigated and social justice is also given high priority. The policies, despite their problems and drawbacks, are sure to be helping the country ensure ecological balance, while also making sure sustainable development is achieved.
References
Betsill, M., Dubash, N.K., Paterson, M., van Asselt, H., Vihma, A. and Winkler, H., 2015. Building Productive Links between the UNFCCC and the Broader Global Climate Governance Landscape11. This article reflects and builds upon discussions at a December 2013 workshop held in Neemrana, India, sponsored by the Centre for Policy Research (New Delhi) and the Mitigation Action Plans and Scenarios (MAPS) program of the Energy Research Centre (Cape Town). This article builds on pp. 14–19 of the workshop report. See Centre for Policy Research 2014. Global Environmental Politics.
Chandel, S.S., Shrivastva, R., Sharma, V. and Ramasamy, P., 2016. Overview of the initiatives in renewable energy sector under the national action plan on climate change in India. Renewable and Sustainable Energy Reviews, 54, pp.866-873.
Dunn, W.N., 2015. Public policy analysis. Routledge.
Intergovernmental Panel on Climate Change, 2015. Climate change 2014: mitigation of climate change (Vol. 3). Cambridge University Press.
Keohane, N.O. and Olmstead, S.M., 2016. Introduction. In Markets and the Environment (pp. 1-10). Island Press, Washington, DC.
Kriegler, E., Weyant, J.P., Blanford, G.J., Krey, V., Clarke, L., Edmonds, J., Fawcett, A., Luderer, G., Riahi, K., Richels, R. and Rose, S.K., 2014. The role of technology for achieving climate policy objectives: overview of the EMF 27 study on global technology and climate policy strategies. Climatic Change, 123(3-4), pp.353-367.
Nordhaus, W.D., 2014. A question of balance: Weighing the options on global warming policies. Yale University Press.
Plevin, R.J., Delucchi, M.A. and Creutzig, F., 2014. Using attributional life cycle assessment to estimate climate?change mitigation benefits misleads policy makers. Journal of Industrial Ecology, 18(1), pp.73-83.
Powlson, D.S., Stirling, C.M., Jat, M.L., Gerard, B.G., Palm, C.A., Sanchez, P.A. and Cassman, K.G., 2014. Limited potential of no-till agriculture for climate change mitigation. Nature Climate Change, 4(8), p.678.
Thaker, J. and Leiserowitz, A., 2014. Shifting discourses of climate change in India. Climatic change, 123(2), pp.107-119.
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