Budget and the environment

Environmental concern has certainly heightened in Bangladesh . When Bangladesh was born, environmental concern was almost non existent. The country had only started urbanising in that period and urban pollution of different forms witnessed today in Dhaka and other major cities of the  country were unknown in that period. Industrialisation was at nascent stages and the degrading effects of industrial wastes on the soil, the water and the air were also relatively unknown quantities. But today, the environmental problems are posing as among the worst threats to the country.
The poor air quality of Dhaka city is a source of  anxiety and suffering for its residents. The  degraded sources of fresh water such as rivers from the discharge of untreated industrial and other toxic wastes and effluents is another very big source of environmental worry. Then there are also many other environmental worries facing this country ranging from lack of crop rotation that reduce soil fertility to excess lifting of underground water that has led to heavy arsenic presence in such water and  land subsidence.
It would make one long list if one counts one by one the environmental hazards in Bangladesh. Its biodiversity is  threatened from deforestation resulting mainly from population growth and other factors like aridity and desertification caused by  the interference in the flow of rivers that flow to it from the neighbouring country. Its wildlife including the world famous Royal Bengal Tiger  are dwindling from the threat of salinity and excessive human encroachments affecting  their main abode — the Sunderbansmangrove forests. Bangladesh at one time was famous for over four hundred species of sweet water fishes . Only about sixty or seventy such species have survived human greed and the rest have become extinct or nearly so.
In this way, it should be possible to go on counting the environmental ills to show why the environment should be near  the top of the  agenda of the government in this country for action. Even hospitals and clinics in Dhaka city dispose off  their highly hazardous medical garbage most carelessly and the conventional garbage landfills  are located  next to densely populated residential areas ;   heavy polluting tanneries seen right in the midst of densely populated urban areas. Indeed, one can go on  and on to highlight the many faces of environmental decline in this country.
Therefore, it  is no wonder that  the economists and the environmentalists  have been  drawing  attention to the  very pressing need for  much better environmental regulation to control the adverse environmental drift. They have  recommended the pollution tax or green tax for which the polluters would be required to pay a tax big enough for them to feel  actively discouraged from their polluting activities. The proposers of  such taxation measures in support of the environment  are of the view that the same will rein in the polluters. Apart from the pollution taxes there have been recommendations also for  other measures such as  reduction of duty for  the import of environment friendly  equipment and automotive vehicles and substantially increased duty for the import of unfriendly ones.
The proposed fiscal measures to promote   environment  friendly  actions and behaviour  may  sound somewhat novel in the context of Bangladesh. But their appropriateness or usefulness can be hardly doubted. They are a part of life  in countries where environmental concerns are high. For instance, in Singapore,  a penalty in the financial sense  could be required  even for  shredding  bits of paper on a  road which might be considered as a trivial or no offence  in our country.
The point is environment is no longer looked at in isolation in those countries. Economics also is not seen divorced from pollution. Economists today   are apt to discuss these days terms and concepts such as social costs and benefits of economic activities, the externalities (whether positive or negative of any economic activity) on third parties, the costs of environmental clean up, etc. They are for allocative  efficiency in the use of resources  to produce goods and services that would maximise social benefits and reduce the social costs.
For example, the  ugly black fume belching three-wheelers in Dhaka city were heavy polluters but their operators argued that they  engaged in economic activities by transporting  and employing people. The drivers of the three wheelers would lose their work and income as their vehicles were phased out and that would add to unemployment and misery.
But this argument was untenable because, with allocative efficiency, we can have both non polluting versions of these three wheelers  such as the new scooters that run on compressed natural gas (CNG) while also achieving the environmental objective of non air pollution.
The  polluting three wheelers were engaged in some form of economic activity all right but  these were also causing a negative externality in the process such as air pollution. Apart from the unpleasantness of air pollution to the victims, such a negative externality also exacted a heavy price in the form of shortened lives from illnesses caused by air pollution and the amounts expended in higher medical costs to treat such diseases. Thus, the need for allocative efficiency or prudent use of resources in this sector  could be met by investing on  non  polluting three wheelers which   contribute to economic activities minus their negative social or economic  costs.
The purpose of  so much textual verbiage here is to drive home the point that time has arrived for our planners to  start thinking hard about efficiency in the allocation of  resources and nothing can be better than the national budget to put  such principles into practice. And  the next national budget is around the corner, a suitable time to start  giving due attention to these matters.
Physical arm twisting and blunt enforcement measures  or lack of the same so far have yielded little result against certain  environmental problems. But the fiscal measures that have been proposed stand a  better chance of succeeding by creating  adequate   disincentives for the polluters to wind up their polluting activities in view of the penal taxes or  the inability to bear the heavy import costs of the polluting agents.
Not only  in respect of these proposals  the budget makers need to redraw their strategy. They ought to  give the highest priority to the principle of allocative efficiency in  all spheres of the budget to more and more channel resources into activities that would  lead to  economic activities and economic growth but not at the cost of the environment.


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