impact of climate change on the indian economy

8/14/2019 Impact of Climate Change on the Indian Economy

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SOCIO-ECONOMIC IMPACT

OF THE CLIMATIC CHANGE

IN INDIA

Dr. Tarun Das*,

Professor (Public Policy)Institute for Integrated Learning in

Management

Lodhi Institutional Area, New Delhi-

110003.

Formerly, Economic Adviser, Ministry

of Finance, India

30 October 2008

______________________________________________________________________

* The paper expresses personal views of the author and should not be attributed to theviews of the organizations he is associated with. The author would like to express hisgratitude to the Poverty and Development Division, UN-ESCAP, Bangkok for providing

an opportunity to prepare this paper.

** For any clarification and additional information, EMAIL [email protected]

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mailto:[email protected]:[email protected]


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COUNTRY REPORT ON INDIA: PART-B

SOCIO-ECONOMIC IMPACT OF

THE CLIMATIC CHANGE IN INDIA

Professor Tarun Das, IILM, New Delhi-110003.

CONTENTS

1. Introduction

2. Climatic Change and its Socio-Economic Impact in India

2.1.Soil degradation and crop/ production loss

2.2.Water pollution2.3. Air pollution2.4.Poverty, population and environment2.5.Bio diversity

3. Natural disasters (such as tsunamis, floods, storms, hurricanes etc.)

3.1. Natural disasters in India in the recent past (5 to 10 years)

4. Disaster management systems and precautions

4.1 Natural disaster management measures4.2 Acts and laws4.3 Financial planning for natural disaster management

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COUNTRY REPORT ON INDIA: PART-B

SOCIO-ECONOMIC IMPACT OF

THE CLIMATIC CHANGE IN INDIA

Professor Tarun Das, IILM, New Delhi-110003.

1. Introduction

Climate change is one of the greatest challenges facing the worlds environment, societyand economy today. Its impact can already be seen across the globe, and no country willbe immune. As climate change impacts on the economy and growth are inevitable, theneed to adapt to the changing climate becomes more pressing, not just in the way we live,but in the way we do development.

Natural disasters

Natural disasters are the most adverse outcomes of climatic changes. Since the dawn ofcivilization, human society and the natural disasters have been closely interlinked. Thesenatural disasters lead to heavy losses of human lives and property and are serious threatsto sustainable environment. In the past twenty years, earthquakes, volcanic eruptions,landslides, floods, tropical storms, droughts and other natural calamities killed over 3million people, inflicted injury, disease, homelessness and misery on another one billionpeople, and caused billions of dollars of material damage. Statistically, 90% of the totaldisasters and 95% of the total disaster related deaths worldwide occur in developingcountries whereas the fraction of GNP lost is estimated to be twenty times greater than inindustrialized countries.

By the year 2025, 80% of the world's population will reside in developing countries, andit has been estimated that up to 60% of these people are highly vulnerable to floods,severe storms and earthquakes.

Natural disaster areas are well known. Yet, the response to disasters and environmentalthreats are reactive and are characterized by increased defensive activities. As a result,when a disaster strikes there is an evidence of lack of trained persons to coordinatedisaster relief activities.

The issues of immediate concerns are availability of potable water, restoring of food andfuel supply lines, re-establishing transport and communication links, providing medicalrelief and rebuilding of key infrastructure such as health centers, food storage godownsetc. The medium and long-term concerns of reconstruction and rehabilitation of disastervictims is a even more challenging task, since it involves continuous support for anumber of years.

What is however needed to tackle natural disasters is a comprehensive approach todisaster management. The approach involves four phases: mitigation, preparedness,

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response and recovery. A pro-active mitigation approach is more effective andeconomical compared to rebuilding efforts in the recovery phase. Further, thedecentralization of decision-making is important in strengthening of organizations fordisaster preparedness, prevention and mitigation, particularly given the need for rapid andlocalized responses in the face of swiftly occurring catastrophes.

Indian Situation

India shares the global concern about the threat to the atmosphere due to the climaticchange caused by depleting ozone layer and rising average temperatures. It alsorecognizes the urgent need for regional and global cooperation in addressing this concern.In June 1991, India became a Party to the Vienna Convention for the Protection of theOzone Layer, and in September 1992 to the Montreal Protocol on Substances thatDeplete the Ozone Layer. It signed the United Nations Framework Convention onClimate Change (UNFCCC) in June 1992, and ratified it in November 1993.

India has to fulfill its obligations under the Montreal Protocol but is not required to adoptany emissions reduction targets as Indias contribution to ODS consumption and to GHGemissions in the atmosphere is not significant. The emission of GHGs is, however,expected to increase significantly in the coming years. At per capita levels, though, theseemissions would remain much below the global average. The per capita level of theconsumption of ODS is also below the level permitted under the Montreal Protocol.

Indias consumption of ODS in 1991 was about 10370 tonnes. Of this, about 85% wasproduced domestically and 15% was imported. In ozone-depleting potential (ODP) terms,the total consumption was 13111 tonnes.

2. Climatic Change and its Socio-Economic Impact in India

There is growing evidence that the Earth is heating up. The 1990s have seen some of thehottest years in the world since the Industrial Revolution began. Nine of the hottest yearssince 1860, when scientists first started taking measurements, have in fact taken place inthe last 11 years. When the global average temperature of 1997 is compared with theestimates that scientists have made of world temperatures over the last 600 years, it turnsout to be the hottest year on record with 1995 and 1990 following 1997. The year 1997was some 0.43C hotter than the average temperature for the period 1960 to1990. Andnow 1998 is likely to break the record of even 1997.

The Intergovernmental Panel on Climate Change, an international committee of scientistsset up the United Nations to track global warming says that the average global surfacetemperature has already increased by 0.3-0.6C in the last one hundred years which isbeginning to alter the climate2. Scientists are reporting that the spring is now coming aweek earlier in the northern hemisphere, the treeline in the northernmost forests of theworld are moving towards the pole, the level of the atmosphere at which the temperaturereaches 0C has been rising by five metres annually, and ice shelves on Antarcticasnorthern fringe are disintegrating. Unfortunately, though we know that the heating up of

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the Earth will definitely change the global climate, scientists cannot yet forecast with anyprecision how a particular region like South Asia or a particular country like India will beaffected. But scientists are already pointing out to several possibilities that are of greatconcern to India:

(1) Studies show that the heating up of India will not be uniform across the country.While the average annual increase will be about 1C, the winters of north andnorthwest India may be more than 2C warmer by the middle of the next centuryand there could be a cooling of over 1C in the Northeast. The monsoon season islikely to about 1C warmer on average.

(2) Some studies have also indicated a decline in monsoon rainfall over the northand central plains of India in the decades ahead because of the general weakeningof the monsoon. This is because there will be a decrease in the land-sea thermalgradient. No significant rainfall decrease is expected during the winter season.But the average annual levels and monsoon season levels of soil moisture could

decline significantly in the central plains. There will also be a significant declinein surface runoff in these plains leading to less water in the rivers. Thus, globalwarming could have a significant impact on the countrys water resources.

(3) Yet another study has calculated that rice yields could drop by as much as 15 to42 per cent and wheat yields by 1.8 to 3.4 per cent and agricultural prices inrelation to non-agricultural prices could increase by 7-18 per cent. Even if theincreased carbon dioxide in the atmosphere stimulates plant growth, because ofan effect known as carbon fertilisation, there would still be reductions in yields.

(4) Other experts argue that the carbon dioxide concentration in the atmosphere hasgrown by 25 per cent in the period between 1900 and 1980 but no noticeablechange in productivity of several crops has occured, except due to improvementsin varieties and new management practices. Therefore, carbon fertilization mayhave no or very limited effect. A 2C increase would be intolerable in India.

The heating up of the Earth will melt the polar ice caps and thus raise the level of theworlds seas. This could drown the entire country of the Maldives and nearly one-third ofBangladesh resulting in unmanageable migrations into the higher lands of India. Theworst affected areas in India are likely to be the low-lying areas of Goa, West Bengal andGujarat.

The heat will also lead to glaciers melting and becoming smaller in the Himalayas andthus there will be reduced water flows in Indian rivers during the summer period. Thereare more than 5218 glaciers in the Himalayan mountains which occupy nearly 9 per centof its total area or about 3.822 million hectares. Already, there is evidence that severalHimalayan glaciers are receding. Between 1977 and 1990, the Gangotri glacier retreatedby as much as 364 metres or about one-third of a kilometer.

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Scientists believe that extreme weather events will increase when the world warms up. Inother words, there could be even more intense cyclones,more intense rainstorms andmore intense drought periods. All of these weather-related problems already exist in Indiaand but if they intensify, they could lead to havoc. This will have serious economic andpolitical impacts on the Indian subcontinent. We must not forget that the political process

leading upto the creation of Bangladesh was triggered off by a cyclone which ultimatelyled to nearly ten million people fleeing to India. More than 1,000 people died in theAndhra Pradesh cyclone in 1996.

Preliminary results suggest more frequent heavy rainstorms over the Northeast whichcould mean even more flash floods in that region. The World Health Organisation haswarned that several diseases like malaria, dengue and cholera will become more intensein tropical countries like India because breeding conditions for mosquitoes and variousother germs will improve.

The United Nations Inter-governmental Panel on Climate Change (IPCC) has warned

that, in economic terms, the consequences of climate change will be far more severe fordeveloping countries because they will have less financial resources to deal with its ill-effects. If the carbon dioxide concentrations in the atmosphere were to double, the IPCChas calculated that the resulting economic damage would wipe out only 1-2 per cent ofGDP for industrialised countries whereas developing countries could see 2-9 per cent oftheir GDP wiped out.

Why is there so little investment in research on impacts?

Compared to the research that has gone into understanding the process of climate change,little effort has been made to understand how different countries and regions will beaffected by climate change. At a few international conferences, scientists concluded thatthere appears to be a conspiracy of silence on this count because it may show that mostdamage will take place in the developing world whereas it is the Western world whichhas largely caused the problem. If this turns out to be true, there is a danger that publicpressure in Western nations may become so low that these countries may notwant to do much about the problem.

The heating up of the Earth will be maximum towards the polar regions. This does meanthat whereas agriculture will become more prone to pests and water shortages in thedeveloping world, there will be greater scope for agriculture in the Northern countriescause their winter will become shorter and less intense. The northernmost forests ofSiberia and Canada are already said to be extending further towards the North Pole. A USeconomist has, in fact, publicly stated that the US should not worry too much aboutglobal warming as it will suffer only a very small impact. Unfortunately, there is verylittle researcher impacts of global warming in developing countries.

The heating up of the Earth will melt the polar ice caps. This could drown the entirecountry of the Maldives and nearly one-third of Bangladesh resulting in unmanageablemigrations into India.

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2.1 Land Degradation, Soil Erosion and Crop/ Production Loss

On the basis of land-use classification, the land use statistics is available for roughly 306million hectares (mha) of land which accounts for 93% of the 329 million hectares of thetotal geographic area. The area under barren and uncultivable land (such as deserts,

snowbound and remote, saline land, weed infected and ravine land etc.) is unsuitable forcultivation. About 263 million hectares are available for agriculture, forestry, pasture andother biomass production. The area under agricultural land has also decreased due toincrease in developmental activities; e.g. housing, transport system, irrigation, etc.

The land use in India, over the last five decades, has undergone drastic change. Landunder agriculture has almost doubled, forest cover has dwindled to less than half, largetracts of fertile agriculture and forest land have been diverted for urbanization andsettlements. Deforestation contributes to loss of precious top soil which amounts to about35 percent of the global sediment load going to oceans even though water flowingthrough our rivers is only about five percent of the flow of rivers in the world.

Land Degradation

Land is degraded when it suffers a loss of intrinsic qualities, decline in its capabilities orloss in its productive capacity. Land degradation may be due to natural causes or humancauses or it may be due to combination of both. Soil erosion is the major cause of landdegradation.

Soil Erosion

Soil is the non-renewable natural resource which supports life on earth. It is estimated

that one-sixth of the world's soils have already been degraded by water and wind erosion.This has two important consequences: the reduced ability of society to produce sufficientfood due to loss of quality and depth of soils; and resulted in off-site pollution associatedwith erosion. These include siltation of dams, pollution of water-courses by agriculturalchemicals and damage to property by soil-laden runoff. On-site issues of declining soilquality tend to be spatially dispersed occurring on many different soil types whereas off-site pollution issues tend to be locally concentrated.

Soil erosion problems are not confined to the Developing World. In the last two decades,there has been a growing appreciation of the threat to European soils as a result ofintensification of agriculture, overgrazing and climate change. The threat is most apparent

in the Mediterranean Region where the term "desertification" has been used to describe aseries of interrelated changes which include soil erosion. The EU-funded MediterraneanDesertification and Land Use (MEDALUS) project is currently addressing these latterissues for much of Southern Europe.

In India, about 130 mha of land (45% of total geographical area) is affected by serioussoil erosion through ravine and gully, shifting cultivation, cultivated wastelands, sandyareas, deserts and water logging. Soil erosion by rain and river that takes place in hilly

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areas causes landslides and floods, while cutting trees for firewood, agriculturalimplements and timber, grazing by a large number of livestock, over and above, thecarrying capacity of grass lands, traditional agricultural practices, construction of roads,indiscriminate (limestone) quarrying and other activities, have all led to the opening ofhill-faces to heavy soil erosion.

Wind erosion causes expansion of deserts, dust, storms, whirlwinds and destruction ofcrops, while moving sand covers the land and makes it sterile. Excessive soil erosion withconsequent high rate of sedimentation in the reservoirs and decreased fertility has becomeserious environmental problems with disastrous economic consequences. Of the 16 riversof world, which experience severe erosion and carry heavy sediment load, 3 Indian rivers,namely; Ganges, Brahmaputra and Kosy occupy the 2nd, 3rdand 12thposition, respectively.

Soil erosion results in huge loss of nutrients in suspension or solution, which are removedaway from one place to another, thus causing depletion or enrichment of nutrients.Besides the loss of nutrients from the topsoil, there is also degradation through the

creation of gullies and ravines, which makes the land unsuitable for agriculturalproduction. Subsidence of the land in some areas and landslides in the hilly tracts areproblems affecting highways, habitations and irrigation dams.

The use of pesticides above permissible limits enters the food chain, causing healthhazards. A major concern particularly about chlorinated hydrocarbons like DDT is theirpersistence in soil. Among fertilizers, the conversion of fertilizer-N to gaseous forms-ammonia (NH3) and various oxides of Nitrogen lead to atmospheric pollution. Thepresence of ammonia and sulphur dioxide leads to acid rains which ultimately degradethe soil. Atmospheric ammonia contaminates water bodies, impairs visibility and causescorrosion. Nitrous oxide also contributes to global warming.

Mining and Quarrying

The activity of mining and quarrying covers underground and surface mines, quarries andwells and includes extraction of minerals and also all the supplemental activities such asdressing and benefaction of ores, crushing, screening, washing, cleaning, grading, millingfloatation, melting floatation and other preparations carried out at the mine site which areneeded to render the material marketable. The mining activities in India are governed bythe Mineral Conservation Development Rules (MCDR), 1988. Every license holder ofmining lease shall take all possible precautions for protection of environment and controlof pollution while conducting prospecting, mining beneficiation or metallurgicaloperations in the area. Specific provisions for proper removal and utilization of top soil,storage of over burden and waste rocks, reclamation and rehabilitation of lands, precautions against air pollution, noise and ground vibrations, restoration of flora,discharge of toxic liquid, control of surface subsidence have been provided under theMCDR. The Indian Bureau of Mines collects the statistics on all these aspects under theabove rules.

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2.2 Air pollution

Air pollution in Indian cities is also growing by leaps and bounds. The Central PollutionControl Board (CPCB) released the air quality data for 1997 for 70 cities. At that timeShillong was the only town in India where the air quality in terms of suspended

particulates - the most threatening air pollutant in Indian cities was clean round the yearand there was no single day either when the air became even moderately polluted.

In all other 69 cities, the air quality was moderately, highly or critically polluted termsused and defined by the CPCB - round the year. In some, the air was moderately poorround the year but reached high or critical levels of pollution during certain days in theyear. In 33 cities, that is, in about half of all the cities monitored, the air was criticallypolluted round the year and they had days when the air quality was nothing short ofdisastrous (see Table: Air Quality in Indian cities in 1997). Another 40 per cent of thecities had high or moderate levels of pollution round the year but had certain days whenthe pollution reached critical levels.

Table 2.1: Air Quality in Indian cities in 1997

(Based on measurements of Total Suspended Particulate Matter)

Level of Air Quality No. of towns with

air quality round

the year

% of towns

where air

quality is

monitored

No. of towns

with air

quality on

most polluted

day

% of towns

where air

quality is

monitored

Critical Pollution (above 1.5times the standard)

33 47% 61 87%

High Pollution (between 1 and1.5 times the standard) 18 26% 6 9%

Moderate Pollution (between0.5 and 1 times the standard)

17 24% 2 3%

Clean Air(below 0.5 times the standard)

2 3% 1 1%

TOTAL 70 100% 70 100%

Source: 1997 Air quality data from the Central Pollution Control Board

Today, about a million die each year because of water pollution and this is still largelybecause of the traditional form of pollution which results from human filth. The newwater pollution will add to this all kind of horrendous diseases like cancers andneurological disorders. It is estimated that at least 0.1 million die each year from urbanair pollution. Thus, at the least one million or more will continue to die from pollutioneach year in India. This figure will rise to probably 2-3 million a year with growingpollution. But tens of millions will suffer from high rates of illness and a very poorquality of life.

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The main sources of atmospheric pollution includea) The combustion of fuels to produce energy for heating and power generation both inthe domestic sector as well as in the industrial sector.b) The exhaust emissions from the transport vehicles that use petrol, diesel oil, etc.c) Waste gases, dust and heat from many industrial sites including chemical

manufacturers, electrical power generating stations, etc.

Environment Pollution due to Energy Use

A considerable amount of air pollution results from burning of fossil fuels. Fuels aremainly derived from fossilized plant material and consist of carbon or its compounds.The household sector is the largest consumer of energy in India. More than 60% of Indianhouseholds depend on traditional sources of energy like fuel wood, animal dung and cropresidue for meeting their cooking and heating needs. Out of total rural energyconsumption about 65 per cent is met from fuel wood. Fuel wood consumption during2001-02 is estimated at 223 million tones, 180 millions tones of which is for household

consumption and the balance for cottage industry, big hotels etc.

The environmental effects of various fuels, namely, coal, oil, nuclear etc. are of growingconcern owing to increasing consumption levels. The combustion of these fuels inindustries and vehicles has been a major source of pollution. Coal production throughopencast mining, its supply to and consumption in power stations, and industrial boilersleads to particulate and gaseous pollution which can cause pneumoconiosis, bronchitis,and respiratory diseases. Another major impact of coal mining is land degradation,especially of forest areas.

Industrial Emissions

Air borne emissions emitted from various industries are a cause of major concern. Theseemissions are of two forms, viz. solid particles (SPM) and gaseous emissions (SO2, NOx,CO, etc.). Liquid effluents, generated from certain industries, containing organic andtoxic pollutants are also a cause of concern.

Road Transport

Road vehicles are the second major source of pollution. They emit CO, HCs, NOX, SO2,and other toxic substances such as TSP and lead. Diesel engines are much less pollutingthan petrol engines. Both types of engines are not very efficient converters of fuel energy.However, diesel types with a conversion efficiency of around 30% must be more efficientand use less fuel than petrol types with a 15-20% conversion efficiency.

Harmful Effects of Emissions

The high concentration of particulates in the atmosphere over large urban and industrialareas can produce a number of general effects. Smoke and fumes can increase theatmospheric turbidity and reduce the amount of solar radiation reaching the ground. The

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overall effect of air pollution upon the biosphere and the built environment can bebroadly considered under 3 headings: The adverse and damaging impact on (i) buildingsand materials, (ii) soil, vegetation, crops and animal life, (iii) human beings.

Ambient air quality

Sulphur dioxide (SO2)Annual average concentration of SO2 levels are within the prescribed National AmbientAir Quality Standards (NAAQS) at almost all the locations as per reports of the Central /States Pollution Control Board.. A decreasing trend has been observed in sulphur dioxidelevels in many cities.Nitrogen dioxide (NO2)

Annual average concentration of NO2 was also within NAAQS at most of the locations.

Table 2.2: Major Polluting IndustriesIndustry Key Environmental Aspects

Aluminum Disposal of red mud, bauxite tailings and other hazardous waste, dust emissions andhigh energy consumption.

Caustic Water pollution due to disposal of brine mud, mercury, and chlorine emissions.Cement Fugitive dust emissions from materials and air emissions from energy consumption.

Copper Sulphur dioxide and dust emissions; water pollution from electrolytic bath and otherprocesses; disposal of slag from smelter.

Distillery Water pollution due to highly organic effluent from spent wash; soil contamination.

Dyes and dyesintermediates

Water pollution due to toxic azo-dyes, organic colored and phenolic substances.

Fertilizer Water pollution due to heavy metal, ammonia and fluoride bearing effluent,ammonia emission, fluoride bearing dust and hazardous material.

Iron and steel Water pollution from cyanide, fluoride and heavy metal bearing effluent, dustemission from sintering, pelletization, pig iron plants; slag and dust disposal.

Leather Water pollution, particularly from hexavalent chromium and salt in discharge.

Pesticide Air pollution due to particulate and volatile organic compounds; effluent containingpesticides residues.

Petrochemicals Water pollution due to phenol and benzene containing effluent; fugitive emissions oftoxic and carcinogenic and volatile organic compounds (VOC); hazardous materialdisposal.

Pharmaceuticals Water pollution due to organic residues bearing effluent; VOC and particulateemissions; hazardous waste containing process sludge and spent catalyst.

Pulp and paper Water pollution from organic/ inorganic substance and chlorinated compounds inblack liquor; highly malodorous emissions of reduced sulfur compounds and VOC.

Refinery Water pollution from effluent containing organic/ inorganic material, oil, solvent; airemission of particulates, sulfur dioxide, benzene, toluene, and xylene, VOC.

Sugar Water pollution due to high biological oxygen demand (BOD) and chemical oxygendemand (COD) effluent and spillage of molasses; air pollution due to combustions of

bagasse, coal, etc.Thermal powerplants

Air emission from combustion, coal handling, water pollution due to discharge ofboiler blow down, overflow from ash pond; land contamination due fly ash disposalpractices.

Zinc Air pollution due to fugitive zinc dust, water pollution containing residues, disposalof solid and hazardous waste.

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Areas of Concern

a) Air pollution exists in major cities where vehicles are the major sources.b) There are 24 critically polluted areas where industrial pollution is predominant. Action plan have been formulated and implemented by the Central/States Pollution Control

Board in these problem areas.

Steps taken to Control Air Pollution from automobiles include the following:

Measures taken for Control of Air Pollution from VehiclesA) Setting Vehicular Emission Norms in major citiesB) Setting Fuel Quality Specifications for all automobiles and making pollution checkscompulsory at regular intervals..

Noise Pollution

Of late, noise has been recognized as a pollutant which until recently was considered onlyas a nuisance. The Central Pollution Control Board (CPCB) has notified the ambientnoise standards.

2.3 Water Pollution

India is rich in surface water resources. Average annual precipitation is nearly 4000 cubickm. and the average flow in the river system is estimated to be 1880 cubic km. whereas,some regions are drought affected, others are frequently flooded. With the rapid increasein the population, the demand for irrigation, human and industrial consumption of waterhas increased considerably, thereby causing depletion of water resources.

River Water

Rivers are the lifeline of majority of population in cities, towns and villages and most ofthese are considered as sacred. Most of the Indian rivers, especially the smaller ones, aretoday toxic drains: Sabarmati, Bhadar, Yamuna, Damodar, Chaliyar, Betwa, Noyyal,Bhawani, to name just a few. Groundwater, too, is becoming polluted, which is a majorsource of drinking water and most of it is drunk without any treatment.

For maintaining the quality of river water, the pollution levels in rivers have beendetected by monitoring limited number of the physico-chemical parameters, which couldonly determine the changes in chemical characteristics of water bodies. Deterioration inwater quality, over the past several years has gradually rendered the river water quality

unsuitable for various beneficial purposes.

Monitoring of Rivers

The Central Pollution Control Board in collaboration with State Pollution Control Boardis operating the Water Quality Monitoring Network comprising of 784 stations in 26States and 5 Union Territories spread over the country for monitoring of aquaticresources. Government has introduced Biological Water Quality Evaluation and Criteria.

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Water Pollution

The types and sources of water contamination include point sources of pollution whichusually refers to wastes being discharged from a pipe; and non point sources, which

means all other sources such as storm water runoff (which picks up oils and othercontaminants from various areas), irrigation (which carries fertilizers and pesticides intogroundwater), leaks from storage tanks and leakage from disposal sites. The non-pointsources are technically the most difficult to regulate in India. Water pollution comes fromThree main sources: domestic sewage, industrial effluents and run-off from activitiessuch as agriculture. Water pollution from domestic and human wastewater causes manysevere water borne diseases. The problem of water pollution due to industries is becauseof the inadequate measures adopted for effluent treatment than to the intensity ofindustrial activities. The 13 major water polluting industries have been identified and areclosely monitored by the Central Pollution Control Board.

Access to safe drinking water remains an urgent need as about 70.5% of the householdsin the urban area and 8.7 % in rural areas receive organized piped water-supply and therest have to depend on surface or ground water which is untreated. The diseasescommonly caused due to contaminated water are diarrhea, trachoma, intestinal worms,hepatitis, etc. The most common contamination in the water is from the disease bearinghuman wastes, which is usually detected by measuring fecal coliform levels. Inadequateaccess to safe drinking water and sanitation facilities leads to higher infant mortality andintestinal diseases.

An uncontrolled disposal of urban waste into water bodies, open dumps and poorlydesigned landfills, causes contamination of surface water and ground water. Forindustries, surface water is the main source for drawing water and discharging effluents.Industrial wastes containing heavy metals such as mercury, chromium, lead and arseniccan threaten or destroy marine life besides polluting aquatic food resources.

2.4 Poverty, Population and Environmental

Incidence of poverty is estimated by the Planning Commission on the basis ofquinquennial large sample surveys on household consumer expenditure conducted by the National Sample Survey Organization (NSSO). The Uniform Recall Period (URP)consumption distribution data of NSS 61st Round yields a poverty ratio of 28.3 per centin rural areas, 25.7 per cent in urban areas and 27.5 per cent for the country as a whole in2004-05. The corresponding poverty ratios from the Mixed Recall Period (MRP)consumption distribution data are 21.8 per cent for rural areas, 21.7 per cent for urbanareas and 21.8 per cent for country as a whole. While the former consumption data uses30-day recall/reference period for all items of consumption, the latter uses 365-dayrecall/reference period for five infrequently purchased non-food items, namely, clothing,footwear, durable goods, education and institutional medical expenses and 30-dayrecall/reference period for remaining items. The percentage of poor in 2004-05 estimatedfrom URP consumption distribution of NSS 61st Round of consumer expenditure data are

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comparable with the poverty estimates of 1993-94 (50th round) which was 36 per cent forthe country as a whole. The percentage of poor in 2004-05 estimated from MRPconsumption distribution of NSS 61st Round of consumer expenditure data are roughlycomparable with the poverty estimates of 1999-2000 (55th round) which was 26.1 per centfor the country as a whole (Table 2.3).

Table 2.3 Poverty Ratios by URP and MRP (per cent)

Uniform Recall Period (URP) Method Mixed Recall Period (MRP) Method

Sector 1993-94 2004-05 Sector 1993-94 2004-05

1 Rural 37.3 28.3 4. Rural 27.1 21.8

2. Urban 32.4 25.7 5. Urban 23.6 21.7

3. All India 36.0 27.5 6. All India 26.1 21.8

Source: Planning Commission

There are concerns about vulnerability of people who have crossed the poverty line (PL)

and are at present above it. Vulnerability is a relative term and could be gauged from theconsumption patterns (in the absence of a better available alternative). Given meagreresources, higher share of expenditure on food items, which is the most basic of all basicneeds, would be indicative of vulnerability to some extent.

Food Availability and Hunger

On the basis of NSSO data for various rounds, it is observed that reporting of inadequatefood has also come down between 1993-94 and 2004-05 with 1.9 per cent householdsreporting inadequate food availability for the country as a whole in 2004-05 as against4.2 per cent households in 1993-94. Of these, 1.6 per cent households reportedinadequate food for some months while 0.3 per cent reported inadequate food for all

months. Further, rural households accounted for a predominant share of inadequate foodavailability. In respect of State-wise comparison, West Bengal followed by Orissa has anunusually high percentage of households reporting food inadequacy.

Poverty alleviation and employment generation programs

Poverty reduction has been an important goal of development policy since the inceptionof planning in India. Various anti-poverty, employment generation and basic servicesprograms are being implemented at present. The ongoing reforms attach great importanceto removal of poverty and addressing specifically the wide variations across States andthe rural-urban divide. However, there is a need for better implementation of schemes

especially NREGS, through web enabled information generation and monitoringsystem. The lessons learnt from earlier phases of implementation need to be utilized inthe third phase of implementation of the program.

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Poverty and Environment

The root cause of environmental degradation in India can be attributed to rapid growth ofpopulation. India has approximately 18 per cent of the world population but only 2 percent of the geographical area. In 1972, in the Stockholm Conference on Environment, the

then Prime Minister of India, Smt. Indira Gandhi had said that poverty is a greatpollutant. Twenty years later, in 1992, World Bank stated, poor are the agents andvictims of environmental degradation. The poor become agents of environmentaldegradation when they are victims of it.

Human development is also adversely affected by the environmental degradation. Two ofthe environmental indicators, viz. access to the safe drinking water and the sanitation areclosely linked with two of the very important human development indicators, viz. aninfant mortality rate and the life expectancy. Polluted air and poor and unhygienicconditions in settlements contribute to reduction in life expectancy and increase in infantmortality. Life expectancy in India is still on very low ebb and an infant mortality rate is

much more than desirable. The poor, therefore, take fertility decisions to compensate forall those factors and to avoid risks. Larger population leads to more poverty and worsensthe environment, and creates vicious cycle.

Housing and Basic Services

Access to safe drinking water and proper sanitation is both a right and a basic need. It hasa significant bearing on the achievements of other Millennium Development Goalsincluding poverty reduction, and gender equality. However, despite two decades ofconcerted efforts by national governments and international communities, equitableaccess to safe drinking water supply and improved sanitation for all remains elusive. It isa pressing development issue.

Almost two-thirds of the worlds population without access to safe water and 80 percentwithout access to improved sanitation, lives in Asia. In the last decade of the 20 th century,Asian countries invested about $60 billion in water supply and about $ 11 billion insanitation. This enabled about 585 million people in both rural and urban areas to gainaccess to safe water supply, and the Johannesburg Summit goal of halving the number ofpeople without access to improved sanitation by 2015, are to be achieved, about 1 billionpeople in Asia would have to obtain access to safe drinking water and another 1 billionpeople to improved sanitation.

Water is a finite resource. Conserving water is one way of ensuring that more is availablefor those who do not have it. The reduction of non-revenue water in Asia (currentlyranging from 25-70 per cent in most water utilities) will significantly lower capitalrequirements for new investments and conserve. It costs far less to reduce non-revenuewater than to expand capacity and perpetuate system inefficiencies. Access can also beexpanded by applying the results of research in new technologies that separate water use(e. g., for cooking, drinking, bathing, sanitation), and through natural means such asrainwater harvesting and storage. In conjunction, water quality must remain a key focus.

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Slum Population

A total of 42.6 million people living in 8.2 million households have been enumerated inslums of 640 cities/towns spread across 26 states and union territories in 2001 census.The slum population constitutes 4 percent of the total population of the country.

.Solid Waste and Hazardous Material Management

Due to a rapid growth of urbanization, there is a substantial increase in generation ofsolid waste in both absolute and per capita terms. It has been indicated that very littleamount of waste generated is treated. The problems in management of wastes relate to itscollection, handling, transport and disposal. Segregation of solid wastes is not uncommonin India as much of recycling work is being done either by rag-pickers or NGOs in fewareas. Proper sanitary land-filling sites need to be developed which are effective inkeeping the surface and ground water free from leachates.

When this solid waste is not collected and disposed of efficiently and effectively, itattracts rodents and flies which then spread diseases. It also pollutes and degrades landand water resources. If these wastes are left untreated, they would ferment slowly andproduce bio-gas which would be distributed in the atmosphere. The bio-gas contains 65-70% methane gas which is a green house gas, have a global warming potential 34 timesmore than that of Carbon Dioxide. Therefore, development of suitable technologies forutilization of wastes is essential to minimize adverse health and environmentconsequences. Comprehensive guidelines are available with Central Pollution ControlBoard for Toxic Waste Management including hospital wastes.

Plastics Waste Management

Use of plastics has grown manifolds all over the world as it has many advantages. Theyare light, easy to mould, durable and easy to adapt to different user requirements.However, plastics are difficult to destroy and are classified as no biodegradable. On theother hand, it is easy to recycle plastics. In India the growth of the plastic industries isphenomenal. Polymer demand in India has consistently recorded double digit growthrates, trebling every 10 years. India's per capita consumption of plastics was only 4 Kg in2000, compared to per capita consumption of plastics of Western Europe at 60 Kg. that ofJapan 70 Kg. and of USA 78 Kg. in 1998. Also, about 60% of the plastic wastesgenerated in India are recycled which is the highest in the world. However, the remaining40 % of the plastic wastes remains uncollected, unsegregated, strewn on the ground,littered around in open drains or in unmanaged garbage dumps. The collection of suchSoiled Waste including the one recycled three or even four times earlier, is not onlyuneconomical for recovery of material, but also unhygienic and undermines theenvironmental benefits of materials recycling. These indiscriminately disposed solidplastic wastes are of concern in view of causing chokage of municipal sewers, blockingof the storm water run-offs in drains particularly in hilly areas, causing deaths to manyanimals, like, cows which feed on the garbage food thrown in polythene bags.

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2.5 Bio Diversity

The term biodiversity encompasses the variety of life on Earth. It is defined as thevariability among living organisms and the ecological complexes of which they are part,including diversity within and between species and ecosystems. Biodiversity manifests at

species genetic and ecosystem levels. Biodiversity has direct consumptive value in food,agriculture, medicine, industry, etc. It also has aesthetic and recreational value.India is one of the 12 mega biodiversity countries of the world. From about 70% of thetotal geographical area surveyed so far, 46,000 plant species and 81,000 animal speciesrepresenting about 7% of the worlds flora and 6.5% of the world's fauna, respectively,have been described. Out of the total twelve biodiversity hot spots in the world, India hastwo, one is the north east region and other the western ghats.

Though more than one-fifth of Indias geographic area is recorded as forest area, it is notknown with certainty how much forest area actually bears forest cover. The NationalForest Policies (1952 and 1988) aim at having one third of countrys land area under

forest and tree cover. As per the latest State of Forest Report 2003, the forest cover in thecountry is 678,333 kmsq. and constitutes 20.64 percent of its geographic area.

Biodiversity the world over is in peril because the habitats are threatened due to suchdevelopment programs as creation of reservoirs, mining, forest clearing, laying oftransport and communication networks, etc. It is estimated that in the world wideperspective, slightly over 1000 animal species and sub-species are threatened with anextinction rate of one per year, while 20,000 flowering plants are thought to be at risk.

Conservation Measures Biospheres:

Areas rich in biodiversity and encompassing unique and representative ecosystems areidentified and designated as Biosphere Reserves. The goal is to facilitate conservation ofrepresentative landscape and India's immense biological diversity as described above. Tilldate, 14 Biosphere Reserves have been set up.

Agro Biodiversity

India has a rich heritage of species and genetic strains of flora. Overall about six percentof world species are found in India. It is estimated that India is tenth among the plant richcountries of the world and sixth among the centers of diversity and origin of agrodiversity.

The livestock population in the country increased from 292 million in 1951 to the currentestimate of 485 million. Grazing by Livestock puts pressure on grasslands and forests.Because of excessive grazing, natural regeneration is either absent or inadequate in52.8% of the forests in the country.

An analysis of forests vis--vis livestock indicates continued free access to the forest areawhich has resulted in high rates of growth of livestock population causing land

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degradation and arresting the development of markets for forage crops. Overgrazingimpedes regeneration, retards growth of vegetation, and leads to extinction of goodpalatable grasses which are replaced by less palatable and inferior grasses. Extensiveareas have been invaded by bushes which are not browsed, excessive trampling makesthe soil compact and impervious and prevents circulation of air, water, thus exposing the

soil to erosion by wind and water.

3. Natural disasters (such as tsunamis, floods, storms, hurricanes etc.)

India is prone to natural disasters. Due to its locational and geographical features, it isvulnerable to a number of natural hazards like cyclones, droughts, floods, earthquakes,fires, landslides and avalanches. Natural disasters result in heavy economic losses, apartfrom the loss of human life and the hardship inflicted on the survivors. On an average, atleast one major disaster hits India every year, causing irreparable damage to life andproperty.

3.1 Natural disasters in India in the recent past (5 to 10 years)

The following tables indicate various dimensions of natural disasters in India such as:

1. Frequency of occurring natural disasters in India2. Major earthquakes in India since 18193. Flood affected area and flood damages in India during 1953-20054. State-wise details of damage due to heavy rains / floods, cyclonic storms and

landslides during 2005 in India5. Indias major natural disasters since 19806. Damage due to Tsunami/ tide wave in the bay of Bengal in 2004

Tsunamis hit south India; over 1,800 dead

During the Christmas time in December 2004, for the first time India was hit bytsunamis, which are triggered by seismic disturbances - coastal earthquakes, volcaniceruptions or undersea landslides - that jolt the ocean floor. The result is a deep wave thatstretches from the sea's surface to the floor and travels horizontally at speeds of up to 800km/hr and rises between 50 and 100 ft. The earthquake and the resultant waves alsoaffected Indonesia, Thailand, Malaysia, Maldives, and Sri Lanka.

In India, 10,750 people were killed and hundreds went missing when tsunamis triggered by a massive earthquake - the biggest in four decades at 8.9 on the Richter scale,according to the US Geological Survey's National Earthquake Information Centre - nearthe Indonesian islands of Sumatra slammed into the southern peninsular coast of India,The states of Andhra Pradesh, Tamil Nadu, Pondicherry and Kerala and the Andaman andNicobar Islands were severely affected. The Centers Crisis Management Group met anddrew up an emergency plan to carry out relief and rescue operations. The army, air forceand navy launched massive rescue and relief operations, pressing helicopters, transportaircrafts and ships along the eastern coastline and in island territories to search for thedead and rescue the trapped.

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Ts

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4. Disaster management systems, policies and precautions

4.1 Measures to tackle climate change

The UK-based Carbon Disclosure Project (CDP), which is "the largest investor coalitionin the world", supported by 385 investors with a combined asset base of $57 trillion,

conducted their annual survey of more than 3,000 companies worldwide on climaticchange in 2008. According to the CDP Survey, Asian companies continue to lag in theirresponse to climate change, with just 50% of the region's top companies. By comparison83% of European and 82% of North American companies took part in the study ofclimate change practices and disclosure, the study showed. Asian companies also postedthe lowest "carbon disclosure" score, 53 out of a possible 100, compared with 69 and 57 by Europe and North America respectively. "The level of disclosure for the Asiancompanies is significantly below the Global 500 average across almost all categories,"the CDP said in its sixth annual survey.

Among Asian companies that did not respond to the CDP questionnaire were well-known

brands such as Sony Corp, Bank of China and China Mobile, Li Ka-shing's HutchisonWhampoa and Cheung Kong, and carbon-intensive groups Formosa Petrochemical,Hyundai Heavy Industries and China Petroleum. CDP said the poor response wasprobably because of the "less-developed" level of climate change regulation and thelower level of public debate on the issue compared with western economies.

CDP said uncertainty surrounding climate change regulation - such as the plannedintroduction of carbon trading schemes - was a problem for corporations all around theworld. "[A] backdrop of regulatory uncertainty is delaying strategic investment decisionsand senior management is calling for greater visibility on climate change-related policy."Despite the uncertainty, 74% of Global 500 companies reporting to CDP are nowdisclosing emissions targets, showing companies were increasingly taking climate changemitigation seriously. The survey found that the utilities sector within the Global 500 to bethe most transparent in its reporting of greenhouse gas emissions, with 93% responding.In contrast the only 69% of oil and gas sector companies responded. EMC ranked highestin the telecom-media-tech sector, beating out Cisco, Nokia, BT and Dell.

4.2Acts and Laws to deal with climatic change

India has enacted various Environment Legislation, Acts, Rules, Notifications andAmendments for environmental protection and to control climatic change. In theConstitution of India it is clearly stated that it is the duty of the state to protect andimprove the environment and to safeguard the forests and wildlife of the country. Itimposes a duty on every citizen to protect and improve the natural environmentincluding forests, lakes rivers and wildlife. Reference to the environment has also beenmade in the Directive Principles of State Policy as well as the Fundamental Rights. TheDepartment of Environment was established in India in 1980 to ensure a healthyenvironment for the country. This later became the Ministry of Environment and Forestsin 1985.

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Box-4.1: Key Environmental Legislations in India An Illustrative ListPolicies

1992 Policy Statement on Abatement of Pollution

1992 National Conservation Strategy and Policy Statement on Environment and Development

1998 National Forest Policy

2002 Wildlife Conservation Strategy2006 National Environment Policy

Environment Acts

1927 The Indian Forest Act

1972 The Indian Wildlife (Protection) Act (amended 1993)

1973 The Water (Prevention and Control of Pollution) Act (amended 1988)

1977 The Water (Prevention and Control of Pollution) Cess Act (amended 1992)

1980 The Forest (Conservation) Act (amended 1988)

1981 The Air (Prevention and Control of Pollution) Act (amended 1987)

1986 The Environment (Protection) Act (amended 1992)

1988 The Motor Vehicles Act

1991 The Public Liability Insurance Act (amended 1992)

1995 National Environment Tribunal Act

1996 National Environment Appellate Authority Act

2002 The Wild Life (Protection) Amendment Act T

2002 The Biological Diversity Act

2003 The Water (Prevention and Control of Pollution) Cess (Amendment) Act

Environment Rules

1986 The Environment (Protection) Rules

1989 Hazardous Wastes (Management and Handling) Rules

1990 Forest (Conservation) Rules (amended 1992)

1991 Chemical Accidents (Emergency Planning, Preparedness and Response) Rules

1998 The Bio-Medical Waste (Management and Handling) Rules

1999 The Recycled Plastics Manufacture and Usage (Amendment) Rules2000 The Municipal Solid Wastes (Management and Handling) Rules

2000 The Hazardous Wastes (Management and Handling) Amendment Rules

2000 The Ozone Depleting Substances (Regulation and Control) Rules

2001 The Batteries (Management and Handling) Rules

2002 The Noise Pollution (Regulation and Control) (Amendment) Rules

2003 The Recycled Plastics Manufacture and Usage (Amendment) Rules

2003 Bio-Medical Waste (Management and Handling) (Amendment) Rules

2003 Forest (Conservation) Rules

2003 Draft Biological Diversity Rules

Environment Notifications

1994 Environmental Impact Assessment Notification 1994 (amended 2002)

1998 Constituting the Taj Trapezium Zone Pollution (Prevention and Control) Authority1999 Fly Ash Notification (amended 2002)

International Agreements to which India is a Signatory

1972 The Rio Declaration on Environment and Development and the Agenda 21

1975 The Convention on International Trade in Endangered Species of flora and fauna (CITES)

1985 The Vienna Convention/Montreal Protocol on substances that deplete the ozone layer

1991 The Convention on Wetlands of International Importance (the Ram Sar Convention)

1992 The Framework Convention on Climate Change

1992 The Convention for Conservation of Biological Resources

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The constitutional provisions are backed by a number of laws acts, rules andnotifications. The Environment Protection Act of 1986(EPA) came into force soon afterthe Bhopal Gas Tragedy and is considered an umbrella legislation as it fills many gaps inthe existing laws. Thereafter a large number of laws came into existence as the problemsbegan arising e.g. Handling and Management of Hazardous Waste Rules in 1989.

Following is a list of the environmental legislations that have come into effect: General Forest and wildlife Water Air

General

1986 The Environment (Protection) Act authorizes the central government to protectand improve environmental quality, control and reduce pollution from all sources, and

prohibit or restrict the setting and /or operation of any industrial facility on environmentalgrounds.1986 The Environment (Protection) Rules lays down procedures for setting standards ofemission or discharge of environmental pollutants.1989 Hazardous waste (Management and Handling) Rules objective is to controlgeneration, collection, treatment, import, storage and handling of hazardous waste.1989 The Manufacture, Storage and Import of Hazardous Chemical Rules defines theterms used in this context, and sets up an Authority to inspect, once a year, the industrialactivity connected with hazardous chemicals and isolated storage facilities.1989 The Manufacture, Use, Import, Export and Storage of hazardous Micro-organisms/ Genetically Engineered Organisms or Cells Rules were introduced with aview to protect the environment, nature and health, in connection with the application ofgene technology and micro organisms.1991 The Public Liability Insurance Act and Rules and Amendment, 1992 was drawnup to provide for public liability insurance for the purpose of providing immediate reliefto the persons affected by accident while handling any hazardous substance.1995 National environmental Tribunal Act has been created to award compensation for

damages to persons, property and the environment arising from any activity involvinghazardous substances.1997 The National Environment Appellate Authority Act has been created to hearappeals with respect to restrictions of areas in which classes of industries etc are carriedout or prescribed subject to certain safeguards under the EPA (Environment ProtectionAct).1998 Biomedical waste (Management and Handling) Rules is a legal binding on thehealth care institutions to streamline the process of proper handling of hospital wastesuch as segregation, disposal, collection and treatment.

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Forest and wildlife

1927 Indian Forest Act and Amendment 1984 is one of the many surviving colonialstatutes. It was enacted to consolidate the law related to forest, the transit of forestproduce and the duty livable on timber and other forest produce.

1972 Wildlife Protection Act, Rules 1973 and Amendment 1991 provides for theprotection of birds and animals and for all matters that are connected to it whether it betheir habitat or the waterhole or the forest that sustain them.1980 The Forest (Conservation) Act and Rules 1981 provides for the protection of andthe conservation of the forests.

Water

1882 The Easement Act allows private rights to use a resource i.e. groundwater, byviewing it as an attachment to the land. It also states that all surface water belongs to thestate and is a state property.

1897 Indian Fisheries Act establishes two sets of penal offences whereby thegovernment can sue any person who uses dynamite or other explosive substance in anyway (whether coastal or inland) with intent to catch or destroy any fish or poisons fish inorder to kill.1956 The River Boards Act enables the states to enroll the Central Government insetting up an Advisory River Board to resolve issues in inter state cooperation.1970 Merchant Shipping Act aims to deal with waste arising from ships along thecoastal areas within a specified radius.1974 The Water (Prevention and Control of Pollution) Act establishes an institutionalstructure for preventing and abating water pollution. It establishes standards for waterquality and effluent. Polluting industries must seek permission to discharge waste intoeffluent bodies. The Pollution Control Board (CPCB) was constituted under this act.1977 The Water (Prevention and Control of Pollution) Cess Act provides for the levyand collection of cess or a fees on water consuming industries and local authorities.1978 The Water (Prevention and Control of Pollution) Cess Rules contains the standarddefinitions and indicate the kind of and location of meters that every consumer of water isrequired to affix.1991 Coastal Regulation Zone Notification puts regulations on various activities,including construction, are regulated. It gives some protection to the backwaters andestuaries.

Air

1948 Factories Act and Amendment in 1987 was the first to express concern for theworking environment of the workers. The amendment of 1987 has sharpened itsenvironmental focus and expanded its application to hazardous processes.1981 Air (Prevention and Control of Pollution) Act provides for the control andabatement of air pollution. It entrusts the power of enforcing this act to the CentralPollution Control Board.

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1982 Air (Prevention and Control of Pollution) Rules defines the procedures of themeetings of the Boards and the powers entrusted on them.1982 Atomic Energy Act deals with the radioactive waste.1987 Air (Prevention and Control of Pollution) Amendment Act empowers the centraland state pollution boards to meet with grave emergencies of air pollution.

1988 Motor Vehicles Act states that all hazardous waste is to be properly packaged,labeled and transported.

Table 4.1: Summary of Area-Based Environmental Management

and Planning Approaches in India

Action Plans for criticallypolluted/problem areas

This is the major area-based program in India. To date, 24 critically polluted/problem areas have been identified by the Central PollutionControl Board (CPCB) in consultation with the concerned State PollutionControl Boards (SPCBs), for which action plans are in various stages ofimplementation.

Programs for environmentallysensitive areas

The Ministry of Environment and Forests (MoEF) have issuednotifications prohibiting or restricting location of industries, miningoperations and other development activities with environments impacts in

five environmentally sensitive areas.

Eco-city Program The Eco-City Program has been initiated by the CPCB for environmentalimprovement in selected small and medium towns. In the first phase, ithas been launched in four towns.

City level Urban Air ActionPlans

The CPCB has identified 53 non-attainment cities where the air qualityexceeds the prescribed ambient standards. The concerned Stategovernments and SPCBs are required to prepare action plans for air pollution reduction in these cities. Several measures have beenundertaken in recent years in Delhi; and action plans have been submittedfor 16 other cities.

Areas with industrial clusters Under this program, eight areas of concern due to the clusters of pollutingindustries (mostly tanneries and foundries but also drugs andpharmaceutical manufacturing units, and clusters of coal mining and coalbased power stations) have been subjected to rigorous monitoring andpollution control initiatives.

Area wise Zoning Atlas forthe sitting of industries

To delineate the areas that suitable for industrial sitting and forclassification of areas in different categories based on their existingenvironmental profiles, the program for preparation of DistrictwiseZoning Atlas has been taken up by the CPCB in collaboration with theSPCBs (with Gesellschaft for Technische Zusammenarbeit (GTZ)support). In the first phase, 19 districts were taken up for preparation ofthe zoning atlas.

Area wise assimilativecapacity assessment

A pilot program for assessing area wise assimilative capacity andexploring the feasibility of setting location specific standards wasundertaken by the CPCB in the river stretch in Rajamundri and in theVizag air shed area, Andhra Pradesh.

Area wise carrying capacitystudies

Studies were undertaken in five selected areas of the country to assess thearea wise carrying capacity over time, to assist with spatial planning anddecision making with respect to industrial growth and other developmentactivities based on environmental considerations.

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4.3 Financial Planning for Natural Disaster Management

In addition to physical controls and measures, ex-ante Financial Planning is essential todeal with contingent liabilities of the government and risk management for unforeseen

events such as droughts, floods, earthquakes, land slides and other natural disaster. Riskmanagement and emergency response need to be clearly distinguished. Risk managementcalls forex-ante planning and investments to reduce vulnerability. Emergency responseinvolves ex-postexpenditures for reconstruction, rehabilitation and restoration of publicinfrastructure affected by natural disaster, which can be greatly reduced through ex-anteplanning and investments in prevention and mitigation.

While the occurrence of natural events can not be predicted precisely and prevented fully,there is a possibility to reduce the degree of vulnerability of populations through riskmanagement. This can be achieved in two ways: (i) planning with the purpose of theidentification and reduction of risk by integrating prevention and mitigation measures

into national development and financial plans and programs and (ii) financial protectionprovided by transferring risk partly to the private sector or spreading it over time. Thelatter can be achieved by strengthening both life and non-life insurance institutions.

4.3.1 The Credit System

The development of commercial banks, co-operative banks, savings banks, informal andformal non-banking financial institutions, and micro-credit institutions can contribute tothe mobilization of the resources needed to finance investments in prevention, mitigation,rehabilitation and reconstruction. The system of contingent credit mechanism makes iteasier to obtain financing in the event of a disaster. In the case of a contingent credit, inexchange for an annual fee to a general insurance company, the right is obtained to takeout a specific loan amount post-event that has to be repaid at contractually fixedconditions. In order to tackle the adverse impact of droughtsin India, if any in future, asystem of contingent credits or crop insurance or herds insurance can be very useful.

4.3.2 Risk Transfer Instruments

Risks can be transferred by creating suitable risk transfer instruments and mechanismscurrently in use in developed countries, especially insurance. Financing through ex antecredits offers even more incentives to mitigate risk because risk transfer instruments offeropportunities to contain moral hazards or adverse selection problems.

Ex-ante measures to tackle unforeseen events include prevention and mitigation,insurance, contingent credit and reserve funds. Mitigation reduces the damages, whereasrisk financing measures reduce losses by transferring risk or sharing risk with others.Mitigation is directed towards decreasing engineering or physical vulnerability, whereasrisk financing reduces financial vulnerability (Fig. 1).

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Risk transfer provides indemnification against losses in exchange for a premium payment. Risk is transferred from an individual to a (large) pool of risks throughinsurance/ reinsurance, reserve funds and contingent credit systems (Fig.2). Insuranceand reinsurance funds bear part of the risk. In a reserve fund arrangement, liquid fundsare laid aside so that the fund accumulates over the years without unviable impact on the

present budget. In case an unforeseen disaster takes place, the accumulated funds can beused to finance the losses.Contingent credit arrangements do not transfer risk, but rather spread it intertemporally.As explained earlier, in exchange for an annual fee, the right is obtained to take out aspecific loan amount post-event that has to be repaid at contractually fixed conditions.

naturalhazard

exposure

engineering

vulnerability

engineering

vulnerabilitydamage financial

vulnerability

financial

vulnerability

economicloss

mitigation ex-ante instruments

Fig. 1:Mitigation and Risk Financing

+

-

Capital Accumulation

Fund Paymenta) Reserve Fund

+

-

Credit Payment

Debt RepaymentAdministrative Costs

b) Contingent Credit

+

-

Insurance PaymentPremium

c) Insurance

Flow of Funds from Three

Instruments

Fig.2- Flow of funds from three ex-ante financing instruments -

Reserve Fund, Contingent Credit and Insurance

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4.3.3 Insurance and development bonds

Development of insurance markets requires updating legislation and institutional set up.This requires development of appropriate rules and regulations, strengthening theindependent regulatory authorities to improve monitoring of the solvency of insurance

companies and eliminate conditions that favor anticompetitive practices.

The possibility of introducing innovative capital market mechanisms such as catastropheor natural calamity bonds, commodity futures and weather-related derivatives may beexamined. These instruments, which may be of interest to international financial entities,avoid the major difficulties related to asset valuation and loss settlement procedures, buthave to be implemented at pool or governmental levels.

The same arguments hold good for life and non-life insurance. But, catastrophe or naturalcalamity bonds are difficult to be developed by developing countries like Mongoliawhich lack efficient money and capital markets. It may be easier for Mongolia to develop

other kinds of bonds such as development funds (viz. municipal, social, urban, rural,roads, infrastructure development bonds etc.) to meet critical needs for infrastructuredevelopment. This can be helped by international development agencies.

Another instrument that could be highly useful is to establish a contingent liability fundand to make budgetary contributions. Government of Mongolia has already establishedsuch a contingent fund, road development fund and a general Development Fund.

The private sector and the community-wide formal and informal financing instrumentsperform a very important role at the local level by supplying resources, particularly in poorer areas. Regardless of the source of financing, the implementation of thesemechanisms requires close cooperation between the public and private sectors, especiallyin reference to the establishment of the appropriate legal and regulatory framework.

Table-4.2 summarizes various sources ofex ante and ex postdisaster financing. The exante non-reimbursable and reimbursable financing mechanisms without risk transferinclude grants and credits. The corresponding risk transfer instruments encompassinsurance and natural calamity bonds, which can cover the damage based on real losses(indemnification) or the parametric payments.

Ex postfinancing instruments include grants, taxes, emergency and reconstruction loans,and refinancing of existing loans. In the event of a disaster, immediately available andlowest-cost financing options, such as an existing calamity fund or catastrophe bonds,insurance and reinsurance, are generally used first. Similarly, part of budgeted resourcesfrom the existing programs can be transferred to meet immediate emergency needs.

In some cases, existing development funds (municipal, social, urban, rural) may also beused. Government can impose an emergency cess or tax on the existing tax payers. At thesame time, the government could seek as much international aid and donations aspossible and resort to contingency credits.

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Table-4.2 Provisional Classification of Disaster Financing Mechanisms

impact of climate change on the indian economy

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