Rajiv Sinha, a professor at W. P. Carey School of Business, has developed an alternative measure of India's Gross Domestic Product statistics that factors in environmental costs.
His “green accounting” initiative is set to go global: the European Union recently granted €1.8 million to Sinha’s Green Indian States Trust to evaluate the costs of the loss of biodiversity and declining ecosystems worldwide.
Sinha and two colleagues from Deutsche Bank launched the Trust in 2004 to promote sustainable development in India, and quickly developed accounting rules that Indian government officials can use to put a monetary value on environmental damage.
Advocates of green accounting believe that a major reason countries fail to protect their ecosystems and resources is that the current measure of GDP doesn’t value them properly.
Pricing resources like trees is relatively easy because there’s already a market in place. For example, there is a price for lumber. Pricing more intangible things like clean air is more complex. Someone with asthma, for example, would put a higher value on it. For this, Sinha and colleagues propose a set of "satellite accounts": a range of values based on different measuring methods.
Protecting the environment poses its own challenges in poor countries. India's per capita annual income is $3,300. Sinha knows it’s hard to tell a poor farmer not to cut down trees if they serve as his only source of fuel or building materials.
Environmental problems are creating severe crises in the country. For example, for decades farmers have used irreplaceable groundwater to irrigate their fields. Now, falling water tables in states such as Andhra Pradesh and Maharashtra have forced millions of farmers to the brink of ruin. Buried under mounting debts, thousands have committed suicide.
However he’s hopeful that his work will change perceptions about the relationship between economic success and environmental health, and ultimately lead to increases in spending on environmental conservation in his homeland: “That's our hope… that we can get in right now and truly effect change while there's still time,” he says.