Urbanisation key to driving growth engines

Source: By TV Mohandas Pai: The Financial Express

Development and urbanisation are two sides of the same coin. No society in recent history remained agrarian while adequately providing for its population. Urbanisation aggregates human activity—aggregation leads to specialisation, specialisation to increased productivity; enabling greater availability of goods, delivery of services, increased wages, and job opportunities. Urban areas are engines of growth in any modern economy.

China is a shining example of how urbanisation drives economic growth. China rapidly urbanised from 26.4% in 1990 to 59.2% today. The impact is evident in China, where the quality of life and life expectancy have improved dramatically. We can also trace the feedforward effect in China’s specialised workforce and productivity improvements—making China a Top 2 economy with nominal GDP of $14.1 trillion. In contrast, India is at $2.7 trillion, moving towards the target of $5 trillion by 2025.

The world, on average, is at 55.3% urbanisation, whereas India lags at 34%. India has been slow to urbanise because of the fixation on being a village-based society. Most planners still look to Gandhiji’s sentiments on this topic—‘The future of India lies in its villages’, he said in 1947. This is no longer true—complexity has increased, people’s economic needs and aspirations have grown, and it is impossible to supply adequate resources to India’s six lakh villages. Keep in India’s population in villages while being unable to meet their economic needs has resulted in high inequity.

Rural employment is mostly in agriculture. 42.7% of India’s workforce in 2016-17 was engaged in the agriculture sector, crawling at a 3.4% growth rate and contributing only 17.3% to the GDP. Meanwhile, 57.3% of the workforce was engaged in industry and services, growing at 5.5% and 7.6%, respectively. The income differential is very high, the ratio being 1:3:4 for the average wages of dependents on agriculture to industry to services. Left unaddressed, this large group of agricultural dependents will always be condemned to a sub-aspirational existence—with increasing distress and perpetual dependence on subsidies from the government.

Lack of opportunities is also accelerating large-scale internal migration towards India’s few urban growth engines—such as Mumbai, Bengaluru, Delhi, Hyderabad, and others. 2011 Census indicates 43,324 uninhabited villages, presumably abandoned due to migration. People are voting for urban areas with their feet while the government sings the same old romanticised song about India in villages.

Large cities are reeling under the strain of overpopulation, with problems like inadequate infrastructure and rocketing living costs. Employment is unable to keep up with the inflow. Due to high costs, it is uncompetitive to set up industries in cities. Without industries to absorb the incoming rural population, they are mostly making low wages as contract labour. Even if they earn higher wages than in their hometowns, they can’t keep up with living costs—resulting in a growing urban population with unfavourable living conditions. Moreover, because of the policymakers’ fixation on villages, cities aren’t allocated enough to develop infrastructure to handle their rapidly expanding populations. A lose-lose situation all around.

A compelling solution to this unstable situation is the systematic shift of people from rural to urban areas. The 2011 census indicates there are 7,933 towns/cities housing 31.16% of the population, with an average population of 47,536. Of these, 465 towns have a population over one lakh and 53 cities, over ten lakh. On subtracting these, the remaining 7,468 towns must have significantly lesser populations than the 47,536 average. The upcoming 2021 census will inform us of the current situation.

Census data must be used to suitably identify 4,000-5,000 smaller towns all over India and develop them to absorb the rural-to-urban shift sustainably. GoI’s smart Cities initiative has identified 100 cities so far, focusing on roads, solar, water, and control centres. While expanding to 5,000 towns, four critical aspects must be incorporated:

  1. Infrastructure and connectivity:From the planning stage, it is essential to prioritise providing infrastructurelike roads and airport accessinternet connectivity and other amenities. Not only is state-of-the-art infrastructure crucial for quality of life, it also provides the logistical backbone for a productive industrial environment. Moreover, commissioning large-scale infrastructure development will also boost the construction sector—another means of mass employment. We need strategic investments from both the central and state governments in these towns for parallelised infrastructure development.
  2. Labour-intensive industry (LII) clusters:Creating many LIIs in and around the 5,000 towns is the best way to provide gainful employmentto the transitioning population. By focusing on the right type of industries—garments, fabrication, electronics assembly, automobiles, so on—this move will also boost India’s export capabilities. With focused skilling programs, LIIs will offer excellent income opportunities to the incoming population. Even a lower wage than cities will go a long way towards quality of life, especially since living costs are lower in towns. Women, who are not as mobile as men, can also now find employment near their villages and towns, commute and earn a living. Governments, apart from focusing investment here, must also provide incentives for the private sector to create LIIs.
  3. New sustainable technologies:While urbanisation improves delivery of services, it poses several challenges like congestionrestricted mobilityhigh waste production, and pollution. These are solved problems, however, in many parts of the world. India must invest in understanding state-of-the-art technologies and implement them. The newly developed towns will have the advantage of getting sustainable infrastructure—renewables like solar panels and wind turbines, planned tree cover to offset urban spread, water treatment facilities based on phytoremediation and other plant-based technologies, integrated recycling, EV infrastructure, and public transportation with last-mile connectivity—integrated from the planning stage itself. Older cities will need careful planning to incorporate new technologiesinto unwieldy city plans.
  4. Planning for capacity: Indian policymaking has a jaded tradition of planning projects based on latest available data—usually outdated—like the previous census. By the time projects are completed 5-10 years later, they are operationally overloaded. Instead, it is necessary to plan projects for sewage treatment, airports, roads, water supply, and so on with at least a 20-30-year forecast with provisions for future expansion. Again, China paves the way—many major airports have received the go-ahead to build a third runway and increase seating capacity by forecasting the demand to 2030. In parallel, new airports are being commissioned all over the country to provide additional capacity using forecasting beyond 2030.

Rapid urbanisation is essential to sustain India’s impressive 10-year growth trajectory and meet PM Modi’s 2025 economic target of $5 trillion. The proposed network of small towns and industry clusters can become India’s engine of growth and provide jobs at scale, thus improving overall economic prosperity. Sustainable urbanisation can be the force multiplier to mobilise India’s potential.

 

 

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Deforestation, desertification and climate solutions

Source: By Chandra Bhushan: The Financial Express

The one thing that worries climate scientists the most is the positive feedback loop. This is a process where changing one quantity changes the second one, and the change in the second quantity, in turn, changes the first. Scientists fear that a positive feedback loop will lead to a tipping point, beyond which the climate crisis may spiral out of control.

Desertification, melting of the Arctic ice caps, and thawing of the Siberian permafrost are some examples of the positive feedback loop. For instance, global warming is speeding up desertification by increasing the frequency and intensity of droughts, floods and forest fires. Desertification, in turn, is releasing large quantities of soil carbon into the atmosphere, further exacerbating warming. Similarly, global warming has started to thaw the Siberian permafrost. This could potentially release billions of tonnes of CO2 into the atmosphere, warming the earth further and causing more permafrost to thaw. These are nightmarish scenarios, but they may slowly be becoming a reality. The fires raging in Brazil’s Amazon rainforest are a vivid manifestation of this.

The Amazon Basinmost of which is in Brazil, is the world’s largest rainforest, spanning four million km2. In the last 50 years, about 0.8 million km2 of the Amazon, equal to the entire forest and tree cover of India, has been lost to logging, farming, mining and other infrastructure developments. Scientists believe that if the Amazon loses another 3-8% of its forestdeforestation will start to feed on itself. Beyond this tipping point, forest cover would keep shrinking despite efforts to stop it. Eventually, much of the Amazon would become dry grassland, known as cerrado. When this happens, the Amazon will release billions of tonnes of carbon into the atmosphere, worsening global warming. Illegal logging, forest fires and climate change bring the tipping point closer every year.

It is important to understand that what is happening in the Amazon rainforest is not new. Deforestation in the Brazilian Amazon has been taking place at an industrial scale since the 1970s, peaking in 1995, when about 29,000 km2 forests was razed. From 2004 to 2012, the rate of deforestation slowed because of domestic and international pressure. In 2008, an international Amazon Fund was created to help pay for protection. The result of all these was that deforestation reached its record low level of 4,500 km2 in 2012. Since then, deforestation has been on the rise again. Under President Jair Bolsonaro, an environment sceptic, the rate of deforestation has further accelerated.

Bolsonaro has told the world that what happens in the Brazilian Amazon is Brazil’s business. But, is it? Amazon produces about 20% of earth’s oxygen and regulates the water cycle in the whole of South America. It is a net carbon sink; in normal years, it absorbs more than two billion tonnes of CO2. The destruction of the Amazon, therefore, has global ramifications and requires global attention. But, global attention is also required for deforestation and land degradation in other parts of the world. The Amazon fire only exemplifies what is a global problem.

It is estimated that the world lost more than 1.29 million km2 of forests during 1990–2015, at a rate of more than 50,000 km2 per year. Brazil accounted for about 30% of this loss. Large-scale deforestation is also happening is Southeast Asia and Africa. At the existing pace of deforestation, the world is likely to lose another 2.89 million km2 of forests by the 2040s. Similarly, the world is losing 120,000 km2 of land every year due to land degradation.

Land degradation and deforestation are responsible for more than 20% of the global greenhouse gas (GHG) emissions. The Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5°C clearly states that we will not only have to stop these emissions but also deploy large-scale ‘carbon removal’ from the atmosphere to meet the target of keeping the global temperature increase within 1.5°C. The best way to remove carbon is by sequestering it in its natural sinksforestsgrasslands and soil. This also has the added benefit of halting desertification and land degradation, which is threatening the world’s food and water security. So, how do we get these solutions implemented?

Ricardo Salles, the environment minister of Brazil has reportedly said, “The international community can’t give Brazil the onus of being the world’s lungs without any benefits.” He is right. Developed countries, responsible for the bulk of emissions, should support Brazil in protecting the Amazon. In 2007, a global mechanism called REDD+ (Reducing Emissions from Deforestation and Forest Degradation) was started to incentivise forest conservation in developing countries by providing them with funds and allowing them to sell carbon credits to developed countries. A decade later, the carbon market has collapsed and the developed countries’ funding commitments for REDD+ have also been much lower than expected.

My colleagues and I studied in detail the implementation of REDD+ in India and a few African countries, and concluded that lessons from REDD+ can be used to design a new global mechanism to enhance natural carbon sinks in land and forests. We call this the Sink Mechanism. Our proposal, which we discussed at the UN Climate Convention, last year, has the following elements:

First, the sink mechanism must be owned by communities. REDD+ was captured by forest departments and large-forest owners, with little benefits to communities. But, studies show that indigenous people and local communities are capable of achieving excellent forest conservation outcomes at a much lower cost. The sink mechanism will work if millions of forest dwellers and farmers are incentivised to reverse land- and forest-degradation.

Second, the mechanism must be to promote sustainable forest and farm management practices, which lead to social, economic and ecological benefits. Scaling of carbon sequestration would be one of its co-benefits.

Third, land- and forest-based mechanisms cannot be sustained on carbon credits. They cannot be left to the mercy of markets. A non-market approach is needed to finance the sink mechanism. We, therefore, need to design a non-market mechanism where funds are mobilised to build the capacities of communities and local governments. Based on their performance, they can be rewarded for achieving emissions reduction and carbon stock enhancement.

Last, any global mechanism cannot depend solely on funding from developed countries. The REDD+ experience showed that once foreign funding ceases, projects become unsustainable. So, the funds for the sink mechanism have be a combination of domestic and international resources. But, even in this cooperative framework, developed countries will have to make far greater funding commitments than what they have done so far.

Halting forest loss along with reforesting could provide 150–200 billion tonnes of carbon mitigation between 2020 and 2050. Farmlands in dryland areas can sequester an additional 30–60 billion tonnes of carbon during the same period. Together, a sink mechanism that addresses both forests and farmlands can mitigate more than one-third of the climate crisis. What we need is to urgently bring countries together and agree on this collaborative framework to fight the climate crisis.

 

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