Allocation of Natural Resources

The spate of recent Supreme Court judgments on the allocation, pricing, utilization and regulation of natural resources-land, coal, sand, spectrum, et al – have ruled that environment and social concerns should take primacy over development in case it is observed that our quest for industrialization and growth would entail extensive use of natural resources which would be damaging to our Eco-system. The issue has once again brought into sharp focus the development versus environment debate wherein both are poised at opposite ends of the spectrum with development perceived as being against nature. The questions arise as to whether growth is always antithetical to development or whether there is scope for reconciliation by striking a fine balance between two seemingly conflicting objectives.
Anecdotal evidence shows that there is no economic activity that does not burden the environment. The industrial revolution in U.K and Europe, which set the foundation for industrialization across the world, was based on large scale exploitation of natural resources which served as raw materials for industrial use. Yet the industrial revolution is also known to have transformed economic activity across the west, having paved the way for large scale mechanization and sweeping technological innovations which led to wealth creation and in turn raised living standards as never before.
In India, the post-liberalization period, which has provided a fillip to industrialization and lifted our country from the low growth syndrome, is witnessing a steadily rising demand for raw materials, minerals and energy all of which could be available by sourcing our requirements from nature. The mining activities have increased tremendously and demand for fossil fuels such as coal, petroleum and natural gas as also segments like metals and sand has gone up manifold thereby causing the depletion of natural resources which has a tremendous impact on environment and local economy.
No doubt, the exploitation of natural resources is a key factor in economic growth which in turn has definite environmental and socioeconomic impacts. These include the destruction and degradation of old growth forests, the depletion and pollution of water resources, the decimation of fisheries and the despoliation of land in order to extract mineral resources. In addition, there is a localized adverse impact on livelihoods and human security which could pose a threat to the socio-economic balance in the country. For example, in India the Adivasi or tribal people, representing eight percent of the total population, make up 40-50 percent of the displaced. In Nepal, indigenous groups displaced by a dam on the Kaligandaki river have lost their land and livelihood of an estimated 35,000 indigenous Ibaloi people is threatened by the construction of the San Roque Dam in the Philippines. However, does the negative environmental impact assessment mean that we should set the clock back on industrialization and growth despite the fact that industrial development is critical for wealth creation, employment generation and for lifting millions out of poverty? Could a win-win situation be conceived wherein the pristine attributes of nature remain intact without sacrificing development? 
The recent Supreme Court judgments tend to give precedence to environmental and socio-economic concerns of displacement of locals over growth priorities. The case in point is the Supreme Court’s refusal to vacate the stay granted by the AP High Court on sand mining in various rivers across the state. The decision is a setback to several ongoing infrastructure and irrigation projects which have been adversely affected by the AP high court.     
 Similarly, the Mining Bill and the Land Acquisition Rehabilitation and Resettlement Bill 2011 continue to hang in balance due to a general lack of consensus over its provisions which continue to be debated even today. There are stringent provisions that restrict acquisition of land in scheduled areas and all agricultural land – a move meant to protect the land owner and the environment from diverting land use for commercial activity.  However, such narrow considerations are bound to slow down investments in new projects and perpetuate gloom in the economy.   
Another judgement which endorses auction of airwaves and spectrum over the first come first serve principle is the other area where the Supreme Court has taken an extreme position in terms of allocation of scarce natural resources.
Such arguments, which overlook the contribution of economic activities in national prosperity while focusing on preserving our ecology, reflect simple and short term solutions to complex and festering long term problems.  For instance, the ban on sand mining would bring construction activity to a halt which in turn would affect demand since the construction sector has a huge multiplier effect on the rest of the economy. As a result, both direct and indirect employment would be affected.  A better option perhaps would have been to let mining of sand to continue while directing the mining companies to compensate for the damage done to the ecosystem, not only through royalty payments made to the government but also through redevelopment efforts to restore the loss made by exploiting nature. The aim should be to give back more than what is taken away for development.
Mining companies should be required to work towards reforestation and plant high value trees to prevent soil erosion, create more irrigation facilities, help in the construction of canals, dams and promote rain water harvesting. And such reconstruction activity could be monitored by a competent authority. After all, business and corporates are one of the largest users of natural resources, making them an important stakeholder in the protection of the global commons along with the government and the civil society. It is hence important for them to arrive at a consensus with regard to resource use and compensation.  
Similarly, the concerns of landowners and tribals who have been displaced from their land on account of mining or development related activities like construction should be provided adequate compensation for relinquishing their land. More importantly, the project affected people should be made stake holders in the project under reference so that they develop long term interest in development. Besides, welfare activities such as building of schools, healthcare centers would go a long way to assuage the sentiments of those dispossessed by industrial activity in their region.
What is required for the government is to carry out a cost-benefit analysis for any productive activity to be undertaken in sensitive areas involving extensive use of scarce natural resources. And a go- ahead for resource allocation should be given only when benefits of development outweigh the costs. There could be areas where the ecosystem is extremely fragile and any developmental activity would cause extensive damage to our environment without adding significantly to growth. In such cases, the project should be shelved. There is need to devise transparent, workable solutions for use of natural resources and implementation of projects and programmes. Besides, a greater degree of integration is necessary to settle inter-departmental issues in order to fast track clearances.
To ensure transparent and efficient allocation and use of natural resources such as land, minerals, forests, airwaves- it would be worthwhile to constitute an independent National Resources Commission in each state to oversee, manage and calibrate the use as well as preserve natural resources which would be in short supply in the future. The Commission would be involved in price discovery of specified natural resource based on certain identified parameters as also address the grievances of stakeholders and make suggestions on recuperating and rejuvenating the biodiversity and ecosystem affected by exploitation of natural resources. Such a Commission, constituted under the aegis of the Centre, would also address the priorities of the states and could be financed by cess taken by mining companies for the purpose.
A holistic approach where the genuine concerns of stakeholders- government, business, landowners and civil society- are discussed in the best interests of the concerned parties would go a long way to narrow the gulf between the interests of business which favor investment and profits and civil society and government which are concerned about protecting the people and environment.