liberationraj.org » Environment

Energy subsidies – Burn it

raj — Sat, 08 Jan 2011 12:09:46 +0000

One my pet peeves is indirect subsidies. They distort the economy and ruin the environment. It is nothing but robbing Paul to pay Peter. But since Peter also gets robbed to pay Paul, no one really benefits. Well there are some Pauls and Peters who manage to get the tax man to rob and not get robbed. Exhaustive Get the Energy Sector off the Dole article by Jeffery Leonard is an excellent read.

Why ending all government subsidies for fuel production will lead to a cleaner energy future—and why Obama has a rare chance to make it happen.

We can be sure that the same arguments is applicable in India or pretty much any country.

Can Environmentalists and Economists Agree?

india — Fri, 25 Apr 2008 12:30:00 +0000

One of my pet themes–perils to the environment when you ignore economic principles and the power of incentives. One of the reasons why I respect the work of Nature Conservancy.

Art Carden and Mike Hammock in Can Environmentalists and Economists Agree? March 31, 2008 Contra Costa Times address some interesting issues.

Burning Mr Singh’s pump

india — Mon, 07 Apr 2008 07:11:00 +0000

One more reason why all sincere environmentalist should learn economics and a thing or two about incentives. Check out this pretty alarming piece India’s water shortage by Daniel Pepper. This shouldn’t surprise anyone. Unfortunately, most concerned environmentalist I know just talk about these issues. Then follow it with a speech on why we should love nature, conserve water, yada yada yada. Completely oblivious to the economy distorting and ecologically disastrous effects of indirect subsidies.

So all praise to Mr Saurabh Kumar, who heads the government’s Bureau of Energy Efficiency in New Delhi and his experiment in reforms.

That’s exactly what Kumar hopes to do: get politicians, farmers, and
bureaucrats to sign on to reforms that will save billions of dollars
and reduce the amount of water pumped out of the ground. A pilot
program for his nationwide scheme is expected to launch early this
year. Farmers will receive new, efficient pumps with meters and prepaid
electricity credits allowing them to draw roughly the same amount of
water they use now and either pocket the savings if they pump less or
pay to pump more. Utilities will be required to upgrade transmission
lines to cut losses and improve service.

Hope he goes further next time. Just give the money directly to the farmers. They know how to buy pumps, electricity, etc. keeping costs in mind. The less electricity a farmer uses, the more money he keeps. Simple. Get government out of the pump buying business. I am pretty sure soon we will get to hear about a government pump buying scam. Let the farmers buy the pumps that is appropriate for their use.

Set up a transparent regulatory framework, if necessary, so anyone and everyone can produce and distribute electricity. Introduce competition, which in turn introduces accountability, to electricity and other services. Put an end to government MONOPOLY. This way government does not have to be in the business of “utilities will be required to upgrade transmission
lines to cut losses and improve service”. Cutting losses and improving services are what businesses do when faced with competition. Appealing and pleading is not a substitute for free and fair competition.

Farmers like Darshan Singh, 55, who grows rice and wheat on 25 acres of
Punjab land that has been in his family for generations, say they would
be happy to pay for electricity if it was constant and didn’t burn out
their pumps.

Even if you doubt Mr Singh, giving tax payers’ money, to buy electricity, water or booze for that matter, directly to farmers like Mr Singh, will be politically practical and make questions about Mr Singh’s sincerity irrelevant. Directly subsidy would be far less distorting to the economy and thereby far less harmful to the environment.

There is an added advantage. Even government electricity company will be able to charge market prices and use their profits to upgrade their systems, invest in more electricity production and improve their services.

Same principles apply to fertilisers. Overuse of fertilisers cause incalculable harm to rivers and water bodies. Ask yourself, why would an ordinary farmer overuse fertilisers.

Let us stop burning Mr Singh’s pump! And yes, as Mr Kumar says, “all these issues are interconnected”.

Money and Mouth

india — Sun, 09 Sep 2007 06:12:00 +0000

Not too many people put there money where there mouth is. There is
usually a lot of talk about environment and that is immediately
followed with a ‘government should do more …’ statement. Here are
some people who put there money and effort where their talk is. I have
always been a big fan of The Nature Conservancy

Our Methods, Tools and Techniques

How can The Nature Conservancy protect all of these places?

We can’t buy them all, and we certainly can’t protect
them single-handedly. But by joining together with communities,
businesses, governments, partner organizations, indigenous people and
communities, and people like you, we can preserve our lands and waters
for future generations to use and enjoy.

Basically that means, they collect money and buy land
and water bodies that need protection. Of course they work with
government and international agencies to do a lot other things too.