The fal­lacy of sav­ing in­vest­ment rather than en­vi­ron­ment

How eco­log­i­cally dam­ag­ing projects are per­pet­u­at­ing a fal­lacy


The past few months have witne - ssed sev­eral key mo­ments in the de­bate over en­vi­ron­ment and jus­tice. These in­clude res­ig­na­tion of Union en­vi­ron­ment min­is­ter Jayan­thi Natara­jan, can­cel­la­tion of Vedanta’s en­vi­ron­men­tal clear­ance for min­ing in Niyam­giri and the go- ahead to POSCO for min­ing in the Kan­dad­har hills. One such de­velop ment was a state­ment by the Supreme Court re­gard­ing the al­lo­ca­tion of coal mines. The court on Jan­uary 8 asked the govern­ment not to use in­vest­ments made in min­ing as a trump card for al­low­ing projects in eco­log­i­cally im­por­tant ar­eas. While this ap­pears to be com­mon sense, the state­ment is im­por­tant in the cur­rent process of reach­ing an en­vi­ron­men­tal ver­dict.

Till date in al­most all cases where people have raised en­vi­ron­men­tal and liveli­hood con­cerns about par­tially com­pleted projects, the au­thor­i­ties have is­sued clear­ances based on the ar­gu­ment that the in­vested amount will go waste if the project is not con­tin­ued. In eco­nomic terms, such an ar­gu­ment is called “sunk cost fal­lacy”. Fail­ing to con­sider the in­vest­ment as cost that is al­ready “sunk” has been the de­cid­ing fac­tor in set­tling sev­eral en­vi­ron­men­tal cases. This is be­cause, by the time courts hear the mat­ter, in­dus­trial op­er­a­tions would have been kicked off us­ing en­vi­ron­men­tal and for­est clear­ances by the state or Union min­istries. Thus, a de­lay in ad­dress­ing is­sues on ground, which is delib- er­ate in most cases, al­lows “sunk cost fal­lacy” to in­flu­ence de­ci­sion mak­ing.

Our re­search in Nau­pada wet­lands of Srikaku­lam district, Andhra Pradesh, gave us a first­hand un­der­stand­ing of the is­sue. A coal-based ther­mal power plant is be­ing con­structed in the Kakara­palli swamp that is part of the much larger Nau­pada wet­lands. The swamp is an im­por­tant feed­ing area for mi­grant birds from Europe and Cen­tral Asia. It also func­tions as a flood cush­ion for agri­cul­tural fields in sur­round­ing ar­eas by ab­sorb­ing sea­sonal surges from the streams orig­i­nat­ing in the East­ern Ghats. But ever since con­struc­tion work has started in Kakara­palli, agri­cul­tural fields are in­creas­ingly be­ing flooded. Fill­ing and el­e­va­tion of the wet­land has al­tered its nat­u­ral flood man­age­ment sys­tem. In ad­di­tion to agri­cul­tural losses to thou­sands of farm­ers, many fish­er­folk have lost their liveli­hood.

En­vi­ron­men­tal clear­ance to pro­posed Som­peta power plant was can­celled only af­ter three pro­test­ers died in po­lice fir­ing

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