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