Conceptual development in the theory of
externalities have opened up several policy options for
their internalization including payment towards
environmental services. Hence as externalities are social
costs, accountability is crucial in increasing
environmental awareness and for collective action
through education and extension more so in developing
countries. Here a modest attempt has been made to
estimate externalities in water, forests and environment
with field data from peninsular India to reflect on the
economic perception of externalities by farmers and
users of environment for the consideration of policy
makers to devise institutions for payment towards
environmental services.
The methodology largely used here in estimation /
valuation of externalities is by considering ‘with –
without’ situations (including ‘before – after’ in some
cases) akin to ‘project valuation’. Studies cover
empirical estimation of externalities inter alia due to
over extraction of groundwater , sand mining, watershed
development, conservation of forests, sacred groves,
cultivation of organic coffee, use of medicinal plants as
alternate medicines and the annual values presented are
in 2008 prices.
The negative externality due to sand mining 24 € per
acre, that due to distillery effluent pollution is 34 € per
acre. The positive externality due to watershed program
is around 51 € per acre, and that due to rehabilitation of
irrigation tanks is 26 € per acre. The positive
externality due to cultivation of shade coffee is 9 € per
acre and that due to forest conservation 27 € per acre.
The positive externality due to sacred grove
conservation was 12 € per family. The impact of forest
conservation on Non timber forest products was 88 € /
per tribal household. The positive externality due to use
of medicinal plants as alternate medicine is equal to 35 €
per patient suffering from osteo-arthritis and 19 € per
patient suffering from peptic-ulcer.
While these estimates are not sacro sanct as the
methodologies for valuation of externalities are subject
to further review and improvement, they however serve
as initial indicators of spillovers. And they signal
possibilities for consideration of policy makers for
devising alternate institutions for potential payment
towards environmental services
