The polycrisis that the world is grappling with is fundamentally different in nature from earlier crises in two ways. First, the simultaneous occurrence of interacting and interconnected crises exacerbated by climate change creates a new dynamic that is challenging; second, the human-generated crisis brought on by the pursuit of resource-intensive economic growth as an end in itself has generated inequality, environmental devastation, and social unrest, has brought the world to the brink of extinction such that we can no longer function using the ‘business as usual’ model. In order to retrieve ourselves from this unequal and unsustainable path of development it is necessary to move towards a more equitable and sustainable path of development. India has proposed the theme of Lifestyle for Environment, Resilience, and Values for Well-Being’ as a theme for the ongoing Presidency and Task Force 3 has been constituted within the Think Tank 20 (T20) for the purpose. The orientation of the Task Force on bringing about changes in individual behaviour would need to be supplemented by change in the orientation and functioning of multilateral agencies at the global level. Three suggestions are made from this perspective for consideration by the T20.

1. Move from just transition to just recovery

In order to save the world from the brink of extinction, the post-Covid policy measures of national governments should go beyond attempting just transition to just recovery to ensure long-term impact. The urgent imperative is to shift to a development paradigm that respects the core values of equity and sustainability and that views economic growth as only a means towards ensuring the well-being of people. The human development paradigm considers equity and sustainability as its core values. Equity includes both inter and intra-generational equity in the realm of choices, freedoms, and opportunities. Sustainability goes beyond the environmental dimension to include economic and social dimensions as well. Further, it adheres to the concept of strong sustainability that considers essential the preservation of ‘critical natural capital’ as opposed to the concept of weak sustainability wherein natural and physical capital are considered substitutes for each other.

There are elements of the human development approach already being used by national governments in their approach towards social sectors or in the poverty alleviation and ‘welfare’ measures being implemented. However, these tend to address the repercussions of the prevailing development paradigm rather than reversing the paradigm itself. This partial and hesitant approach must change as welfare measures cannot succeed as long as macroeconomic policies continue to be cast in the neo-liberal framework and continue to generate inequalities and unsustainable outcomes. The need is to have equity and sustainability as core values governing ‘all’ policies – monetary, fiscal, incomes, et al – so that they are characterised by a ‘redistributive ethos’ including not only intra-generational but also inter-generational considerations. This can enable the achievement of the SDGs and Agenda 2030 which is currently spluttering and weakened due to the poly crisis.

2. Transform norms adopted by multilateral agencies in assessing projects and move towards discount rates that are ‘near zero for net zero’.

Following the above, the imperatives of LiFE require that the preservation of natural capital to be the priority. For this to be a reality, at the operational level, it is essential to adopt norms and evaluation metrics that accord the preservation and restoration of such capital the highest priority. Currently, the norms used by most donors and international financial agencies in cost-benefit analysis -that is deemed to be a ‘scientific’ method for project selection and evaluation- is to use discount rates ranging between 3-7 per cent so as to reflect either the opportunity cost of capital or the social rate of discount. This induces a systemic bias towards longer-duration projects and environmental and ecological restoration is typically a process stretching over 50 years or more. It is therefore imperative that there is a broad consensus and initiative to adopt zero or near zero discount rates in order to move towards net zero greenhouse emissions for projects related to the restoration of the and aspects that affect LiFE.

Unlike individuals, society has the explicit responsibility of nurturing the interests of future generations. By adopting near-zero discount rates, the systemic and systematic bias against the interests of future generations is neutralised. Moreover, cost-benefit analysis is a tool that is relevant for decisions at the margin, and is not relevant for decisions concerned with the whole of society and hence needs to be revisited in the context of the current existential crisis.

While the need to adopt near-zero discount rates is imperative at all levels- local, regional and national- we emphasise the global financial institutions as the political will and the resource requirements necessary for such long-term projects are often not available at the local or national levels. There is also a ‘collective myopia’ at the lower levels that leads to a systematic bias against the selection of longer gestation projects due to the compulsions of electoral politics that encourage political parties to focus on immediate gains rather than invest in long-duration projects.

Further, as global financial institutions have the imperative to earn reasonable profits and will find it difficult to adopt this required measure without explicit agreement among member states, innovative financing options will need to be explored in terms of long-term zero-interest financing to enable countries to implement projects of immense value to society and thereby to the world at large.

3. Change the Metric of Measurement of ‘Progress’.

‘What we value is what we measure’, the famous dictum of the Stiglitz-Fitoussi-Sen Commission, pinpoints the issue of erroneous measurement leading to undesirable consequences. As long as nations and international agencies continue to use GDP per capita as the metric for measuring ‘progress’ of a nation, there will not be a change in the way in which development is delivered. Considering that inequality and environmental degradation have been the direct by-products of the growth-oriented development paradigm pursued thus far, it is imperative if LiFE is to be made a reality, to move towards measures that reflect these values directly. Progress will need to be measured in terms of ‘Green GDP’, and adjusted for planetary pressures and inequality. The Human Development Index is already being adjusted for these two dimensions and it is essential that the core GDP measure be adjusted for these. Inequality-adjusted per capita income and planetary pressures-adjusted GDP would be a huge step forward in advancing the concept of LiFE at the global level.

Institutional backing is essential for all of the above to be a reality. India’s Presidency is a huge opportunity to further these important game-changing ideas to usher in an era of well-being for all.

The author, K. Seeta Prabhu is Visiting Professor at the Tata Institute of Social Sciences, Mumbai, and at the Institute for Human Development, New Delhi. She is currently a Co-Chair for Task Force 3 on LiFE, Resilience and Values for Well-Being’ of Think Tank 20 (T20). This is based on the presentation made at the T20 Co-Chairs meeting during the Inception Conference at New Delhi, 13-15 January, 2023.

Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.


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