The Cost of Damages and its Estimation (Environment)

Environmental Impact Assessment involves determination of nature and magnitude of impact whereas Cost Benefit Analysis compares the cost of damage caused by developmental activity with the cost of control measures adopted and provides the optimum solution for a given environmental quality.

Thus, cost benefit analyses converts the benefits from the development, damages and control measures into monetary values. It helps the managers and policy-makers to take decisions and plan suitable environmental management strategy economically. It also motivates the project executioners to invest in environmental protection measures.

(1) The Cost of Damages and its Estimation :

Adverse impacts on the quality of environment result in deterioration in abiotic as well as biotic components of the system. The cost of deterioration caused by adverse changes in the environment which are usually slow and gradual is rather difficult to estimate as full impact of the degradation may manifest itself after a long period of time. Damages caused by various developmental activities can be of the following types:

1. Damage to human health.

2 Damage to flora and fauna of the locality.

3. Damages to materials.

4. Damages to structures, buildings and property.

1. Damage to Human Health:

Estimation of changes caused to human health is usually done by Dose response relationship. The effect of various concentrations of pollutants on human health can be estimated on the basis of mortality, number of days the individuals are unable to put in productive activity, reduction in working efficiency as determined by total work out-put, or expenditure incurred for medical care etc. These parameters usually cover only reversible exposures which can be taken care of with a medical help.

There are many industries which use or produce as a product, by-product or waste materials which may cause irreversible toxic exposures or exposures with late and latent effects. Such exposures may cause the individuals to suffer permanent health damage for which the available medical facilities can do nothing. These exposures may result in pre-mature death or cripple the individual for his entire life.

Often the threshold concentration for exposures causing irreversible and late and latent action is either ambiguous or there is no threshold at all. The toxic response is not graded – it does not intensify with rise in concentration. Instead a small exposure could cause intense toxic action if occurs – the toxic action may not occur at all even with much larger doses. Effects like cancers, tumours, teratogenesis and mutation come in this category. Estimation of damages caused in such cases is impossible.

Adverse effects caused by many industries and developmental activities tend to produce a environment which is full of stress to the human population within the locality. Life under stressful conditions causes the living beings to adjust and adopt to the adversities for which some physiological and biochemical changes have to occur within the system. The system has to do some additional work to excrete the toxic agent or carry on with it for which metabolic energy is required.

For example, if one has to live in atmosphere charged with gases like SO₂, NH₃, and fly-ash, fie win regularly breath in large quantities of these gases and particulates. To clear out these unwanted materials the living system shall have to strain itself which shall naturally step up the rate of wear and tear of the system, and could result in general non-specific disease symptoms.

There is every , likelihood that the overall life span of the individual could be reduced – e.g., he may die a couple of years earlier than he would under normal and healthy conditions. Is it not like committing a delayed murder of so many people who are forced to live in such environment – a crime (murder) for which the law prescribes life imprisonment or even a death sentence.

People working in asbestos factories, quartz and silica mines, metal foundaries, glassware manufacturing units etc. may suffer from ailments of respiratory system ranging from chronic bronchitis, to lung cancers which impair the working efficiency and definitely shortens the average life span. These damages are seldom accounted for in Cost benefit analyses.

2. Damages to Flora and Fauna:

Plants being stationary are subjected to drastic changes caused by developmental activities. A large area of land surface is cleared of natural vegetation. The remaining flora is subjected to adverse conditions. The susceptible species disappear and the hardy and tenacious forms come up to replace the original ones and usually built up a huge population. The changed conditions of environment may be detrimental to rare and endangered species present in the system. Species which happen to be endemic to the area may be lost completely. The damage done, therefore, could be irreparable and the cost incalculable.

With changes in flora a number of animal species migrate away from the locality and only those forms persist which are tolerant to the changed conditions. All this may result in disappearance of traditional resource base for local population which may have to seek some other source of livelihood. For example, disappearance of local fishes may cause the fishing community to suffer.

Disappearance of common species of trees which provide fuel wood or cheap timber may cause wood-wenders to look for an alternative source of livelihood. Such changes have to assess in terms of monitary losses and added to the cost of damage incurred due to the development activity.

The damage, thus, incurred may be estimated by the loss in yield multiplied by the selling price of the commodity or alternatively by assessment of the cost incurred for mitigative measures adopted. For non-commercial species the cost of mitigative measures taken or the replacement cost of the affected species may be used for the assessment of the magnitude of damage done.

3. Damage to Materials and Property :

Pollution inhances the detrioration of metals, stone, cement concrete, fibres, paints, rubber and structures made up of these materials. The damage done is usually slow and gradual. Painted surfaces lose their shine and the protective property of paints which is one of the important purposes behind application of paints is lost. Bare metal, cement concrete and stone surfaces are slowly corroded by pollution of air of water.

Buildings acquire a dirty appearance due to the deterioration of polished surface. Agricultural land may lose their productivity. Fruite trees growing in areas with atmosphere charged with polluting gases and particulates may lose their original flavours. Even the wine brewed from grapes grown in such atmosphere may acquire unpalatable flavours. Rains may turn acidic due to contaminants of the air and cause acid deposition which affects soils, water bodies and other structures adversely.

Assessment of losses incurred due to the pollution of the environment in terms of money is usually done on the basis of money spent to repair the damage or the mitigative steps which have to be undertaken to reduce the load of pollution. Monuments of architectural and historical importance situated in the locality may also be affected by the pollution and lose their beauty. Such loses are, however, incalculable in terms of money.

(2) The Cost of Mitigative Measures and its Estimation :

The controls cost or the cost of mitigative measures undertaken is the cost incurred in adopting various mitigative measures to minimize pollution to provide relief to the affected people. The relation between the expenditure on control measures and the magnitude of reduction in pollution is examined to estimate the optimum expenditure which will result in maximum reduction in the magnitude of pollution.

Usually as the efforts to minimize pollution is intensified, i.e., more money is put in mitigative efforts, the magnitude of pollution diminishes. A point is finally reached where there is little reduction in the load of pollution even if we put in more efforts.

To reduce a little more of the pollution loads a much larger effort and thereby a much larger expenditure is needed. It is usually at the point where the optimum reduction in pollution load is attained with the optimum expenditure that mitigative efforts are levelled off. The mitigative efforts usually include:

1. Sorting out, modifying or treatment so as to make the wastes harmless or less harmful.

2. Safe disposal of waste material – solid liquid or gases.

3. Modifying the process so as to reduce the magnitude (quantity) or toxic nature of the wastes.

4. Steps undertaken to provide relief or to rehabilitate the affected people to safer locality.

Sorting out, modifying or treatment of waste material requires labour, chemicals and equipment for which expenditure is needed. Safe disposal of wastes may require higher chimneys or transportation to places unfrequented by man where the wastes may lie and be taken care of by nature’s agencies.

Process modification which at times results in significant reduction in volume and toxicity of the wastes may require additional expenditure. Steps undertaken to provide relief to the affected people or their rehabilitation to safer localities also involves expenditure.

Expenditure is involved in maintenance, wear and tear of equipments used in pollution control operations. All these costs are included in the Control Costs and should be added to the cost of the product so that adverse impacts of developmental activities may be properly handled.