Justice Considerations in Deploying Market-Based Instruments for Environmental Protection in South Asia - By Abi Perriman
Justice Considerations in Deploying Market-Based Instruments for Environmental Protection in South Asia
By Abi Perriman
Market-based instruments (MBIs) use market forces to efficiently and effectively promote environmental protection. Policymakers in South Asia are increasingly interested in MBIs given the opportunity they present to redistribute revenues, alleviate poverty, and rectify unequal access to resources.
At the same time, MBIs raise environmental justice concerns because of their potential to intersect with and exacerbate social inequalities and vulnerabilities. Indigenous People and Local Communities (IPLCs) and low-income groups are particularly susceptible to the negative consequences of MBIs. Furthermore, perceptions of fairness and equity are critical for the effectiveness of MBIs as policymakers navigate diverse interests to introduce policy and ensure compliance.
My research into the deployment of MBIs in South Asia provides the following insights:
1. Effectiveness of MBIs: MBIs have shown promise in South Asia by incentivizing more efficient use of resources and through reducing environmental impacts through mechanisms like taxes, tradable permits, and subsidies. Successful applications include fuel taxes in the Philippines and India, and carbon trading schemes in India.
2. Justice Concerns: Despite their potential, MBIs raise significant environmental justice concerns. These concerns include the potential for MBIs to perpetuate or exacerbate existing inequalities. IPLCs and low-income groups are particularly vulnerable due to their limited resources and influence, which can result in an inequitable distribution of costs and benefits.
3. Pathways to Inequity: Policy interventions that safeguard against adverse impacts and drive equitable change can be developed based on an understanding of five mechanisms through which MBIs lead to unequal outcomes.
· Economic Development versus Environmental Protection: Environmental MBIs can adversely impact GDP leading to unemployment and diminished public revenue, disproportionately affecting low-income communities.
· Market Failures: Markets prioritise efficiency over equity by allocating resources to higher-income populations and by shifting polluting industry to low-income populations.
· Monetizing Nature: MBIs can undervalue the ecological, cultural and spiritual significance of nature. This is especially pertinent for IPLCs whose value systems may contrast significantly with the monetisation of natural resources.
· Property Relights and Land Tenure: MBIs that involve ecosystem services often require redefining property rights, disadvantaging IPLCs with alternative ownership structures.
· Institutional Capacity: Effective MBIs require robust institutions to design, implement, monitor and enforce environmental targets. When this is lacking, they can become susceptible to failings, co-option and corruption.
From this analysis, there are three broad principles that should guide policymakers when developing and implementing MBIs:
1. Policymakers Should Integrate MBIs into a Broader Policy Framework using a Phased Approach: This involves starting with simpler mechanisms and gradually incorporating more complex ones, allowing time to build institutional capacity and address potential injustices.
2. Policymakers Should Explicitly Incorporate Justice Considerations into Policy Analysis, Policy Design and Policy Evaluation: Policy analysis for MBIs should go beyond traditional metrics and should include equity considerations. This involves tailoring definitions and criteria of justice to resonate with affected communities and alternative governance structures. This will guide corrective and redistributive measures in policy design.
3. Policymakers Should Co-produce Inclusive Policies with Marginalised Communities:Policymakers should engage IPLCs and low-income groups in meaningful dialogue during the design and implementation of MBIs. This ensures policies are aligned with the needs and values of communities, promoting broader sustainable development goals.
In conclusion, while MBIs offer significant potential for cost-effective environmental protection in South Asia, their implementation must be carefully managed to avoid reinforcing social inequalities. By prioritizing justice considerations and engaging marginalized communities, policymakers can ensure that MBIs contribute to both environmental sustainability and social equity.
Notes:
1. Abi Perriman’s policy brief titled “Justice considerations in deploying market-based instruments for environmental protection in South Asia” was the winner of the Chronos Sustainability Prize 2024. Abi’s policy brief can be accessed here
2. Abi is completing a postgraduate degree in Environment and Development at the London School of Economics and Political Science (LSE). She has a bachelor's degree in psychology from University College London and a background in international development. Her work has supported donors, investors, NGOs and other private sector actors with evidence, learning, and impact strategies, with a focus on South Asia, Southeast Asia, and the Pacific.