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released by fishing vessels and dhows to blockade Iridia'smilitarY anacohn1::---r---c;oornll1irr "'c i5'ncn"" 0 ... _ ____-=~ri-lIIrollc"'o, ..c <5 . ~~_. __

mercial ports at the start ofa war. The Indian Navy requires at least 24 MCMVs; there are just seven minesweepers today. Delay in buying more could result in

sunken vessels, lives lost and insurance rates gOing sky-high. Much of the blame for this situation goes to the defence ministry, which

blocks the procurement of even desperately needed equipment as soon as any­one complains - even if the complaint is anonymous, or from a company that is losing the contract and clearly wishes to derail the process. In some cases, such complaints have been rejected by the Central Vigilance Commission and by the

ministry's own independent monitors committee. Yet, infected by Defence Minister A K Antony's conviction that no contract with even the whiff of con­troversy should go through, these procurements continue to languish. Capability gaps also stem from the Navy's hankering for cutting-edge equipment that must be developed even as the warship it is meant for is being built. Sensible navies shy away from "concurrent engineering", as this risky process is called,

because any delay in developing the equipment - as in the case ofthe LR-SAM - means that the warship is ready but the equipment is not. It is too late then to retrofit otherequipment and that warship remains operationally vulnerable until development is completed. The ministry's belief that anything goes, even grave operational shortfalls, has poisoned military culture as well. It must be ensured that the lakhs ofcrores being spent on national defence result in an operational

and ready military, not one that will be ready in some distant future.

more than 330 major reforms in 60 areas for imple­mentation by 2020 - a package of unprecedented scale, depth and complexity. Orchestrating China's transformation from a manufacturing- and export-based economic model to one driven by consumption and services - and that is inclusive, environmentally sustainable, and creates more than 13 million jobs annually - is a massive undertaking. Add to it the chal­lenge ofupholding financial and social stability - and accoinplishing all of this while managing one of the world's largest bureaucracies - and the task ahead becomes truly mind-boggling.

Consider the effort last summer to assess the gov­emment's financial condition. The National Audit Office had to mobilise 55,400 staff members to review not only the central government's accounts, but also those of 31 provinces and autonomous regions, five central municipalities, 391 cities, 2,778 counties and 33,091 rural communities. The investigation covered 62,215 gov­ernment departments and agencies, 7,170 local-gov­ernment financing vehicles, 68,621 public finance-sup­ported repOltingLUllts, 2,235 public business units, and 14,219 other entities - responsible, altogether, for 730,065 projects and 2,454,635 items of debt.

Clearly, public sector governance in China is radi­cally different from that in the West, where the rule of

The dismal science as saviour?

~ BOOK REVIEW SHREEKANT GUPTA

All things bright and beautiful, All creatures great and small, All things wise and wonderful, The Lord God made them all.

- Cecil Frances Alexander

Evolutionary biologists may quibble over the popular Anglican hymn, but one thing is clear: irrespective of how "things" and "creatures" came about on this plan­et, we know for sure how they are now becoming extinct. Unlike previous five mass extinctions over the past 540 mil­lion years, this time around it is not microbes or meteorites but humans that are the cause. In a short span of20 years since the Earth Summit in 1992, the

Living Planet Index ofbiodiversity declined 12 per cent globally and by as much as 30 per cent in the tropics.

Ifhumans are single-mindedly destroying the planet's biological diversi­ty (or biodiversity), can they also be its saviours? Can the dismal science of eco­nomics and economists save Mother Nature? Can an economist caricatured as "someone who knows the price of every­thing and the value of nothing" actually help prevent this mass extinction?

For Dieter Helm and Cameron Hepburn, both economics professors at Oxford University, the answer is obviously yes. Why else would they expend time and effort to compile a fat tome with 15 chapters running into more than 400 pages? Of course, their task is made easier since two-thirds of the chapters (and pages) have appeared previously in the in­house Oxford University journal Oxford Review ofEconomic Policy, which they edit. Be that as it may, they believe neglect of economics to be the root cause ofthe problem: "(T)reated as separate from the

economy, and without regard to the eco­nomics of biodiversity, the destruction willgo on largely unchecked."

The problem with this book is not that it argues for a central role for economics in biodiversity preservation; it is that much of the book does not tell us any­thing new - envirorunental economists are well versed in valuation methods (and, in any case, have access to the Oxford Review ofEconomicPolicy, where much of this appeared earlier). Secondly, the con­tributors are western-based academics and their take on the role of economics in biodiversity does not resonate with the concerns and priorities of poor countries, where the bulk of the world's biodiversity - and its people - is to be found. For example, the book does not address squarely the conflict between livelilioods and biodiversity preservation, which is of key concern to poor countries. The battle raging over the fate of the Western Ghats and over the "controversial" Gadgil and Kasturirangan Committee reports would hardly be informed by this book. But

'througlfTIaUOIiat nnrnsmes 01 " "'. "

institutions. They include cent n I \'1.1 development and reform; the IIDII '

motion of officials to important 1''' state-owned enterprises, and local I '.' levels; and macroeconomic tools. \l monetary, exchange rate, and regula I

kuai refers to the lateral, highly COli

ships among regional entities, til \'I

government delegates a celtain aI lit 1 In order to achieve genuine S1.al1i

ers must strike a delicate balance I control and kuai kuai autonomy. HI difficult, \vith relaxation of tino Liell) just to rapid regional growth and i local public services, but also to widl and a heightened risk of overheat iI cyclical herding behaviour, such a asset investment. The govemment L impose central control abruptly, bril den stop. IfChina's economy were a leaders would always be either floori or slanm1ing on the brakes.

With its latest set of reforms, Chi 11

attempting finally to fine-tune its ap age centralises some responslbiliti

then, the ivory towers of academia in British and American universities are far removed from the lives of billions of peo­ple in Asia and Africa.

A third problem is the intrinsic diffi­CUlty of creating a coherent book out of papers that were essentially written sepa­rately and meant to be read as stand­alone pieces (recall their previous avatar as papers in the Oxford Review of Economic Policy symposium). This leads to some repetition - biodiversity is defmed in several chapters, for instance­and unevenness of quality.

Chapters one and two are a preview of the book (less charitably, a "CliffsNotes", aka kunji in Hindi) with much overlap. It would have been more "efficient" if the editors had combined them into one ­lUter all, they wrote both. Chapters three to five contain new material compared to the rest of the book - especially chapter three ("Biodiversity: Its Meanings, Roles and Status"). An excellently crafted expo­sition of the mearling, roles and status of biodiversity, chapter three is a must read. Chapter 4 ("Identifying and Mapping Biodiversity: Where Can We Damage?") is most provocative. It proposes criteria for a "biodiversity triage", where some areas

are more exr premise is th would wanr luxury of COl not an optio

Chapters book,focus services am point. Chap Services anI turereview known met ter seven ('"' and Biodiv Responses· forarepon European of Ecosyst report was comrnissio governmel Economic. terwas a d togetherd case for ea The same theconle

The ne nomicrol Chaptere

..--~· -- . --t.- in fec e- ...-- --- "" ·f~::~~a=f:~e~~~aft;~gt~~~-~I~~~'-'='OimY,",~'i-.J10'ITI~~:~~~~:;;:U7:=7=Jr. OPe~mJ~",,6an-.'mdurr~r<:=s~~u=~~t'-~iii~;;~~~7n:;;:;~;7r;;ra~~~1n1ffilttee- Ye.. - - - -t ...d-b y Def.e.nce~'T"-....;;;;;o;w~~~ go ~='C~alrn ..~ Oicontract with even the whiff of con- becomes truly mind-boggling. ers must strike a delicate balance between tiao tiao between Chinese and global governance systems. aents continue to languish. Capability Consider the effort last swnmer to assess the gov- control and kuai lcuai autonomy. But thls has proved China's leaders have already demonstrated that ilg for cutting-edge equipment that emment'sfinancialcondition. The National Audit Office difficult, with relaxation of tiao tiao often leading not they understand the need to implement modem man­: is meant for is being built. Sensible had to mobilise 55,400 staff members to review not just to rapid regional growth and improvements in agement techniques, and that doing so requires them ering", as this risky process is called, only the central government's accounts, but also those local public services, but also to widening imbalances to update and recalibrate the tools ofcentral control on

of 31 provinces and autonomous regions, five central and a heightened risk of overheating, mving to pro- which they have long relied. With the right adjust­)ment - as in the case of the LR-SAM municipalities,391cities,2,778countiesand33,091mral cyclical herding behaviour, such as excessive fixed ments, China's governance system can effectively ~quipment is not. It is too late then to communities. The investigation covered 62,215 gov- asset investment. Thegovemment is then forced to re- address market failures like air and water pollution, emains operationally vulnerable until ernment departments and agencies, 7,170 local-gov- impose central control abruptly, bringing about a sud- food safety, energy efficiency and social inequality, beliefthat anythinggoes, even grave emment financingvehlcles, 68,621 public finance-sup- den stop. If Chlna's economy were a car, the country's while ensuring the country's long-term prosperity.

try culture as well. It must be ensured ported reporting units, 2,235 public business units, and leaders would always be either flooring the accelerator Thls process is only beginning, but it is off to a onal defence result in an operational 14,219 other entities - responsible, altogether, for or slamming on the brakes. strong start.

730,065 projects and 2,454,635 items of debt. With its latest set ofreforms, China'sgovemment is - ------- ---- ------­ady in some distant future. Clearly, public sector governance in Chlna is radi- attempting finally to fine-tune its approach. The pack- The writers are at the FzmgGlobal Instill/te, Hong Kong.

cally different ftom that in the West, where the nlle of age centralises some responsibilities, such as manag- Project Syndicate, 2014

;ience as saviour? ng Planet Index ofbiodiversity lined 12 per cent globally and by as ~h as 30 per cent in the tropics. IhUll)ans are single-mindedly troying the planet's biological diversi­)r biodiversity), can they also be its ,ours? Can the dismal science of eco­nics and economists save Mother ure? Can an economist caricatured as m.eone who knows the price ofevelY­Ig and the value ofnothing" actually ) prevent tills mass extinction? ror Dieter Helm and Cameron )burn, both economics professors at ord University, the answer is obviously Why else would they expend time

I effort to compile a fat tome with 15 pters mnning into more than 400 es? Of course, their task is made easier :e two-thlrds of the chapters (and es) have appeared previously in the in­lse Oxford University journal Oxford iewofEconomicPolicy, whlch they . Be that as it may, they believe neglect conomics to be the root cause of the blem: "(T)reated as separate from the

economy, and without regard to the eco­nomics of biodiversity, the destruction will go on largely unchecked."

The problem with thls book is not that it argues for a central role for economics in biodiversity preservation; it is that much ofthe book does not tell us any­tiling new - environmental economists are well versed in valuation methods (and, in any case, have access to the Oxford Review ofEconomic Policy, where much of tills appeared earlier). Secondly, the con­tributors are western-based academics and their take on the role of economics in biodiversity does not resonate with the concerns and priorities ofpoor countries, where the bulk of the world's biodiversity - and its people - is to be found. For example, the book does not address squarely the conflict between livelihoods and biodiversity preservation, whlch is of key concern to poor countries. The battle raging over the fate ofthe Western Ghats and over the "controversial" Gadgil and Kasturirangan Committee reports would hardly be informed by tills book. But

then, the ivory towers ofacademia in British and American universities are far removed from the lives ofbillions ofpeo­ple in Asia and Africa.

A thlrd problem is the intrinsic diffi­culty of creating a coherent book out of papers that were essentially written sepa­rately and meant to be read as stand­alone pieces (recall their previous avatar as papers in the Oxford Review of Economic Policy symposium). Thls leads to some repetition - biodiversity is defined in several chapters, for instance­and unevenness of quality.

Chapters one and two are a preview of the book (less charitably, a "CliffsNotes", aka /cunji in Hindi) with much overlap. It would have been more "efficient" if the editors had combined them into one ­a,fter all, they wrote both. Chapters three to five contain new material compared to the rest of the book - especially chapter three ("Biodiversity: Its Meanings, Roles and Status"). An excellently crafted expo­sition ofthe meaning, roles and status of biodiversity, chapter three is a must read. Chapter 4 ("Identifying and Mapping Biodiversity: Where Can We Danlage?") is most provocative. It proposes criteria for a "biodiversity triage", where some areas

are more expendable than others. The premise is that while conservationists would want to preserve everything, "the luxury ofconserving all biodiversity is not an option".

Chapters six and seven, the core of the book, focus on valuation of ecosystem services and biodiversity. They disap­point. Chapter six ("Valuing Ecosystem Services and Biodiversity") is part litera­ture review and part laundry list ofwell­known methods of valuation, while chap­ter seven ("The Economics ofEcosystems and Biodiversity: Challenge and Responses") is a summary ofand a plug for a report commissioned by the European Commission. The Economics of Ecosystems and Biodiversity (TEEB) report was motivated by another one commissioned by the United Kingdom government ("Stem Review: The Economics ofClimate Change"). The lat­ter was a deeply flawed and hastily put together docUll)ent that made a strident case for early action on global warming. The same can be said ofTEEB report in the context ofbiodiversity.

The next two chapters look at the eco­nomic role ofbiodiversity from top down. Chapter eight ("Natural Capital") revisits

the well-trodden topic ofdepletion of nat­ural capital and its implications for sus­tainable development. Chapter nine ("Biodiversity and National Accounting") includes biodiversity in national accounts in a strange marmer - the val­ue ofbiodiversity is approximated by the value ofland in protected areas, whlch in tum is valued the same as the least pro­ductive agricultural land in a country. The remaining six chapters are all reprinted (with some modification) from the Oxford Review ofEconomic Policy.

Thls book musters/recycles western scholarshlp to address an important problem, nanlely, loss ofbiodiversity, whose incidence and impact are dispro­portionate in the poorer parts of the world. By tills yardstick, it leaves much to be desired and, in doing so, hlghllghts a gap that needs to be filled urgently.

The reviewer is with the Delhi School ojEconomics sgupta@econdse.org

NATURE IN THE BALANCE: THE ECONOMICS OF BIODIVERSllY Dieter Helm and Cameron Hepburn (editors) Oxford University Press; xx + 416 pages