New Power Plant Threatens Agriculture and Food Security in Bangladesh

The government of Bangladesh is advancing plans to install a coal-based thermal power plant in the area of Rampal in the Bagerhaat district. This project is only 10 kilometers away from the Sundarbans, an environmentally critical area, and threatens its very existence.

The Rampal power plant will have hazardous impacts on agriculture and food security, diversity of plants and wildlife, fisheries, the life of local inhabitants, and the area’s topography. The power plant will generate 1,320 megawatts of electricity and will occupy 1,834 acres of land, which is mostly agricultural and shrimp aquaculture ponds.

The distance of the plant from the Sundarbans cannot be considered safe. Its impact on agriculture and food security is so fatal that we cannot sustain and support the project. Unfortunately, the government is going ahead by ignoring public protest.

Though an Environmental Impact Assessment (EIA) report was published in January 2013, its methodology, findings, and recommendations have been highly criticized and even revoked by many specialists because of its deficiencies in estimations and disclosures of truth, as well as for its ambiguity.

The EIA report by the Center for Environment and Geographic Information Services took an area of 10 kilometer radius from the stack location of the proposed plant and showed 75.4 percent (26,344 hectares) is Net Cultivable Area (NCA) in their study scope of 34,955 hectares. It suggests that only 706 hectares of NCA will be compromised by the project site, but it actually has a lethal and circular impact on agriculture.

Once the plant is in operation, it needs huge amounts of coal supplies and the materials used in it will emit hazardous chemicals such as sulfur, carbon dioxide, cadmium, radium, arsenic, lead, mercury and nickel. Reportedly, 220 tons of different toxic gases will be discharged daily from the plant unless they are treated appropriately before emission.

These gases will be spread out by wind and affect the people, trees, soil and livestock. The soil texture (sand, silt and clay) will be damaged by the discharged toxic chemicals, and it will extensively decrease land fertility and production over time.

Interestingly, within 743 hectares of land of the proposed plant, 706 hectares (95 percent) is agricultural land. The EIA report says that 459 of the 706 hectares is a damage-free area, and the lost production is only 467 tons of crops, but that is simply an underestimation of the consequences.

The EIA report also shows annual production loss of paddy is about 9,455 metric tons (project area 467 tons and study area 8,988 tons).

The air, odor and sound pollution will affect local inhabitants and cattle so badly that it will be hardly possible for people to live and cultivate outside of the study area. The study area now produces 62,353 metric tons of rice and 140,461 metric tons of other crops annually.

The EIA report also estimates that the livestock and poultry population per household in the study area comprises three cattle, two buffaloes, four goats, one sheep, five ducks and six chickens.

The power plant will reduce the livestock grazing area, and the wastes from coal such as fly ashes and bottom ashes will contaminate air and water. This will make the livestock vulnerable to diseases and will affect the income level of households and farms simultaneously.

The most deadly impact will be on fisheries. The fishery resources of the project area are enriched with around 120 aquatic fauna, including hilsha, taposhi, bhetki, parsheand, rita, faisha and tulardandi, to name a few from the long list.

The Passur River is a source of larvae for the shrimp and the confluence of rivers provide some unique places for the propagation of fish.

The aquatic species are already facing extinction due to a number of different factors, such as the hindrance of fish migratory routes, changes to the geomorphological processes of  rivers, rapid siltation of  fish habitats, squeezing of spawning and feeding grounds, and the expansion of culture fisheries.

If the coal power plant is installed, it will accelerate the extinction process of the fisheries. The plant will require 9,150 cubic meters of water per hour from the Passur River for its operation. The discharged water will be toxic and have a destructive effect on the fisheries.

The oil and chemical wastes from coal-carrying vessels will contaminate the water. The Passur River will be the first victim of the power plant, followed by the Passur-Chunkuri confluence, Maidara, and Tidal Khal.

Mangrove-supported habitat will also suffer, and shrimp farms and homestead fish ponds will be no exception.

Whatever report the government published to get the environmental clearance is totally a whitewash. The benefits of this project can never outweigh the consequences.

This initiative must be stopped at any cost. This project will not only hamper Bangladesh in food and agriculture, but also make it vulnerable to natural disasters and calamities that we can barely imagine.

This article was published in 'Food Safety News' magazine from Seattle, USA on Oct 22, 2013

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RMG sector: Getting paid as you perform

The ready-made garment (RMG) sector that began its journey in the 1980s has emerged the biggest part of our manufacturing industry. Now, it employs more than 4.5 million workers, mainly women from low income families. But the main problem that still remains unresolved to a large extent is the wage structure for workers, who are mainly labourers doing blue-collar jobs. We experienced unrest, vandalism and strike in this sector over the workers' minimum wage demand. But is the minimum wage the best solution? If we visit economic theories, we see a rational individual acts in the best interest of his or her own. Adam Smith chose to call it 'self-love'. This passion of a man drives him to gather wealth for ensuring a comfortable today and a better future. The owners of the garments factories and the workers are no exception. However, the self-interest is not a bad thing until it affects others' legitimate rights. So an owner's inclination for making more profit by reducing the expenses is as simple as it is. On the contrary, the workers want better wages to meet their basic needs. Hence, to solve the conflict of interest and the wage problem, we need to address the problem from both the owners' and workers' perspectives.

What if we introduce performance-based pay or any profit-sharing plan? Economist Martin L. Weitzman, a professor of Harvard Kennedy School, came up with a beautiful but simple equation: Y=MX+C, where Y denotes the total earnings of a worker, M is the reward rate, X is the variable and C is the fixed wage. In our country, C is high, though many people may disagree, and there is no reward for performance. That means the MX is missing. Our goal is to ensure betterment of the workers by not harming the owners' interest either. So, we can reduce C and introduce some variables and rates, based on which the workers will be paid for their performance. The benefits for workers should have its lower and upper limits. A standard could be set in this connection based on agreements between workers and owners. This has various advantages. Once the standard is set, the workers will be more motivated to put up the best performance and this will lead to a higher earning (Y) than before (when C was higher and fixed). Weitzman did research on fixed versus profit sharing wages and their effect on unemployment. He has argued that when firms offer profit sharing wages, that means employees receive higher wages when a company is doing well, firms have the lower rates of unemployment and do better during any recession. If the economy experiences any downturn, the owners have nothing to be worried about, because if firms earn no profit, then they do not need to pay on performance, since the source of MX is the profit but the owners must continue to pay the fixed wages which is not difficult now, because C is now lower. If C is a big figure, a slowdown of an economy can destroy the firms, leading to higher unemployment and unstableness in a country. That's how MX could work as a shock absorbent factor for the firms.

It is easy to understand that if MX is higher, then Y will be higher as well. So the workers will be satisfied and they will cooperate with the owners. Unrest, vandalism and strike will never be there. This will result in a stable industry. Nevertheless, accounting experts see something different in Weitzman's theory and call the above logics legitimate but a layman's notion. They argue that a higher MX will reduce the monitoring costs. When C is higher and fixed, the workers tend to shirk. So, firms need supervisers, foremen, surveillance and other similar things, but performance-related pay (PRP) can reduce this cost and improve the workers' efficiency. Economists view it from a wider perspective. They believe if the money is in the pockets of owners, who are already well off, they will spend it for luxury. They will travel overseas, buy apartments, ornaments, latest techno devices and thus money will be drained out to foreign countries. But more money in the workers' hands will have a more positive impact on the economy. They will meet their basic needs by this money. They will buy food stuffs, clothes and many other things. So, the demand for those products will be higher and it will help enhance their production and supply resulting in a higher purchasing power of the lower class people. This will also help create more jobs and have a positive impact on gross domestic product (GDP).

Now the question is: Can Bangladesh can apply this theory at this juncture? The answer is 'yes but gradually'. The trouble with its implementation is we have a large workforce. But workers are often disorganised and unskilled. So, owners and investors will not be willing to accept Weitzman's theory right now. But the government should persuade the investors to set up factories by providing lucrative tax benefits. The profit sharing with employees is regulated by the government under the Companies Profit Act, 1968 (amended in 1989). The existing act is fine but the government can impose such profit sharing plans on big firms through gazette notification time to time on the basis of mutual agreements. To do this, owners must shun the hardcore capitalistic mindset and the government should shun the extreme fondness for the wealthy owners and, most importantly, they should overcome the narrow partisan interest for the sake of building a better society.

This article was published in The Financial Express, May 29, 2014

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How wise to follow rich nations?

Over the last decade Bangladesh's economy has developed rapidly. Its per capita income in 2012 was estimated at US$ 747.34. According to the International Monetary Fund (IMF), the country was the 44th largest economy in the world in 2012 in terms of the purchasing power parity (PPP) and 57th in the nominal terms. The gross domestic product (GDP) is currently US$ 347 billion in terms of the PPP and US$ 115.6 billion in the nominal terms with an average GDP growth rate of 6 per cent per annum over the past few years. Alike the developed countries, the service sector is the highest contributor (>50 per cent) to the GDP. Though, Bangladesh is a densely-populated country, it has a big labour force of 87.9 million people with the unemployment rate estimated at 5.0 per cent in 2012. If the pace of economic growth remains stable, then Bangladesh will emerge a middle income country very soon. However, 24 per cent people still live under the poverty line while the public debt is 22.8 per cent of the GDP and still we present a deficit budget every year and a staggering amount of money is spent on debt servicing.

The statistics shows the state of development. But truly, the meaning of development may vary depending on the thinking of each of the people. Statistics could be manipulated and the people may think the economy is founded on a good footing while actually it is not. In the book on 'Economic Development', authors Michael P. Todaro and Stephen C. Smith have mentioned three core values of development, namely, sustenance, self-esteem and freedom from servitude. They have claimed that development will be meaningful, firstly when the state can help its population meet the life-sustaining basic human needs such as food, shelter, health etc. Secondly, the general people have to have a sense of worth and self-respect, the belief of not being exploited by others. The nature and level of self-esteem may vary from society to society. Last but not least, the people should enjoy the freedom from servitude which means the independence from misery, oppressive institutions and dogmatic beliefs such as poverty is the unchangeable fate. Nobel laureate economist Amartya Sen has propound an idea of 'capability to function' where he argues that development cannot simply be measured by income or statistics, rather a person's functioning is the main factor that can help us understand the extent and meaning of development.

Unfortunately, these things cannot be easily measured or if somehow it is done, the government is not willing to do that for political reasons. Notwithstanding, the eclectic account of information of Bangladesh's economy is definitely a good sign and many organisations are now considering Bangladesh as a role model for other developing countries. American economic historian Walt W. Rostow's stages of growth model are worth mentioning. According to him, the transition from underdevelopment to development can be described in terms of a series of steps or stages, through which all countries must proceed. Presumably Bangladesh is in the pre-takeoff stage before entering the self-sustainable growth stage and he has argued that all developed countries had passed all the stages and still the developing countries are doing the same.

Now the focal point is what will be Bangladesh's course of action in this transitional period of rapid development. Institutions like the World Bank (WB) and the IMF often impose many conditions on Bangladesh along with many other developing countries before granting loans. Those conditions are set by following the growth path of developed countries. Those are often irrelevant and insignificant, when it comes to our economic environment. At this critical juncture the question arises: Do we really need to follow the path of the developed countries? Or do our transition period and their transition period have any valid resemblance?'

In this context we need to take a look at the earlier stages of currently developed countries, when they embarked on their era of modern economic growth. Contemporary developing countries are often less endowed with natural resources. Most developed countries are located in the northern hemisphere and developing and underdeveloped countries are in Asia and Africa where natural resources are scarce. The people of contemporary developing world have, on an average, a lower real per capita income that their counterparts from developed world had in the 19th century. The most developing countries are now situated in tropical and subtropical regions and most economically successful countries are in the temperate zone. The population size and density are much higher in developing nations compared to the developed countries. In fact, in no time Europe or North America had a population growth rate of 2.0 per cent per annum while the contemporary developing countries had a growth rate of more than 2.5 per cent in the recent decades. International migration, multiculturalism and import of brains from under-developed countries have enriched Europe and America. Basic scientific and technological research and development, efficacy of domestic institutions and international free trade had given the developed countries an added advantage that the contemporary developing countries do not get to that extent.

Against this backdrop, it is not wise to comply with all the conditions of the WB or IMF. This is a very important period for Bangladesh. If it can successfully take off for the next stage of Rostow's model, then it is not so far when Bangladesh's economic development will become meaningful to the country's people. Curbing corruption, keeping political stability, avoiding narrow partisan interest and wise economic decisions with effective management can make Bangladesh a middle income country in this decade, and within 2030 there will be a big change in our economy. Uncertainty exists but we must not forget that we are doing well and every cloud has a silver lining.  

This article was published in The Financial Express, Dec 09, 2013

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