Why blue-green economy is set to soar in India

SNAP ANALYSIS
Why blue-green economy is set to soar in India
A typical example of active urbanisation in an Indian city. India needs to undertake efforts for climate-proofing the economy and building resilient development sectors as a priority.gettyimages

Blended climate finance structures that combine public and philanthropic capital with private investments are the need of the hour

The twin triggers of rampant urbanisation and climate change have led to devastating consequences across urban landscapes around the world – and India is no exception.

From severe and frequent urban flooding to the decimation of blue infrastructure such as gutters, storm drains, collection systems and pumps, India is on track for a 50% shortfall in its water supply by 2030. There is also a major gap between the supply and demand of the finance necessary to rectify this problem.

However, optimisation of the country’s blue-green infrastructure offers the perfect blend of opportunities for India to mitigate any crisis.

The European Commission defines green infrastructure as “strategically planned network of natural and semi-natural areas with other environmental features designed and managed to deliver a wide range of ecosystem services such as water purification, air quality, space for recreation and climate mitigation and adaptation. This network of green (land) and blue (water) spaces can improve environmental conditions and therefore citizens’ health and quality of life. It also supports a green economy, creates job opportunities and enhances biodiversity”.

From severe and frequent urban flooding to the decimation of blue infrastructure such as gutters, storm drains, collection systems and pumps, India is on track for a 50% shortfall in its water supply by 2030.
Indian cities like Bengaluru, once known for its greenery, are witnessing a decline in green and blue features due to rapid urbanisation.
Indian cities like Bengaluru, once known for its greenery, are witnessing a decline in green and blue features due to rapid urbanisation.gettyimages

Opportunities galore

In the case of India, which aims to grow into a $5 trillion economy by 2024, climate-proofing the economy and building resilient development sectors is a priority. “This necessitates a policy and investment response addressing the three linked aspects of sustainable development: economic, social and environmental,” says Sayli Udas⎯Mankikar, a Senior Fellow with the Observer Research Foundation’s political economy programme. “Several Indian cities have seen a decline in green and blue features due to rapid urbanisation, with studies on land-use transitions indicating environmental losses,” she noted in a recent policy paper.

Bengaluru, for instance, has seen a 925% increase in built-up area between 1973 and 2013, with green features decreasing from 68 percent to 14 percent, and blue features from 3 percent to less than 1 percent. Similarly, from 1977 to 2017, Mumbai witnessed a 60-percent loss in vegetation and 65-percent decrease in waterbodies. And Ahmedabad is projected to see an approximate 50-percent loss in vegetation between 2010 and 2030.

With that rapidly unfolding scenario, a robust public-private partnership can help expand the scope of dormant opportunities in blue-green infrastructure – by recognising the inherent multifunctionality of the individual blue and green components. Deploying blue-green infrastructure in sectors such as transportation, water and housing can not only unlock new opportunities for companies and investors in the climate finance arena, but also result in various provisioning, regulating, supporting and cultural ecosystem services, which in turn lead to health and environmental improvements alongside financial savings.

Highway NH48 in New Delhi India, with the cityscape of New Delhi. The DDA is preparing Master Plan for Delhi 2041, a vision document for the city’s development over the next two decades.
Highway NH48 in New Delhi India, with the cityscape of New Delhi. The DDA is preparing Master Plan for Delhi 2041, a vision document for the city’s development over the next two decades.gettyimages

Delhi's vision for 2041

The Delhi Development Authority (DDA), for instance, is holding public consultations for the preparation of the Master Plan for Delhi 2041, a vision document for the city’s development over the next two decades. There are several features in the draft “Green-Blue policy” that promise to give the Indian capital a new shape.

Land around drains carrying stormwater will be declared as special buffer projects. A network of connected green spaces would be developed in the form of green mobility circuits of pedestrian and cycling paths. “It will be developed along the drains to serve functional as well as leisure trips,” a senior DDA official told Indian Express. There are also plans to develop spaces for yoga, active sports (without formal seating), open air exhibitions, museums and information centres, open air theatres, cycling and walking facilities, arboretums, greenhouses, community vegetable gardens, facilities for boating, restaurants, and other low impact public uses that may be encouraged as part of special projects.

Such innovations are critical in a country that’s home to 18% of the global population, but which ranks a dismal 120th on the Water Quality Index.
Since it is tough to ensure cash flows towards development sector projects (like water), innovative financing structures to mitigate risks become necessary. “Blended finance structures that combine public and philanthropic capital with private investments using credit enhancement instruments can be useful,” the World Economic Forum noted in a report.

Bengaluru has seen a 925% increase in built-up area between 1973 and 2013, with green features decreasing from 68 percent to 14 percent, and blue features from 3 percent to less than 1 percent.

For example, The Philippines’ Water Revolving Fund blends aid and public funds with commercial finance to offer a lower cost of capital to water service-providers. WaterEquity’s WCIF3 fund uses a blended approach through low-interest loans and first-loss guarantee. Pooled funds – such as the Kenya Pooled Water Fund, which pools domestic pension and institutional money – fit into this category.

For India too, the opportunities are endless – and it’s only a question of matching a green finance project with the right investor.

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