Economic Analysis of Environmental Impact Assessment EIA in India: Cost of Delays, Impacts & Mitigation Measures
Project Team: Dr. K. S. Kavikumar, Ms. Lavanya Ravikanth Anneboina.
Time Period: 2006 - 2007
Project Summary:
  • To identify the causes of time delays, if any, in the Environmental Clearance process of a specific project or sector and estimate the economic costs of such time delays
  • To identify an appropriate sector and a project for the economic analysis based on criteria such as relevance, feasibility and illustrative nature and to study the EIA of the selected project by taking stock of the identified environmental impacts (in physical terms) and the suggested mitigation measures. Further, to carry out an economic analysis to assess the economic costs and benefits of mitigation measures and the market value of environmental impacts.
  • To generalise and prepare appropriate guidelines, and suggest appropriate methodologies for carrying out economic analyses of projects.

Conceptual Framework

In the present practice of EIA, if the total impact of the project on the environment (which is calculated as the incremental changes in ambient concentration of pollutants caused by the project activity) is greater than the regulatory standards for each pollutant, then an EMP for the project is designed and reported. Based on the presumption that the EMP will be implemented, the project clearance is given. Almost in all the projects either the environmental impacts are shown as negligible or the EMP will easily and effectively be implemented. Hence for project clearance these calculations are typically turn out to be inconsequential. 

In an extension of the current practice, it is proposed that not only should an EMP be designed and implemented if the concentration of pollutants exceed their standards, but the costs of undertaking the mitigation activities laid out in the EMP to reduce the concentrations to at least the level of the standards, must also be calculated. Where it is feasible to calculate environmental damage costs, the same should be undertaken and incorporated into the EIA report. Once the aggregate pollutants are calculated, the physical impacts of the project’s activities on the health, ecosystems and materials must be assessed. If the physical impacts on all three of the above cannot be assessed, then at least impacts on health must be considered. Once the physical impacts are assessed, they could be monetised to arrive at the damage costs.

Policy Implications

  • EIA reports could be mandated to provide additional information on costs of mitigation and impacts
  • EIA team could be expanded to include a trained environmental economist
  • EIA professionals could be made accountable for the report.


A project report titled, ‘Economic Analysis of Environmental Impact Assessment in India’, (authored by Dr. K.S. Kavikumar) was submitted to the Ministry of Environment and Forest in 2008