Features
Assessing damage of environmental disasters
By Dr Sirimewan Dharmaratne
, Senior Analyst, HM Revenue and Customs, UK
While Sri Lanka is grappling with wars on many fronts, people are reminded daily of the environmental disaster caused by the sinking of the X-Press Pearl vessel. The scenes of beaching of massive dead turtles, tons of toxic pollutants getting washed ashore, are all ominous signs of a silent killer. These are all precursors to the environmental desecration that is happening out in the deep sea away from human gaze. However, these visceral feelings of despair need to be replaced by realistic expectations on how this can be put right. This invariably leads to the question how to assess the damage that has been caused. Damage itself has no intrinsic cost. The cost comes only in the way of loss of value to humans. Therefore, it is essential that all losses are identified, and appropriate methods are used to value or cost them.
Framework for Assessing the Damage
Unless the government puts forward a compelling case, it is likely to come out short-changed from negotiations with the shipping company. Therefore, it is essential that damages are assessed using internationally accepted methods. Herein lies the difficulty of valuation of environmental goods and services. What is the value of a turtle or a dolphin? They are not bought or sold in markets. Value that we place on the environment is essentially human centric. A resource is valuable only as much as humans are willing to pay for it or how much they are willing to accept for its loss. If it can be replaced, then the cost of replacement to the original level is the value. There is a repertoire of methods that can be applied to capture all types of economic values of the environment.
Clean up costs
Cleaning up of the pollutant prevents further damage. Therefore, clean-up expenses is the minimum cost of any further damage that would have occurred if it had not taken place. For example, Exxon spent over US$2 billion to clean-up the Alaskan coast after the Exxon Valdez oil spill in 1989. This implies that if the clean-up was not done, Exxon would have anticipated at least that much more in further damage payments. Sri Lankan government should have closed all affected beaches and done a professional cleaning process immediately after the disaster. This would have given a much more solid case to recover clean-up costs from the polluter. Due to lack of protocol, there was no organised cleaning and it is unlikely that the government would be able to present valid cost estimates. Further, due uncontrolled access to polluted beaches, pollutants are likely to have been unwittingly transported all over the island, which is still happening. There are lessons to be learned here on how the country should be prepared and act when the next such disaster strikes, which may be just around the corner.
Damage Assessment
While clean-up only prevents future damage and loss of value, damage that has already been caused needs to be properly identified, quantified and cost. There are several immediately obvious losses, including loss of wildlife, loss of livelihood of fisherfolk, reduced fish catch and loss of tourism revenue. There may be other damages that are not as obvious, nevertheless, very real, such as damage to the seabed, that would cause enduring losses to wildlife and commercial fisheries. Health risk to those who were exposed to various pollutants is another cost. These may need more expert investigation and assessment. What is important is no final agreement is reached until a comprehensive analysis is done.
Replacement Costs
This method is used when the damaged resource can be replaced. For example, for each sea otter rescued, Exxon paid US$40,000 to US$90,000 for rehabilitation. Further, US$32 million was paid to replace the reported 2,800 sea otters that were lost. The total cost of replacing just four species including seals, eagles and sea birds was about US$113 million. Clearly, this depends on whether the lost resources can be replaced. This method could be used to value numerous turtles that have been killed. But first it is essential to establish how many turtle deaths can be attributed exclusively to this disaster over and above what could have occurred naturally. This requires careful scientific proof and not facetious comments by dim-witted politicians. Not only such conjectures are imprudent but also harmful. They could be picked up by the offending parties to put forward a case against just compensation.
If the replacement cost of a sea otter was about US$47,000 over 30 years ago, one could expect the cost of replacing a turtle, a creature that is much harder to replace, would be much higher. Even with a conservative estimate of US$50,000 per turtle, then for the 140 or so turtles that were reported to have been killed, compensation would be around US$7 million. Further, as most were mature adults, their loss would have a significant impact on the breeding stock of this extremely critical species. This could cause a permanent reduction in the turtle population. Then there is the cost of rehabilitating turtles and other animals that were rescued. Those who are working on damage assessment need to do some investigation to understand how replacement and rehabilitation costs have been calculated in previous similar cases. As these are already established and accepted by such institutions as the Department of the Interior and the National Oceanic and Atmospheric Association of the USA, these methodologies have a solid pedigree.
Loss of direct values
These are the losses incurred by all those who based their livelihood on the coastal environment that is now polluted. These are not only the loss of profits of fisherfolk, but losses to all those who are involved in the distribution chain. This is because fish caught generate value at each point they change hands and generate economic rent to someone. In fact, if there is any increase in market prices that causes loss of economic welfare to the final consumer, it is also a direct economic loss. Further, not just a one-time loss, but a stream of future losses until such time that fish stock recovers to pre-disaster level.
Loss of recreational value-tourism
Loss of value from tourism is hard to measure because even if these beaches become unavailable, there will be other substitute beaches that the tourists could go to. However, there are again accepted methods that could put value on a specific beach or a recreational area when individuals have a choice of similar sites. It would be good to have such studies done when the country returns to normal. So that when the next disaster hits, either man-made or natural, the country would be able to accurately estimate economic losses.
While in the current environment, there may not be a strong case for losses from international tourism, there may be a case for loss of value for domestic recreational use. The value of these beaches for those living in the vicinity or within easy commuting distance could be high, especially during these times of travel restrictions. There are well established internationally accepted methods that can be used. While they require extensive data and technical expertise, they have also been successfully applied when data and technical resources are limited.
Loss of non-use values
Demise of numerous and often valuable sea creatures, pollution of pristine beaches and real or perceived long lasting adverse environmental effects human welfare. What is important is one does not have to be directly affected to experience this loss. Hence it is applicable to all Sri Lankans. It is conceivable that even those who may never visit the affected area or see a turtle at a beach or at sea, is ‘worse-off’ after this disaster. While this value is not related to any use, it is nevertheless real. Such values are globally acknowledged and known as ‘non-use’ values.
In the case of the Exxon Valdez oil spill, these non-use values were estimated at US$2.8 billion to all US households. Over 30 years ago, the non-use value for each US household was estimated to be about US$ 31. Thirty years later and considering the income differences of the two countries, if one put it at a measly US$5 per household in Sri Lanka, for the 5 million or so households, non-use value would be around US$25 million. Further, turtles are a global resource, which is valued by the global population as a critically endangered species. Therefore, theoretically this value could be even extended to the global population.
This is by no means a theoretical concept. Robust methods, perfect over the years, exist to capture non-use value. This is palpable by the fact that the Exxon Valdez incident led to the US Oil Pollution Control Act of 1990, which held companies responsible for non-use value in the case of future oil spills. This legislation from the major economic power provides a compelling backdrop for Sri Lanka to add non-use values to the mix of economic losses when seeking compensation.
If all different components of the total economic value are added-up, it is likely that the total would far exceed the interim compensation of US$40 million that has been claimed. Because there are so many precedents from all over the world, Sri Lanka does not need to reinvent the wheel. The government could easily draw upon the plethora of literature that is available on this subject and seek advice and help from experts. However, it is better that the country finds homegrown expertise, without being dependent on foreign consultants.
Way forward
The government is well advised to refrain from reaching an immediate settlement in the interest of making a few quick dollars. Although a few million may look extremely attractive to a cash strapped economy, any immediate compensation should be accepted as interim payments until a proper and comprehensive economic valuation is done. There is no hurry to come up with a settlement. In all previous cases it has taken years to properly assess damage and value. What is important is that it is done to internationally accepted standards so that there is little room for dispute. It is more than likely that the polluter, presented with compelling evidence, will agree to out of court settlements to avoid bad publicity and punitive damages.
Policy making process in Sri Lanka is generally reactive. When a crisis happens, a policy is hastily conjured as a temporary solution. This invariably falls by the wayside due to lack of planning or commitment from stakeholders. It is imperative that a highly trained, numerate and technical team of analysts are put together as a permanent task force to take leadership in situations such as these. They should comprise professionals from all relevant disciplines who are willing to work together as a team for the common good.
There is no doubt that the country has many adroit young professionals who could fill these roles. This is clear from the comments expressed through different media. However, this itself is the problem. There is no value to opinions unless they can be translated to real outcomes. Further, most appear to contradict each other and, in some cases, politically aligned. This not only effete their professional conduct, but also provide ample reasons for offending parties against any settlement. What is needed is not a scattered bunch of individuals who are on personal ego trips, or trying to impress with affectation, but a carefully put together team of fastidious individuals, who are willing to work together and produce high-quality, internationally accepted outputs.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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