Indifference curves as a tool for environment impact assessment

Abstract

Use of indifference curves, defined as functionality between development index and pollution load to evaluate environmental impact, is proposed. Existing Battelle environmental evaluation methodology is subjective in its approach. The use of indifference curves lends a more objective approach to environment assessment methodology. The extent of environmental damage we are prepared to accept, for a development, can be explained by Willingness to Pay and Willingness to Accept approach. The application of proposed approach has been demonstrated taking an example of Power plant set up in forest area. The curves clearly show that cost of EMP considering mitigation of ecological damage is higher than the EMP mitigating impacts of air and water pollution only. The example stresses the need for willingness to accept along with willingness to pay.