In accounting, an economic item’s historical cost is the original nominal monetary value of that item. Historical cost accounting involves reporting assets and liabilities at their historical costs, which are not updated for changes in the items’ values.
It is like owning Wipro shares bought in 1980 .RS. 10,000/ invested in 1980 is worth 535 crores today.
But balance sheet will show the asset value at 10000 only. Whereas if the same shares were to be bought today they will be shown at 535 crores. Somebody not knowing the true worth of these shares in first case will think he is a poor man .
We have been blessed by mother nature with so many natural things which have tremendous utilty for us but are neglected as they have come free to us and we are not valuing them properly.
Wetlands play an important role in reducing the impact of extreme weather events such as floods, droughts and cyclones. Wetlands act as a natural sponge, absorbing and storing excess rainfall and reducing flooding.
During the dry season, they release the water stored, delaying the onset of droughts and reducing water shortages. The frequency of natural hazards has more than doubled; the majority is climate and weather related.
But these are being destroyed as the destruction of these resources is not reflected anywhere in monetory terms.
Whereas man-made dams & bridges etc. which are miniscule creations compared to natural systems are valued as crores are being spent in making them.
For example the Metro Car shed in Aarey Forest in Mumbai is coming at the cost of thousands of trees which have a huge value but not being taken into consideration while deciding the location of these sheds.
The only solution is to put value to each & every natural resources be it trees , forest , rivers , Mangroves or wetlands and publish it yearly with moneytory value . Then only it will be clear whether so called development projects are adding to value or resulting in loss of value .
For example in Navi Mumbai the authorities wanted to destroy 80 hectares of wetlands & mangroves to make golf course which would have resulted in severe consequences for the area like floods etc.
If you think this is the right solution please share it & ask for the government authorities to implement it.
-Sunil Agrawal is A Chartered accountant , environment lover & co founder of Save Navi Mumbai Environment Group.