This document by Centre for Development Finance sheds light on environmental sustainability index (ESI), a diagnostic tool that informs and empowers about state level sustainability issues. The tool identifies the key environmental issues that require immediate attention and action. Further it assists the states to realise their potential in protecting their environment for the future. The document is divided into four chapter followed by three annexure.

The first chapter introduces the concept and rationale of ESI. The index aggregates indicators that reflect:

• Anthropogenic activities of production, consumption and distribution that exert pressure on environment
• State of air quality, water quality, land use and agriculture, forest and biodiversity
• Measures the impact of the current state of environment and resource extraction on ecosystem and human health
• Policy responses and society’s efforts to preserve the environment

The chapter then goes on to elaborate on the objectives of the index, the steps involved in preparing the index and the methodology involved in constructing the index.

Chapter two focuses on the research findings and analysis. Since it is a relative measure of sustainability, it compares all Indian states to predict the pressure each state will face in managing its environmental resources in the coming years. The findings show that the Himalayan states in Eastern India and Himachal Pradesh are most sustainable and the least sustainable are Bihar, Haryana, Gujarat, Punjab, Rajasthan and Uttar Pradesh. The chapter then draws comparison between the states under Driving Force Pressure State Impact Response Framework (DPSIR). Further it elaborates on interstate comparison across sub-indices such as air quality and pollution, water quality and availability, land use and agriculture, forest and biodiversity, waste generation and management, energy management, impact on human health and disaster.

Chapter 3 draws comparison across peer group states. Due to high degree of variation across 28 states, similar states were grouped together to get a more meaningful conclusions about environmental sustainability. For this purpose the states were classified into 6 groups based on their per capita GDP and their contribution to the national GDP. The chapter then analyses the movements of sustainability for the years 2009 and 2011. The snapshot of ESI is provided in a tabular format, which spells out the economic and population details of the states, their ESI category and the DPSIR details.

The final chapter on conclusion states that the environmental challenges of each state differ due to the difference in the availability of natural resource and capabilities. ESI is an agent of change for environmental policy change. The importance of sectoral components of sustainability is well acknowledged. Since ESI is a quantitative tool, it provides an overview of sustainability and does not incorporate state specific characteristic. The tool should be considered as a base for deeper analysis of successful sectoral policies adopted at state level to enhance knowledge about policy initiatives and sustainability outcomes.