A Minimum Environmental Care Size for an Industry  

(click on the Figure to enlarge)

Industrial production is important to meet our needs and generate employment. To ensure that the industrial production is economically feasible, the industry must operate above a Minimum Efficient Scale (MES).

MES can be computed by equating average cost  with marginal cost . The rationale behind this is that if an industry were to produce a small number of units, its average cost per output would be high because the bulk of the costs would come from fixed costs. But if the industry produces more units, then the average cost incurred per unit will be lower as the fixed costs are spread over a larger number of units.In such a case, the marginal cost is below the average cost, pulling the latter down. An efficient scale of production is reached when the average cost is at its minimum and therefore the same as the marginal cost. If we exceed the MES, then the marginal costs may increase due to pressures on product distribution (logistics), additional labor oversight and need for tapping more resources that are not locally available.

I was reading on the concept of MES. I told my Professor Friend that Government of India should make a toolkit for all the entrepreneurs to guide on choosing the right MES for their business focusing on the priority manufacturing areas.

“Well, you have a point Dr Modak” said the Professor lighting his cigar. “ Perhaps we should train the lenders (bankers) and investors on this subject so that they do not finance industries that are way off from the MES. This could help reduce the Non Performing Assets (NPAs) as well – Professor winked.

Professor took a deep puff, walked to the window and turned back to me and asked “You mentioned about the Minimum Efficient Scale or MES, but do you think there could be a concept of Minimum Environmental Care Size (MECS) for the polluting industries? The MECS must accommodate the costs of environmental pollution control that have often no economic return”

I liked the term Minimum Environmental Care Size.

Professor continued

“Dr Modak, many industries don’t do well because they arrive at MES without considering or sometimes not adequately internalizing the costs that they must incur on environmental pollution control. When they approach the Pollution Control Board (PCB) for a consent, they are stipulated several conditions on permissible pollution discharge. Compliance to these conditions often upsets the overall profitability of their operations. Consequently, many industries receive closure orders from the PCBs and judiciary directives due to non-compliance. The case often gets a political overtone as a closure means loss of employment. So, the industry is “allowed” to operate while not in compliance and the environment continues to deteriorate”

I thought the Professor was right. Why should we let these industries to come up at less than MECS in the first place”? I thought of including Department of Industry and Department of Environment in Professors training program (By the way, have you ever seen these two departments talking to each other? – but thats another story)

Could MECS be generally be higher than a conventional MES?

Professor smiled when I asked this question. He walked to the white board in his room and drew Figure as below. The Figure was complex but self-explanatory.

(click on the Figure to enlarge)

“This is just one scenario” – Professor said. “There would a number of variations based on the context”

I noted the following points

  • Many times, industries that operate on the MES are unable to do an environmentally sound or responsible business. Perhaps scales higher than MES allow use of more resource minimal and efficient technologies. A minimum environmental care size or MECS may therefore be higher than a conventional MES.
  • At this scale, the costs/output would be lower and hence even if the costs of investments may be higher, the overall economic returns will be impressive.
  • Besides, the MECS will exhibit higher resilience to the volatility of the markets. (I thought this perspective is interesting and requires a good case study)

While agreeing to my observations, Professor further elaborated

“Dr Modak, apart from the economic objectives, we need to ensure that products we produce have least life cycle impacts and the waste streams we generate in the “overall system” (i.e. covering extraction, processing, transportation etc.) are reused, recycled and recovered (3Rs) to the extent possible. Only the residues that are left need to be treated and disposed in a secured manner. All these costs and benefits must be included in the computation of MECS. In all above, we need to ensure that resource are minimally extracted, used at high efficiency and the 3Rs are followed to the letter and spirit”

I said “Professor, Indeed both scale and technology will play a significant role in arriving at the MECS. Of course, there are other equally important variables such as the location (where resources are extracted and processed) and the demand on the products (especially the green products) from the market”

An analysis of the cost of production break down between a large forest based pulp mill in India with chemical recovery and an agrobased small mill without chemical recovery has shown that the chemical cost alone is 30% of the total cost of production against a figure of 21% for forest based mills. A decade ago, Indian machinery manufacturing companies have shown that, when the mills reach a level of 100 TPD Black liquor solids, it is viable to set up a chemical recovery plant. Today, this threshold could be lower.

Pulp mills of small sizes (20-30 TPD capacity) cannot afford a chemical recovery unit and they would continue to discharge harmful chemicals into the environment. As the society and the State cannot allow continuation of discharge of polluted effluent, either the industry will have to close down or find out alternative methods production to stop pollution or take production to higher scale. This is often not possible due to shortage of finance.

(Do read, though dated, a very interesting report on above)

When I cited this example on MECS and the challenge of financing, Professor got up and responded while extinguishing his Cigar.

“Dr Modak, in such cases, one may conceive a central or common chemical recovery for a number of pulp mills, where Black liquor of individual mills can be collected and processed in a Central Recovery Plant. The white cooking liquor produced in the Central Chemical recovery plant can be transported to the individual mills for their use. Again, the Central chemical recovery unit shall be of a capacity which is technically desirable and is viable financially.

In order to make this concept implementable, one must identify a cluster of pulp mills suitably located within an economic zone. The cluster can harbor at least 6-8 mills. The economic zone can be of a radius of 60-75 Km. The Centralized Recovery unit can either be an independent unit or an integrated unit with one of large mills in the cluster.

There are advantages and disadvantages of setting up an independent central recovery plant. A recovery plant, independent of the pulp mills, and non-integrated with any pulp mill, must have its own infrastructural facilities, such as water supply, steam and power supply, workshop and laboratory in addition to its own Management. The Management which would control the functioning of the central recovery, is independent of the pulp and paper mill operation. Its function is to procure black liquor free of cost from the mills and in return sell the white (cooking) liquor to them at the market price. It must generate its own steam and power required to run the various sections of the Recovery unit.  The extra power can be sold to the State Electricity grid system.

Professor walked back to the white board and drew a New Figure as below.

(click on the Figure to enlarge)

“Look at Points B and C carefully. The MECS with support of a common resource recovery center and a common end of pipe solution will be lower than the MECS for a larger industry. The Small and Medium Enterprises (SMEs) under a cooperative agreement can still do business sustainably on a smaller production scale. What you need is a proper industrial planning, right institutional set up and an interested technology provider/investor for a joint venture” He said

I could see potential of this concept for chrome recovery in tannery clusters, metal recovery in the cluster of electroplating industries and spent acid recovery in chemical industries. There will be several such examples I thought that we could use to develop guidelines for key polluting  SMEs.

“So Dr Modak, what we need is to deepen the concept of MECS and guide the industries, lenders & investors, PCBs, Industry and Environment departments. There is so much to do”

Professor left the room for a meeting

Indeed, we want to see more of Make in India but on a scale that will ensure environmentally and socially sound production – I decided to bring this topic to the attention of MoEFCC and Central PCB when next in Delhi. On a second thought, I thought that it should be the job of the Niti Ayog (India’s earlier Planning Commission). They are the Gurus and can bring in a change at national level.

Friends, whats your take?


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How do you set a Question Paper? – Musing on the Teachers Day

September 5 is known as the Teachers Day in India. Teacher’s Day is marked in honor of Dr Sarvepalli Radhakrishnan, who was born on September 5, 1888.

Dr Radhakrishnan was India’s first vice president and second president. He was a great scholar, philosopher and recipient of the prestigious Bharat Ratna . Since 1962 – the year he became president – India has commemorated Dr Radhakrishnan’s birth anniversary by paying tribute to its teachers and gurus on this day.  On this day, all “students” pay respects to their teachers who have  guided and shaped their lives.

I went to see my Professor friend on the morning of September 5.

When he opened the door and let me in, I touched his feet seeking his blessings. “Oh, Dr Modak, why this?” He exclaimed. He was clearly embarrassed.

When I told him about the Teachers day, he said “Well, I never formally taught you in the class – but maybe I gave you some “insights” while having coffee – but essentially another point of view”. He smiled while lighting his cigar

“Well Professor, these conversations have indeed been quite some teaching to me” I said with all the gratitude.

We then spoke about our teaching experiences and shared anecdotes of some of the inspiring teachers and outstanding students.

“A Teacher should know not just what to teach, or how to teach but how to assess the students. Assessment is often the key”. Said the Professor

“You are absolutely right Professor” I responded. “Often assessments are not well designed and are conducted rather poorly.”

“Tell me Dr Modak, why do we conduct an assessment at all?” Professor asked me taking a deep puff.

I thought this was a rather too basic question to ask.

But I put forth several reasons as below.

  1. To know the understanding of the student
  2. To judge his/her ability to apply what is understood
  3. To allow comparison, instill competition and reward those who excel
  4. To help focus on students that are laggards and may need more help
  5. To get a feedback on how effective your teaching has been

Professor listened to me carefully and agreed to all the above. He then got up and patted on my back and said softly “You missed one more reason Dr Modak”

6. To give students a confidence

I was surprised. I had never thought of this 6th reason for the assessment. I remembered Professors in IIT Bombay where I studied.

We had some Professors who used to set real tough question papers to gain a kind of “reputation”. They were called – as “homos” – as most students used to get “screwed” during the assessment.

Some Professors used to set very lengthy questions where the speed of thinking as well as writing mattered. These professors used to smile when most of us used to beg for extra time. The answer books used to have 4 to 5 supplements!

Some Professors used to give us an Open Book examination where we could bring our books and “cog” sheets. The “solutions” to the questions in the paper were however never found in the books.

Some Professors used to go even one step ahead. They used to allow us to take the question paper to the hostel and take help from our seniors if we wished. A weekend used to be given to come back with the answer books. But, the questions asked were so difficult and different – perhaps coming from the “outer space” and so we used to urge the Professor to set a standard, conventional and time bound question paper.

Professor was amused when I narrated such stories. He said “Well Dr Modak, setting a good question paper is not a matter of acrobatics, it’s also not for displaying your superiority or satisfy your ego and establish an identity. The question paper must be balance of the six objectives we talked about”

So, Professor, what is the “science” of question paper setting? I could not hesitate but ask.

Professor lit the second cigar. “Here are the first principles of setting a question paper Dr Modak – all examples applicable to students studying environment”

  • If you group the students in three categories i.e. top notch, medium and below average, then reserve 100 marks as follows. Top notch 30, medium 30 and below average 40. The questions for each category must be designed differently
  • For the below average case, put 20 marks on the “objective” questions (like TRUE/FALSE but with WHY? ask for match making, correcting a flow chart or filling gaps in the flow chart can be another example– e.g. in industrial manufacturing flow sheet, wastewater treatment process etc.). Keep remaining 20 marks for questions that ask for half page to one page write up or explanation but asking for EXAMPLES. Give multiple options to choose the topic here.
  • For the medium lot, reserve 15 marks for some computational work oriented to problem solving. The problem should however require a need to make ASSUMPTIONS. So, don’t provide complete set of data. Keep the remaining 15 marks for a comprehension type of question where you give a page of text to read and ask questions where there are no easy answers e.g. what should be preferred choice of disinfecting wastewaters prior to discharge or is GMO the solution to address the problem of word’s food security?
  • And for the top-notch students, you need to be rather creative and little out of the box. These questions should ideally check deeper understanding of the student e.g. asking for a causal loop diagram of Food-Water-Land nexus with impact of climate change. Another example could be to state an issue and ask the student to develop a strategic approach with institutional and financial considerations. (Professor did not elaborate here. I could sense he did not want to reveal his “tool box” for assessing the top-notch students)

When Professor saw me taking notes, he paused. “Well Dr Modak, you don’t have to follow my “rules”. After all, remember setting a question paper is both science and art”.

I was thinking how many Professors think of this science and art of question paper setting? How much time and importance do Professor give to this important aspect of “teaching”?

I thought this was a new learning and realization for me on Teachers day.

While reaching me at the door, Professor whispered “Well, we just talked about structuring the question paper – Dr Modak but there is also a science in sequencing/ordering or mixing the questions – we never pose the questions in the hierarchy of below average, medium and top-notch students. The “finale” is a carefully designed “ladder” with well laid “traps” – giving a student an experience of an uneven ride! Only the bright ones do page reading of the question paper and decide the sequence in answering!

I felt rather lucky that I did not formally take a course with Professor and appear for his exam.

“Professor, could we take a project of compiling some of the best crafted question papers/assignments in the subject environmental management?  Teachers of today need to know” I said while walking down the staircase.


In 1984, I went through a 5-day rigorous training at IIT Kanpur in India on how to set question paper for the famous IIT’s Joint Entrance Examination. It was a memorable experience. To my knowledge, this kind of training did not happen later. Pity.


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