Can Pollution Markets Work for Developing Countries? Experimental Evidence from India | Anant Sudarshan
Anant is a faculty member at the Department of Economics at the University of Warwick and a Senior Fellow at the Energy Policy Institute at the University of Chicago (EPIC). Before joining the University of Warwick, he was the South-Asia Director of EPIC and taught at the Harris School of Public Policy at the University of Chicago. He received his PhD in Management Science and Engineering from Stanford University and holds undergraduate and masters degrees in Mechanical Engineering from the Indian Institute of Technology (Delhi) and Stanford University respectively. His research spans several aspects of energy and environment policy including the design of environmental regulation, reducing air-pollution, climate change, energy efficiency, electricity access, and renewable energy policy.
Anant will be discussing the paper Can Pollution Markets Work for Developing Countries? Experimental Evidence from India
Market-based environmental regulations are seldom used in developing countries, where pollution levels are the highest but state capacity is often lacking. We experimentally evaluate a particulate matter emissions market covering industrial plants in a large Indian city. We have three main findings. First, the market worked well: permit trade was active, leaving few permits unused, and plants obtained permits to almost perfectly meet their compliance obligations. Second, treatment plants randomly assigned to the emissions market reduce pollution emissions by 20% to 30%, relative to control plants that remain in the status quo, command-and-control regime. Third, at a constant level of emissions set to the market cap, variable abatement costs in the command-and-control regime would be 12% higher than under the market. This finding is based on a model of abatement costs fitted in the treatment group under the assumption that plants bid for permits at their expected marginal abatement cost. The findings suggest that markets can lower air pollution emissions in India relatively cheaply.
Please email firstname.lastname@example.org to request the Zoom joining details for this workshop by by 5pm on Tuesday, 25 October 2022.