Market Based Schemes for Air Pollutants

Researchers are collaborating with the Punjab State Pollution Control Board (PSPCB) and the Gujarat Pollution Control Board (GPCB) to design, implement, and scale emissions markets for air pollution. The goal of these markets is to reduce the cost of compliance with environmental regulations and reduce emissions of the targeted air pollutants to improve environmental quality. 

The proposed emissions markets represent an adaptation and scaling of India’s first Emissions Trading Scheme for air pollution, which the research team designed, implemented, and evaluated jointly with the GPCB in the city of Surat, Gujarat. That pilot ETS was implemented as a randomized evaluation, in phases starting in 2019, to measure the effect of emissions trading on pollution emissions and industry costs. The experimental results show that plants assigned to the emissions market reduced emissions by 24 percent compared to control plants under the command-and-control status quo regime. These reductions in pollution have been achieved at low permit prices, suggesting that the market has lowered abatement costs.