THE SOLVABLE CHALLENGE OF AIR POLLUTION IN INDIA Anant Sudarshan, Michael Greenstone (University of Chicago), Santosh Harish (EPIC-India), Rohini Pande (Harvard University) Anant Sudarshan India Policy Forum 2017, July 11 2017
OUTLINE Air Quality Regulation: The Health Rationale Reviewing Command and Control • Technology mandates • Bans and rationing Implications • Collect data reliably and transparently • Incentive-compatible and transparent regulation • Rigorously evaluate pilots
Air Pollution and Health
STRONG EVIDENCE THAT PM REDUCES HUMAN LIFESPAN Source: Chen et al (2013)
660 MILLION PEOPLE MAY LOSE 3.2 YEARS OF LIFE Satellite and Ground Monitoring Data • We use data from 456 monitors across 190 cities, combined with ground calibrated satellite estimates from Dey et al (2012) to produce the map on left. • Drawing upon research from across the world and China, we estimate life- expectancy drops by 1.1 to 3.2 life years because Source: Greenstone et al of non-compliance with (2015)
THE EVIDENCE SUGGESTS POLLUTION CAN BE REDUCED
Reviewing Command and Control
REVIEWING COMMAND-AND-CONTROL Efficient environmental regulation requires i. High Quality Data ii. Low Costs and Incentive Compatible Design iii. Rigorous Evaluation
AIR POLLUTION LEVELS VARY SIGNIFICANTLY OVER TIME Jan round April round PM2.5 conc ( m g/ m3) 500 400 300 200 100 0
LIMITED SPATIAL MONITORING…
…BUT LOTS OF SPATIAL VARIATION PM2.5 conc. Jan 2016 April 2016 (mg/m3) 400 300 200 100 0
TECHNOLOGY DOES NOT ENSURE DATA AVAILABILITY Eric Dodge and Rohini Pande, January 19 2016. http://www.indiaspend.com/cover-story/to-cut-delhis-air-pollution-pinpoint-the-source- 40763
MONITORING EMITTERS CAN BE EVEN HARDER Duflo, E., Greenstone, M., Pande, R., and Ryan, N. (2013). Truth-telling by third-party auditors and the response of polluting firms: Experimental evidence from India. The Quarterly Journal of Economics , 128(4):1499 – 1545.
COMMON PROBLEM IN TRANSPORT SECTOR ALSO • 79 percent emission testing centers in Mexico City accept bribes and substitute emissions readings of failing cars (Oliva, 2015) • Private centers in California fail vehicles at half the rate at which government run centers (Wenzel, 1998) • CPCB 2013 audit of pollution checking centers around Delhi: • Manpower poorly trained and unaware of testing protocols • Equipment not maintained, and rarely properly calibrated • Software used to generate dummy measurements
CONTINUOUS EMISSIONS MONITORING SYSTEMS MIGHT HELP, BUT AGENT INCENTIVES STILL MATTER
CASE STUDY: DELHI’S ODD -EVEN PROGRAM • Delhi government ran two rounds of the car-rationing program • January 1-15, 2016 • April 15- 30, 2016 • Ban on driving a car with an odd numbered license plate on odd dates, and an even numbered plate on even dates • Ban in effect between 8am and 8pm with important exceptions (two-wheelers, female drivers, taxis) • Fines for non-compliance: Were these enforced?
DELHI TIME SERIES YIELDED MIXED REVIEWS…
CHANGES IN TRENDS WITHIN AND OUTSIDE DELHI Jan January 19, 19, 2016 2016 May 13, 13, 2016 2016
DID THE ODD-EVEN PROGRAM REDUCE EMISSIONS? • We compare changes in time trends for monitors within and outside Delhi before, during and after the pilot • Difference-in-Differences method uses outside Delhi monitor trends as a control for all exogenous factors – meteorology, crop burning, wind direction – that influence the pollution time-series • Especially in January, monitors within and outside Delhi had similar trends before the pilot, diverged during the pilot, and reverted to being similar after the pilot
DID THE ODD-EVEN PROGRAM REDUCE EMISSIONS? PM2.5 conc. Non-Delhi Jan Delhi Jan m g/ m3 Non Delhi- April Delhi- April 300 250 200 150 100 50 0
IMPACTS CLEAR IN JANUARY, NOT IN APRIL January round April round 60 40 Change in 20 concentrations 0 during the dates -20 when odd-even -40 was implemented -60 (microgram/m3) -80 -100 -120 -140 1 2 3 4 5 6 7 8 9 101112131415161718192021222324 HOUR OF DAY
ONE EXPLANATION: WEATHER WAS THE DIFFERENCE • Dispersion is faster when temperatures are higher • Reduction in emissions may not translate into reduction in concentrations that are identifiable S.K. Guttikunda, R. Goel, 2013. Health impacts of particulate pollution in a megacity — Delhi, India. Environmental Development 6 (2013) 8 – 20
BUT COMPLIANCE MAY HAVE BEEN LOWER… • In January, traffic surveys by the School of Planning and Architecture, travel time queries from Google Maps and self- reported behavior all suggested high compliance (Kreindler 2016 survey of 960 commuters). • In April, travel speeds (an indirect proxy related to traffic) and self-reported behavior suggested compliance. • BUT, surveys found traffic volumes were higher during the second round of the program than the first round, and that there was a large shift to two-wheelers.
SIMILAR EXPERIENCES IN OTHER PARTS OF THE WORLD Mexico City (Davis, 2008) • Restrictions led to an increased adoption of used cars. • Substitution to relatively older vehicles on restricted days may have led to a net increase in pollution. Beijing (Wang et a 2014) • Non-compliance may have been as high as 48 percent • Car owners who traveled during peak hours and/or for work trips, were more likely to break the driving restriction rules.
THE REGULATOR IS LEFT CHASING A MOVING TARGET • Ban on brick kilns in Delhi, led to movement just outside Delhi border • Enforceable regulation, but no change in polluting behavior and limited impacts • High costs imposed on industrial activity • Challenge: Regulate emissions not technology and minimize costs of S.K. Guttikunda, R. Goel (2013) “Health compliance impacts of particulate pollution in a megacity — Delhi, India Environmental Development 6 8 – 20
TECHNOLOGY MANDATES- EASY TO ENFORCE, BUT DO NOT TRANSLATE TO REDUCTIONS IN EMISSIONS 1. Two emission sources attached each with a cyclone and bag filter; Box plot of PM Concentration by Stack Attachments 2. Two emission sources attached, (Gujarat) 1,500 each with a cyclone and scrubber; 1,000 3. Two emission sources attached, each with a cyclone, scrubber and bag filter; 500 4. A single boiler attached with a cyclone and bag filter; 0 1 2 3 4 5 Source: Baseline Survey 5. A single boiler attached to a cyclone and scrubber. Source: CPCB survey of 1000 industries in Gujarat, Tamil Nadu, Maharashtra
NOTWITHSTANDING DESIGN, REGULATION HAMSTRUNG BY INFLEXIBLE PENALTY OPTIONS AVAILABLE TO SPCBS • Do not have the ability to levy penalties commensurate with offence • Very strict penalties can be difficult to enforce, leading to effectively lax regulation “The Value of Discretion in the Enforcement of Regulation: Experimental Evidence and Structural Estimates from Environmental Inspections in India” (with Esther Duflo, Michael Greenstone and Rohini Pande). NBER Working Paper #20590.
Reforming Environmental Regulation
THREE STEPS SEEM ESSENTIAL 1. Collect reliable and transparent data 2. Move towards incentive-compatible and efficient regulation 3. Pilot and evaluate impact of new policies
Two Important Examples
WHY EXPERIMENT WITH MARKET-BASED REGULATION? • Lowers costs of Progra Impact Study m Estimate compliance (cost savings / emissions reductions) • Encourages monitoring US SO 2 U.S. $30m Carlson et al. transparency and quality Trading (2000) Progra U.S. $358m Ellerman et al. m per year (2000) • Incentivizes performance U.S. $153 - Keohane (2006) beyond an absolute 183m per year standard EU ETS 88 Mton CO 2 Delarue, Progra Voorspools, D’haeseleer m - EU • Introduces flexible, power (2008) sector financial penalties 34 Mton CO 2 Delarue, Ellerman, A DAPTED FROM A NTHOFF AND H AHN D’haeseleer (2010) (2008)
EMPIRICAL EVIDENCE MOTIVATING ETS PILOT IN SURAT • For an emissions cap at the 100 mg/Nm3 level, we estimate a 55 percent Without reduction in costs for industries Trading trading relative to fixed standards With • Gupta (2002) estimated that Trading emissions trading would be 2.69 times cheaper than using fixed standards to reduce TSP levels by 50% across 15 polluting industries in Maharashtra
MAHARASHTRA STAR RATING SCHEME • Maharashtra is the most industrialized state of India with over 1,00,000 industries: • 12,500 high pollution potential • 15,500 medium pollution potential • 47,000 low pollution potential • MPCB conducts extensive industry stack and ambient air monitoring. More than 20,000 stack samples collected between September 2012 to January 2017 • The Star Rating Program aims to decrease air pollution by increasing transparency and removing information asymmetries 7/13/2017 33
Visit: http://www.mpcb.gov.in/star_rating/browseRating
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