Gujarat’s Pollution Market Cuts Emissions by 30%: Can Cap-and-Trade Clean Air in Developing Nations?
Gujarat has successfully tested the world’s first cap-and-trade market for particulate pollution- reducing emissions by up to 30% while increasing industrial profits and regulatory compliance, according to a new study published in The Quarterly Journal of Economics.
The study emphasised that this market-based approach, launched in Surat offers a viable, scalable mode for combating air pollution in low and middle income countries where the pollution is usually very high and state capacity is often low.
Market Model That Benefits All
“The market delivered a rare win-win-win by reducing pollution, decreasing abatement costs, and raising government’s success at enforcing the law. And, it did all this in a setting where there was great skepticism that pollution markets could work,” said study co-author Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics at the University of Chicago.
“This success of pollution markets is generating a great deal of interest from other governments that are trying to balance the goals of economic growth and environmental quality. In addition to our continuing collaboration with the Gujarat Pollution Control Board, we’re now working with other states in India and governments in other countries to scale-up the use of pollution markets,” added Greenstone.