•Apr 17, 2025
Can Pollution Markets Work in Developing Countries? Experimental Evidence from India
Michael Greenstone, Rohini Pande, Nicholas Ryan and Anant Sudarshan
Experiment finds that the cap-and-trade market in Gujarat, India reduced pollution by 20 to 30 percent while reducing industrial plants’ pollution abatement costs by more than 10 percent and increasing compliance with the law.
A new study, in the May issue of The Quarterly Journal of Economics, experimentally evaluates the world’s first cap-and-trade market for particulate pollution that has been operating for more than five years. Its success demonstrates that pollution markets can work in low- and middle-income countries where pollution is frequently very high and state capacity is often low.