Building environmental regulation that enables growth

• This project addresses the problem of industrial particulate matter pollution through improved regulatory monitoring.
• The study is a randomised-controlled trial in which treatment plants install Continuous Emissions Monitoring Systems (CEMS), and researchers measure resultant pollution abatement decisions and regulatory actions over time.
• Preliminary results show that it is criticial to account for implementation challenges during a transition to CEMS.

Industry has not only fuelled rapid growth and increased living standards in China and India but also contributed to air and water pollution. Pollution concentrations in these and other developing countries exceed the highest levels recorded in the developed world. Industrial regulations in India have a history of heavy-handedness, characterised by onerous licensing and labour regulations. Today, many of these constraints have been relaxed, but Indian growth has slowed, and many fret that environmental regulation may have supplanted the old regulations. Is low environmental quality an inevitable by-product of growth, or can the environment be protected by innovative and transparent regulation that can co-exist with continued growth?

As a first step toward establishing this market for PM emissions, a robust monitoring framework was established to measure industry-level emissions on a continuous basis in the industries selected for the pilot emissions market. This measurement is achieved by the installation of Continuous Emissions Monitoring Systems (CEMS) for PM that transmit pollution data from plants in real time, which is a significant advance over the existing practice of manual checks conducted at relatively infrequent intervals. CPCB published a technical specification document that outlines the components and requirements of this monitoring framework and which guided the process of CEMS device installations and connections during the course of this project.[1]

The study's research questions are:

• Can information technology deliver better information to the regulator?
• If yes, then does this improve enforcement and lower firm emissions?

The research team evaluated the rollout of CEMS in about 350 solid fuel burning industrial plants around the city of Surat in Gujarat via a randomised-controlled trial in which treatment plants install CEMS, and researchers measure resultant pollution abatement decisions and regulatory actions over time.

In the short-term, the study found no effect of CEMS on emissions levels in participant industries, although this is unsurprising considering that the rollout itself has taken significantly longer than expected, and the environmental regulator has not yet fully incorporated CEMS measurements into their regulatory process flow. A specific learning (also iterated by Duflo et al 2013) is that any scheme that introduces private players into the information gathering process (here, the private vendors are labs that are calibrating CEMS devices) must take acount of potential conflict of interest. We plan to continue measuring the longer-term effects of CEMS during our continued research collaboration. Additionally, this project lays the technical groundwork for continued research into market-based approaches to controlling industrial particulate matter pollution in India.

[1] Available at: http://www.cpcb.nic.in/upload/NewItems/NewItem_202_CEMS_Specs_v21-11-13v_cpcb.pdf