Managing urban air quality in India ; Models, policy instruments and institutions

Abstract

Urban air quality management has become a significant area of public policymaking. The key drivers influencing the air quality are urbanization, population growth, industrial development and vehicular growth. While development is the causes for rapid urbanization and air population, it is also a solution for improved air quality as is brought out by the environmental Kuznets’ curve. As the economy grows and income levels rise, there are more resources to invest cleaner technologies and processes and greater demand for a cleaner environment. Air quality management requires an integrated approach that links the policy objectives, instruments and analysis tools, and institutions. The developed countries have effectively adopted the integrated approach to manage the air quality. However, it is limited in developing countries like India, where the issue gets sidelined by higher priorities of economic and social development. This study addresses the gap by designing an integrated approach to manage the urban air quality in a socially cost-effective manner, in a developing country context. The following issues have been addressed: 1. An ex-ante assessment of policy instruments. 2. Country comparison of processes in managing urban air quality and its relevance for India. 3. Designing an appropriate framework for integrated policy assessment. 4. Developing a suitable mix of instruments, like emissions trading, that minimizes social costs. 5. Analysis of institutions for air quality management. The analysis tools include a long-term energy-environment optimization model, AIM/Local, to analyze alternate instruments for controlling SO2 emissions from large point sources cost-effectively. The Geographical Information System (GIS) interface of the model allows for a spatial analysis of emissions. A case study of Delhi is carried out to analyze the policies, instruments and institutions to tackle the increasing vehicular pollution, in a socially cost-effective way. A cross-country analysis compares the experiences of developed (EU, Japan, US) and developing (China, Latin America) Countries in urban air quality management and derives insights for India. The specific insights obtained from the research are as follows: 1. Development policies should promote technology and investment flows in environmentally sound technologies to bifurcate the development path towards an environment-friendly development. In this context, the North-South investment and technology flows have a significant role in influencing the quality of development. 2. The focus of policies on one sector (transport), or specifying a technology (CNG) reduces the sectoral and technical flexibility, respectively and is not a socially cost-effective solution. Reducing transport emissions by expensive measures, while not reducing emissions that can be mitigated by inexpensive means from industrial sectors is not socially optimal. Technical flexibility implies that the choice of technologies should be based on both components of social cost-the private as well as the societal costs-rather than only one. 3. Country experiences reveal that a mix of instruments for different sources control emissions in a socially cost-effective manner. Command and control instruments are complemented by market based and voluntary approaches. Public image consciousness, pull and push factors and public pressures are prominent forces that also have a significant influence on the processes in air quality management. 4. An emissions trading instrument for controlling SO2 emissions from power plants results in cost-savings of Rs 360 crores annually as compared to technology-push policies. The stringent local air quality standard spread new plants and reduces hotspots, thus improving the local air quality. 5. There is diminishing marginal benefits from advanced EURO norms and lack of necessary pre-conditions to achieve even these benefits of the advanced norms. In this context, a technology-equivalent policy is proposed, where the emissions norms are balanced with non-technical measures. It is based on the polluter-pays principle and the polluters are charged for the negative externalities they cause and the revenue is used for complementary air quality management measures. 6. The current approach to addressing urban air pollution is piecemeal and lacks integration. The research proposes an integrated framework for policy assessment, which comprises of the analysis tools and a suitable mix of instruments that are socially cost-effective. 7. An independent environment regulatory authority, with a few focused objectives, has to follow the integrated framework to manage the air quality. The authority is supported by experts from varied disciplines and has legal backing for compliance and enforcement. The research outputs have contributed to the ongoing literature and academic debates. There is an accepted international publication. The key methodological contributions include (1) designing an emission trading instrument and its implementation in the Indian power sector and (2) designing a technology-equivalent policy for managing vehicular emissions. The key policy contributions include (1) designing an integrated framework for air quality assessment (2) providing insights from other country experiences (3) developing the structure of an environment regulatory authority, and (4) assessing policies and measures the would achieve a balance between development and air quality.