Environmental regulation in India is flawed, Obama’s former chief economic advisor argues
The economics professor argued that the command and control approach should be replaced by market-based approaches to environmental regulation in India.environment Updated: Jul 10, 2017 12:10 IST
New Delhi: Environmentalists have decried the progressive weakening of environmental regulation in India, the most recent being the attack on the independence of the National Green Tribunal, India’s top environmental court. The union government is already in the process of reviewing coastal regulations, and there are reports of emissions standards for industries being diluted and the deadline for meeting them being pushed forward because none of the industries have even installed equipment required to meet the norms.
Under the current regime the government lays down standards and follows up with industries, at times penalizing them or threatening to do so, in what experts describe as a ‘cat and mouse’ game. Michael Greenstone, who served as chief economic advisor to former US President Barack Obama and is now director at the Energy Policy Institute at the University of Chicago (EPIC), argues that the approach has failed.
India would be better off changing its mode of regulation from command and control driven to market-driven, according to Greenstone, laying emphasis on meeting goals rather than focussing on the way the industry achieves them. This would achieve better environmental outcomes like dealing with air pollution and reduce environmental compliance costs for industries. Here are excerpts from his interview with Malavika Vyawahare, on the sidelines of the National Conference on Air and Water Pollution organized by NITI Aayog and EPIC.
Why is there a need for renovating India’s environmental regulations?
The answer is simple. India has set norms for pollution concentrations, a substantial fraction of the country’s population lives in areas where concentrations, say in the case of Particulate Matter (PM), exceed the norms.
It seems like India is not achieving what it set out to achieve. I have studied Indian regulations, there are opportunities to create what economists call a win-win situation; achieve better environmental outcomes and reduce the environmental compliance costs.
How can we do that through market-based regulations?
Too often right now, this is not limited to India, the standard reaction to regulation is: I want to require the installation of some equipment.The government can do that, it can be very costly. The plant might have a different way to reduce pollution that might be less costly. The regulatory goal then becomes did they install the equipment, rather than whether they achieved the environmental goals.
There has to be a mindset change in the mode of regulation. The next step would be to introduce market-based approaches which provides more flexible ways to get there.
In India, one of the problems is that the goal posts keep shifting...
What should not be missed the purpose of having environmental regulations is lost, the purpose is to protect public health. The current levels of air pollution in India are arguably the highest in the world and are causing people to lead, shorter, sicker lives. But I see that there is an opportunity there. It is possible to have reductions in pollution while also reducing the costs of regulation.
We are in a ‘Make in India’ phase, and indeed regulatory reform could be an important block in that phase. The current form of regulations can be difficult for industry to plan around. There is too much discretion, there is a need to make them more systematic and market based, that will make it easier for industries to plan and to make long term investment decisions, their compliance cost will go down, that is where the opportunity lies.
Some Indian leaders question the link between air pollution and premature mortality.
I found that comment perplexing. The human body is the human body and I don’t believe there is any evidence that the human body reacts to air pollution differently in India or China or the US.
I have written a new paper that looks at air pollution concentrations in China that effects life expectancy. It finds quite large losses of human expectancy. We are finding that persistent (exposure to) 10 micrograms of particulate matter per cubic metre is associated with a loss of six tenths of a year of life expectancy.
The contention is that the data about premature mortality is extrapolated by foreign organisations and is therefore not reliable.
In India there is pollution data that goes back several decades, the health data is often missing. They have more extensive health data available in China. Until there is reliable vital statistics in India, we will not be able to conduct a similar analysis.
Is China is doing a better job than India in tackling air pollution?
I don’t know enough, I haven’t done a detailed analysis. It is absolutely true that in terms of conventional air pollution of particulates, there is much greater demand to do something about it in China than India.
(There is) less willingness to accept it here. In China,there aren’t discussions whether the European body is different from the Indian body. There is an acceptance that air pollution affects human health, people in China are demanding that they do something about it.
China’s is not a market-based approach to deal with air pollution, it is mandate heavy. So, that approach works too?
India admired around the world for its commitment to democratic principles. It is interesting even an authoritarian government has been responsive. There is a great reason to think that if the Indian population demanded changes in air pollution the government would follow. China has been using very mandate heavy approach. It can reduce air pollution but do it in a much more expensive way.
(Edited for clarity and length)
First Published: Jul 10, 2017 11:51 IST