government failure on air pollution

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Government Failure on Air Pollution?
Without blaming Industrial development Indian
Leaders worrying for rising pollution in
India High Pollution of Delhi Mamta Banerjee
Narendra Modi Rahul Gandhi Delhi has been ranked
as the most polluted metropolitan city in the
world. 14 out of the 20 most polluted metro areas
of the world are located in India. Recently,
during the cricket match between India and Sri
Lanka, Chief Minister of West Bengal Mamta
Banerjee said that she was ashamed at seeing
Srilankan cricketers in pollution masks.
Expressing the same concern, Congress President
Rahul Gandhi said that we need collective steps
for reducing pollution levels in Delhi. Prime
Minister Narendra Modi too is concerned. However,
he has blamed the people. Speaking to the State
Environment Ministers, he said that the rising
pollution levels are due to the changing
lifestyles brought about the India's economic
development. We shall show that the problem is
instead due to the failure of the
Government. Cost Benefit Analysis! Air
pollution Number of studies shows that the cost
of control of air pollution is much less than the
benefits. In particular air pollution affects the
health of the people and the economic cost of the
reduced age is much more than the cost of
removing pollution. We give few studies
below. Bill and Melinda Gatesl Flue Gas
Desulphurization! Value of Statistical Lifel
Power Plantsl Cost Benefit
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A study by Bill and Melinda Gates foundation (See
report here 15) studied the benefits and costs of
introducing Flue Gas Desulphurization (FGD)
technology in eight power plants in India so that
the level of pollution was reduced. Economists
calculate the benefits that will accrue to the
economy and the cost that will be incurred in
undertaking a particular project. The divide the
benefits by the cost and arrive at a
"benefit-cost ratio." If the ratio is greater
than 1, it means the benefits are greater than
the costs and the project is given green light.
Conversely, if the ratio is less than 1, it means
the benefits are less than the costs and the
project is given red light. We give the
benefit-cost ratios of fitting the FGD in 8 power
plants below.
Table 5 Benefit/Cost Ratios for FGD Retrofits
Plant Name VSL84,036,r3 VSL160,000,r3 VSL256,000,r3 VSL256,000,r8
Dadri 6.0 11 18 14
Unchahar 4.0 7.5 12 9.5
Bakreswar 1.8 3.4 5.5 4.3
Dahanu 1.3 2.4 3.8 3.0
Talcher 0.77 1.5 2.4 1.9
Koradi 0.53 1.0 1.6 1.3
Rayalaseema 0.29 0.56 0.89 0.70
Tuticorin 0.27 0.51 0.82 0.65
In order to calculate the benefits economist used
the concept of value of statistical life (VSL).
The Value of Statistical Life measures the amount
people would be willing to pay for a reduction in
their chance of death. Bill and Melinda Gates
foundation found that among 8 thermal plants in
India, the benefits from reduction of death were
more than the cost of fitting FGD equipment in 4
to 6 plants depending upon the Value of
Statistical Life adopted. The benefits were 6 to
18 times in Dadri and lesser in other power
plants as we can see in the table above. This
means that if the Government required fitting of
FGDs in these power plants, and the cost of the
same is Rs. 1, then the people would be
benefitted by about Rs. 10 because their life
expectation will increase.
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If Dadri Power Station in Uttar Pradesh will be
retrofitted by FGD technique then it will be
beneficial for the society
OECD Shanghai Coal IndustryControl of Pollution
A study by the Organisation for Economic
Co-operation and Development (OECD) (see report
here 13) measured the cost and benefits of
reduction of air pollution. The study has given
the graph produced below
Figure 3. Cost-Benefit Analysis for the European
Thematic Strategy on Air Pollution
160 000 3- 140 000 lt 120 000 c j 100 000
' 5 BO 000 LU 60 000 40 000 20 000
Low Mid High MTFR Source adapted from
Holland, 2012
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The red bars show the cost for low-, medium-,
high- and the maximum technically feasible level
of action. One can see that the benefits are
about 20 times the cost in the low, medium and
high levels of the action. This means if the
Government invests Rs. 1 then the benefits are
Rs. 20 for the control of air pollution. A study
for the city of Shanghai in China published in
the Journal of Environment Management (See study
here) has assessed the benefits and costs from
control of pollution in power generation and use
of coal in industry. The summary of the results
are given below.
Table 7 Health benefit/eost ratios of the
emission control scenarios
Case Power scenario Cl Industry scenario C2
Low 0.9 2.5
Medium 2.0 5.4
High 5.6 15.1
Note both the costs and benefits values are
inflated to reflect prices in 2020.
The study has assessed the benefit-cost ratio for
three scenarioslow, medium and high level of
control of pollution. The power plants and
coal-based industries, if fitted with air
pollution control equipment, will lead to health
benefits for the people. They found that the
benefits from pollution control in power
generation are 5.6 times of the cost and in the
use of coal industries the benefits are 15 times
the cost of control of pollution. Similar other
studies for Japan, Europe and consistently say
that the benefits from control of air pollution
are much greater than the cost.
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Control of Air Pollution by coal-based industries
in China will provide benefits 15 times the cost
of control of the same. Bangladesh Copenhagen
Consensus CentreBrickKilnCosts and Benefits The
question is when the benefits of the air
pollution are greater than the costs, then why
the Government does not implement measures to
control the pollution? The solution to this
riddle is given in a study of Bangladesh
undertaken by the Copenhagen Consensus Centre see
here. The problem is that the benefits of control
of air pollution occur to the larger population
whereas the cost is borne by the people who
pollute. So it is not beneficial for the
polluters to control pollution because the cost
of installing equipment is much higher and the
benefits are less for them although the benefits
for the society are much larger. As there as a
mismatch between the persons who have to bear the
cost of air pollution and persons who gain the
benefits of the air pollution. This has explained
beautifully in this study of Bangladesh. This
study has calculated the benefits and costs
according to the society and to the brick kiln
owners for installing better pollution control
equipment in the brick kilns near Dhaka in
Bangladesh.
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Table El. Annualized social benefits and costs of
full conversion to cleaner brick kilns in Greater
Dhaka, 2014 (BDT million)
Benefits Benefits Cost
VSL DALY
From FCK to IZK 4,857 3,184 408
New IZK 4,857 3,184 815
NewVSBK 8,606 6,097 1,605
New HHK 13,766 11,257 3,261
Note Annualized benefits and costs are at 5
discount rate. VSLvaluation of avoided deaths
using VSL. DALYvaluation of a DALY at GDP per
capita. Source Estimates by the author.
The study has found that moving from the FCK to
IZK technology of air pollution control, the
benefits to the people is Rs. 4857 whereas the
cost to the people is Rs. 408. However the
benefits and costs to the brick kiln owners is
altogether different. In the table below (Table
9.1) we can see that the cost to the brick kiln
owners is Rs. 5333 whereas the benefits to them
are only Rs. 1440.
Table 9.1 Private costs and benefits of full
conversion to cleaner brick kilns in Greater
Dhaka, 2014 (BDT million)
From FCK to IZK New IZK New VSBK New HHK
Costs
Investment cost 5,333 10,667 21,000 42,667
Benefits
Increased production value per year 0 0 0 3,000
Cost savings per year 1,440 1,440 3,440 5,600
Private benefits per year 1,440 1,440 3,440 8,600
Therefore while moving from FCK to IZK
technology, the brick kiln owners are at a loss.
They will have to incur a net cost of Rs 3893 BDT
Million whereas there benefits would be only 1440
BFT Million. Therefore they are not interested in
implementing this technology. But if we combine
the private and social costs, we can see that the
total cost for moving from FCK to IZK
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technology for the society and the brick kiln
owners together is 5741 BDTM whereas the benefit
is 6297 BDTM. This explains that although
installation of IZK technology is beneficial for
the society at large, it is not profitable for
the brick kiln owners. Therefore the brick kiln
owners do not want to install air pollution
control equipment and the people continue to
suffer from air pollution.
Installation of air pollution control equipment
in Brick Kiln of Dhaka in Bangladesh will help to
remove pollution
Conclusion! Polluting Industries! Air Pollution
EquipmentProblem of Pollution The solution to
this problem is for the Government to create
regulations making it mandatory for the polluters
to install air pollution equipment. In that case
the industries will bear the cost of installing
theseequipment and this cost will be reflected in
a higher cost of production of their goods. For
example if the Government requires brick kilns in
Bangladesh to install IZK technology the cost of
a brick may go up from Rs. 8 to Rs. 10 and this
will be a burden on the people. But the people
will be benefited by a larger amount. In the end
air pollution will get controlled.
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The problem of air pollution is actually a
problem of inaction by the government. Control of
pollution is beneficial for the society and the
benefits are more while the costs are less. But
because the costs are born by private producers
therefore they are reluctant to install air
pollution control equipment. It is for the
Government to make regulations and implement so
that the private industries install the air
pollution control equipment, the air pollution
can be cleaned up and the people's health is
saved. The problem of the air pollution in India
is not of lifestyle as Prime Minister Narendra
Modi has said. The problem is that the Government
is not willing to stand up to the polluters. The
result of this inaction is that the people of the
country are suffering. If the Government forced
the polluters to install air pollution control
equipment then the society at large would be much
better off. The explanation given by Mr Modi also
does not hold because among the cleanest metros
of the world we findBredkalen in Sweden, Muonio
in Finland, El Pueyo in Spain, La Plaine in
France, Guimaraes in Portugal etc.where the
lifestyles require much higher levels of material
consumption. Therefore if lifestyle was the
problem, then these large cities should have been
more polluted than Delhi. The problem is not
lifestyle but the failure of the Government to
tax the polluters for securing the social good.
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