India has an impressive number of environmental regulations – but have they been a success? This column presents evidence that while initiatives such as catalytic converters for cars have reduced air pollution, there has been far less success in tackling water pollution. It argues that regulators will only be effective when they are given enough power and legitimacy.
Around the world, environmental regulation is one of the key public services that governments provide to their citizens. While these regulations impose costs on businesses and households by requiring them to dispose of pollution in a responsible way, in return they promise better health, a cleaner environment and other related benefits.
India is no exception. It has an impressive number of environmental regulations, centred on the original Water Act of 1974 and Air Act of 1981, to deal with increasingly hazardous pollution levels. Moreover, India has an extensive network of government offices (both at the national and state level) that are designed to implement these regulations.
Yet public opinion on the effectiveness of these regulations has not always been positive. There are countless newspaper articles or reports detailing the ineffectiveness of these regulations, as well as accusations of the mismanagement of funds earmarked for these purposes, ranging from underuse and incorrect reporting to diversion of funds.
While these stories and reports provide insight into the functioning and challenges of implementing effective environmental regulation in India and elsewhere, what has been missing is systematic evidence on whether the regulations have succeeded in their intended purpose: to reduce air and water pollution. Moreover, these stories don’t provide any insight into how the overall benefits of the regulations (in terms of pollution reductions and lives saved) compare to the costs of these systems. For example, even if one policy brings about a large improvement in people’s health, the cost may be so great that the money could have been better spent on other health interventions that lead to even larger effects.
In recent research we provide new evidence on the effectiveness of these regulations in accomplishing their most basic goal of reducing pollution (Greenstone and Hanna 2012). We collected detailed, yearly data on air pollution for 124 cities and water pollution for 424 cities and matched this to information on the timing of implementation of different environmental regulations in each of these cities. We then measured the change in cities’ pollution levels when a regulation was implemented, compared to cities that never implemented the regulations or did so later. This way of evaluating policy – known as ‘difference in difference’ – allows us to shed light on the causal impact of these regulations on pollution levels.
What do the numbers tell us?
First, just looking at the trends in pollution over time provided us with some interesting facts. Air pollution has been falling over time: for example, according to these data, ambient particular matter concentrations fell by about 17% from 1987-1990 to 2004-2007. This change was not driven by one particular city, but rather borne out by all cities in the sample. In contrast, the trend in water pollution concentrations was more mixed over this time period with the concentrations of some pollutants going up while others went down.
Next, we look at whether environmental regulations contributed to the fall in air pollution. Our analysis indicates that the answer is yes. For example, the mandatory adoption of catalytic converters for cars reversed worsening trends in particulate matter and sulfur dioxide concentrations and led to sharp declines in these dangerous forms of air pollution. Similarly, the Supreme Court Action Plans – the most famous of which was in Delhi, but had also been implemented in 17 cities as well – helped reduce nitrogen dioxide (which is a precursor of ozone).
Were the same successes seen in the water pollution arena? More specifically, would water pollution have been worse if the regulations had not been adopted? We studied the effect of the National River Conservation Plan (NRCP), which is the cornerstone of water pollution regulation in India. Yet across all three measures of water pollution we studied, we failed to find any effect from the programme.
Cleaner air but dirtier water
This leaves us with the question of why the air pollution policy was more successful than the water policy. The history and commentary surrounding the regulations provides some insights. In particular, the legitimacy of the regulations appears to be a predictor of success: air pollution policies were often driven by citizen complaints and an activist Supreme Court. There was thus an ultimate claimant who had a vested stake in ensuring that the regulations were enforced. In contrast, the water pollution policies were less community-driven than the air pollution policies. Our speculative view is that these policies were undermined by the fact that in the end, no institutional body was given the power, resources, and institutional mandate to implement them successfully.
The way forward
We conclude that environmental regulations in India can be successful at reducing pollution concentrations but only when regulators are sufficiently empowered and motivated. However, the deeper question on the optimal level of environmental regulation remains to be answered. This would require developing reliable estimates of the costs that regulations impose on businesses and households and then comparing them to the benefits to society of pollution reductions in terms of health and other areas. It is also critical to experiment with market-based forms of regulation that can achieve pollution reductions at lower costs. We will discuss India’s recent efforts to introduce these regulatory mechanisms in future columns.
- Greenstone, M and R Hanna (2012), “Environmental Regulations, Air and Water Pollution, and Infant Mortality in India”, NBER WP # 17210; MIT Dept. of Economics WP No. 11-11, 2011; CEEPR WP 2011-014. Revision requested by American Economic Review.