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Non-separability and substitutability among water pollutants: evidence from India

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  • Kumar, Surender
  • Managi, Shunsuke

Abstract

The design and implementation of environmental policy often involve more than one pollutant, and must consider pollution as a byproduct of the production of marketable output. In this paper, we test the implicit assumption in the empirical literature that (1) production of marketable output, pollution and abatement are separable, and (2) different pollutants can be abated separately. Using unique plant-level data in India, we reject the null hypotheses of separability between marketable output and pollutants, and between different pollutants. Firms must incur abatement costs for reducing pollution levels. In addition, complement and substitute relationships between water pollutants are demonstrated with statistical significance.

Suggested Citation

  • Kumar, Surender & Managi, Shunsuke, 2011. "Non-separability and substitutability among water pollutants: evidence from India," Environment and Development Economics, Cambridge University Press, vol. 16(06), pages 709-733, December.
  • Handle: RePEc:cup:endeec:v:16:y:2011:i:06:p:709-733_00
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    Cited by:

    1. Ambec, Stefan & Coria, Jessica, 2013. "Prices vs quantities with multiple pollutants," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 123-140.
    2. Bonilla, Jorge & Coria, Jessica & Sterner, Thomas, 2012. "Synergies and Trade-offs between Climate and Local Air Pollution: Policies in Sweden," Working Papers in Economics 529, University of Gothenburg, Department of Economics.
    3. Wei, Chu & Löschel, Andreas & Liu, Bing, 2013. "An empirical analysis of the CO2 shadow price in Chinese thermal power enterprises," Energy Economics, Elsevier, vol. 40(C), pages 22-31.

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