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Tradable permits for environmental protection: Case study of an integrated steel plant in India


  • Pandey, Rita

    () (National Institute of Public Finance and Policy)

  • Bhardwaj, Geetesh

    (National Institute of Public Finance and Policy)


Cost effective policies allow minimising the compliance costs associated to reaching a desired environmental quality target. In this paper a conceptual model has been developed to examine the compliance costs under an intra-plant emission trading system for a non-uniformly mixed assimilative pollutant. The model incorporates the number of emission sources, the concentration of pollutants emitted at each source, the marginal cost of abatement for each source, the transfer coefficient that relates emission at each source with the impact on ambient air quality, and the desired ambient air quality target. The model is applied to an integrated steel plant in India. Results of this study demonstrate that the emission trading is more cost effective than the existing regulatory system. Further, intra-plant trades would result in significant savings to the steel plant while securing an improvement in ambient air quality in the studied geographical area.
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  • Pandey, Rita & Bhardwaj, Geetesh, 2000. "Tradable permits for environmental protection: Case study of an integrated steel plant in India," Working Papers 00/2, National Institute of Public Finance and Policy.
  • Handle: RePEc:npf:wpaper:00/2
    Note: Working Paper 2, 2000

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    References listed on IDEAS

    1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    2. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249.
    3. Atkinson, Scott E. & Tietenberg, T. H., 1982. "The empirical properties of two classes of designs for transferable discharge permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 101-121, June.
    4. Bohm, Peter & Russell, Clifford S., 1985. "Comparative analysis of alternative policy instruments," Handbook of Natural Resource and Energy Economics,in: A. V. Kneeseā€  & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 10, pages 395-460 Elsevier.
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