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An Analysis of Agricultural Crop Residue Burning and Urban Air Pollution in New Delhi, India

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  • Batabyal, Amitrajeet
  • Beladi, Hamid

Abstract

A farmer in Haryana, a state neighboring the capital city of New Delhi, India, burns agricultural crop residue which leads to an increase in air pollution and gives rise to extra costs for a small business owning representative citizen in New Delhi. We theoretically analyze this farmer/citizen interaction. We first determine the optimal amount of crop produced when the farmer disregards the negative externality he imposes on the representative New Delhi citizen. Second, we study the equilibrium that emerges when the farmer must pay a fine to compensate the New Delhi citizen for the negative externality he causes. Finally, we compare the outcomes in the preceding two cases and then explain the differences that arise.

Suggested Citation

  • Batabyal, Amitrajeet & Beladi, Hamid, 2025. "An Analysis of Agricultural Crop Residue Burning and Urban Air Pollution in New Delhi, India," MPRA Paper 125945, University Library of Munich, Germany, revised 19 Aug 2025.
    • Handle: RePEc:pra:mprapa:125945
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    References listed on IDEAS

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    1. Downing, Andrea S. & Kumar, Manish & Andersson, August & Causevic, Amar & Gustafsson, Örjan & Joshi, Niraj U. & Krishnamurthy, Chandra Kiran B. & Scholtens, Bert & Crona, Beatrice, 2022. "Unlocking the unsustainable rice-wheat system of Indian Punjab: Assessing alternatives to crop-residue burning from a systems perspective," Ecological Economics, Elsevier, vol. 195(C).
    2. Gemma Dipoppa & Saad Gulzar, 2024. "Bureaucrat incentives reduce crop burning and child mortality in South Asia," Nature, Nature, vol. 634(8036), pages 1125-1131, October.
    3. B. Kelsey Jack & Seema Jayachandran & Namrata Kala & Rohini Pande, 2025. "Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning," American Economic Review: Insights, American Economic Association, vol. 7(1), pages 39-55, March.
    4. Shefali Khanna & Kanika Mahajan & Sudarshan RSA, 2024. "Are Crop Residue Burning Bans Effective? Evidence from India," Working Papers 136, Ashoka University, Department of Economics, revised 11 Jul 2025.
    5. Shiming Deng & Candace A. Yano, 2006. "Joint Production and Pricing Decisions with Setup Costs and Capacity Constraints," Management Science, INFORMS, vol. 52(5), pages 741-756, May.
    6. Leena A. Kaushal & Anupama Prashar, 2021. "Agricultural crop residue burning and its environmental impacts and potential causes – case of northwest India," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 64(3), pages 464-484, February.
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    Keywords

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    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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