Why Government Fails 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 Gates| Flue Gas Desulphurization| VSL| Power

Plants| Cost Benefit

A study by Bill and Melinda Gates foundation 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.
Plant Name VSL=$84,036,r=3% VSL=$160,000,r=3% VSL=$256,000,r=3%
Dadri 6.0 11 18
Unchahar 4.0 7.5 12
Bakreswar 1.8 3.4 5.5
Dahanu 1.3 2.4 3.8
Talcher 0.77 1.5 2.4
 Koradi 0.53 1.0 1.6
Rayalaseema 0.29 0.56 0.89
Tuticorin 0.27 0.51 0.82
Table 1: Benifit/Cost Ratios for FGD Retrofits

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.
If Dadri Power Station in Uttar Pradesh will be retrofitted by
FGD technique then it will be beneficial for the society

OECD| Shanghai |Coal Industry|Control of Pollution

A study by the Organisation for Economic Co-operation and
Development (OECD) measured the cost and benefits of
reduction of air pollution. The study has given the graph
produced below:

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 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.
Case Power Scenario C1 Industry Scenario C2
Low 0.9 2.5
Medium 2.0 5.4
High 5.6 15.1
Table 2: Health benifit/cost ratiosof the emission control
scenarios

The study has assessed the benefit-cost ratio for three

scenarios—low, 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.
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 Centre|Brick Kiln|Costs 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. 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.
Benefits Cost
VSL DALY
From FCK to IZK 4857 3,184 408
New IZK 4857 3,184 815
New VSBK 8606 6,097 1,605
New HHK 13,766 11,257 3,261
Table 3: Annualized Social benifits and costs of full coversation
to cleaner brick kilns in Greater Dhaka, 2014 (BDT million)

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. we can see that the cost to the brick kiln owners is
Rs. 5333 whereas the benefits to them are only Rs. 1440.

From FCK to IZK New IZK New VSBK New HHK

Costs: - - - -
Investment Cost 5,333 10,667 21,000 42,667
Benefits: - - - -
Increased production
0 0 0 3,000
Value per year
Cost savings per year 1,440 1,440 3,440 5,600
Private benefits per
1,440 1,440 3,440 8,600
year
 Table 4: Private costs and benifits of full conversation to
cleaner brick kilns in GreaterDhaka, 2014 (BDT million)

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
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 Equipment|Problem

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 these equipment 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.
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 find Bredkalen 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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Sinha, Swami Shantidharmanand, Vimal Bhai)

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