Water pollution abatement cost function: methodological issues and an application to small-scale factories in an industrial estate in India

Abstract

Formulation and estimation of a correctly specified abatement cost function would be central to policy formulation regarding imposing taxes or user-fees as well as of sharing social cost in the presence of environmental pollution. Often in research, the output of an abatement activity for water pollution appears to us not to have been clearly specified. This activity is very distinct from whatever is the actual product of the plant. We propose in this paper that the output is only and exclusively the reduction in the level of the pollutant in the outflow from the plant and illustrate this with primary data for small-scale factories in Nandesari Industrial Estate in Gujarat, India. The cost function estimates provide evidence of significant scale economies and high marginal abatement cost in wastewater treatment by small-scale factories.

Estimating Sectoral and Geographical Industrial Pollution Inventories in India: Implications for Using Effluent Charge Versus Regulation

“…It can also be seen from this table that abatement costs for a pollutant vary widely across different industries by a factor as much as 1 to 400. These estimates reaffirm the results of the earlier studies on abatement costs in India [Mehta, et al 1994;Pandey, 1999 and2000b;Goldar, et al 2001] which show large variations in abatement costs not only across the industrial sectors but also across firms within an industry. An important observation that can be made on the basis of these results is that the current legislation, which requires that all polluters meet the same discharge standards, is highly inefficient.…”

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

“…One assumes that marketable output is separable from the production of pollutants (or pollution abatement). For example, Bellas (1998), Goldar et al (2001), and Dasgupta et al (2001) estimate marginal abatement costs assuming separability between marketable 2 Exceptions are Féres and Reynaud (2005) and Pascoe et al (2007), who consider non-separability. Féres and Reynaud (2005) investigate the water demand of Brazilian manufacturing by estimating a multiproduct translog cost function.…”

Firm’s Environmental Performance: A Review of Their Determinants

“…The results indicated that an overall betterment in environmental media is achievable through a combination of various instruments-standards, license fees, subsidies and charges-along with the necessary enforcement. Murty et al (2006) for sugar industry of India, Jiang and Mckibbin (2002) for China, Goldar et al (2001) for small factories in India, Dasgupta et al (2001) for some industries in China, Hailu and Veeman (2000) for Canadian pulp and study industry and Khalid (1996) for palm oil mills in Malaysia, Bataineh (2006) for improving of competition in manufacturing companies, Salleh et al (2007) for readiness in meeting globalization challenges, Nasir and Abdullah (2004) for accrual and cash flow measures investigated the effects of economic instruments on firm's environmental performance such as the level of pollution abatement.…”