Clearing the Air in India

With the aid of a computable general equilibrium model, this paper estimates for India the magnitude of spillovers from limiting growth of greenhouse gas emissions to local air quality and the health of the urban population. The most important spillovers are reductions in emissions of particulates with associated declines in mortality and morbidity. By valuing these spillovers (or ancillary benefits), we can compare them with the welfare costs of climate policy, estimating that — on conservative assumptions — emissions could be reduced by somewhat more than 10 per cent from their 2010 baseline level without incurring net costs. With central estimates of substitution elasticities and willingness-to-pay for health improvements, “no regrets” abatement could reach around 17-18 per cent of baseline emissions. The analysis also permits assessment of the inter-regional variation in costs and benefits, finding that abatement costs are relatively low and ancillary benefits high in North and ...