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

Published online by Cambridge University Press:  31 August 2011

Surender Kumar  and
Shunsuke Managi
Surender Kumar
Affiliation:
Department of Business Economics, University of Delhi, India. Email: surenderkumarbansal@hotmail.com
Shunsuke Managi
Affiliation:
Graduate School of Environmental Studies, Tohoku University, 6-6-20 Aramaki-Aza Aoba, Aoba-Ku, Sendai 980-8579, Japan; and Institute for Global Environmental Strategies, Japan. Tel: 81-45-339-3751. Fax: 81-22-795-4309. Email: managi.s@gmail.com
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Abstract

The design and implementation of environmental policy often involve more than one pollutant, and must consider pollution as a byproduct of the production of marketable output. In this paper, we test the implicit assumption in the empirical literature that (1) production of marketable output, pollution and abatement are separable, and (2) different pollutants can be abated separately. Using unique plant-level data in India, we reject the null hypotheses of separability between marketable output and pollutants, and between different pollutants. Firms must incur abatement costs for reducing pollution levels. In addition, complement and substitute relationships between water pollutants are demonstrated with statistical significance.

Type
Research Article
Information
Environment and Development Economics , Volume 16 , Issue 6 , December 2011 , pp. 709 - 733
Copyright
Copyright © Cambridge University Press 2011

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