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

Published online by Cambridge University Press:  15 January 2001

BISHWANATH GOLDAR ,
SMITA MISRA  and
BADAL MUKHERJI
BISHWANATH GOLDAR
Affiliation:
Institute of Economic Growth, Delhi
SMITA MISRA
Affiliation:
World Bank, New Delhi, India Office
BADAL MUKHERJI
Affiliation:
Delhi School of Economics, Delhi University, Delhi
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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.

Keywords

water pollution abatement activityabatement cost functionpollution load reduction
Type
Research Article
Information
Environment and Development Economics , Volume 6 , Issue 1 , February 2001 , pp. 103 - 122
Copyright
© 2001 Cambridge University Press

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Footnotes

Valuable comments received from Professor K.L. Krishna and two anonymous referees of the journal on an earlier version of the paper are gratefully acknowledged.