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Towards an Emissions Trading Scheme for Air Pollutants in India

Esther Duflo, Michael Greenstone, Rohini Pande and Nicholas Ryan

Discussion Paper, Ministry of Environment and Forest, Government of India, 2010

Esther Duflo, Michael Greenstone, Rohini Pande and Nicholas Ryan, Discussion Paper, Ministry of Environment and Forest, Government of India, 2010

Emissions trading schemes have great potential to lower pollution while minimizing compliance costs for firms in many areas now subject to traditional command-and-control regulation. This paper connects experience with emissions trading, from programs like the U.S. Acid Rain program, to lessons for implementation of a Trading Pilot Scheme in India. This experience suggests that four areas are especially important for successful implementation of an emissions trading scheme: setting the cap, allocating permits, monitoring and compliance. The introduction of emissions trading would position India as a clear leader in environmental regulation amongst emerging economies.

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