Spatial Dispersion of Costs and Benefits of Power Plants in India
58 Pages Posted: 19 Nov 2018 Last revised: 22 May 2019
Date Written: May 21, 2019
Recent decades have witnessed staggering growth in coal-fired power plant capacity across much of the developing world. While energy supply is important for economic growth, the health costs and economic benefits of power provision may not be distributed equally across space in developing countries due to limited health services and electricity transmission infrastructure. This paper exploits temporal and geographic variation in the expansion of power plant capacity in India to test for spatial dispersion of health costs and economic benefits. We find that increases in coal-fired capacity increase both air pollution and infant mortality rates in districts near these plants relative to other districts in the same state. In contrast, we find no differential benefits from coal-fired power plants near versus far from plant sites as measured by district-level GDP as well as output, wages, and employment in the manufacturing and agricultural sectors. Combined, our results indicate that coal-fired power plants impose environmental costs on the districts where plants are built without providing local benefits in addition to those received by other districts in the same state. This spatial mismatch of local costs and benefits has implications for both power plant siting and the design of environmental policy.
Keywords: Coal, Electricity, India, Air Pollution, Infant Mortality, Economic Benefits, Spatial Externalities, Local versus Federal Regulation, Infrastructure
JEL Classification: I15, Q51, Q56, Q48
Suggested Citation: Suggested Citation