The Economic Benefits versus Environmental Costs of India's Coal Fired Power Plants

57 Pages Posted: 19 Nov 2018

See all articles by Geoffrey Barrows

Geoffrey Barrows

University of California, Berkeley - Department of Agricultural and Resource Economics

Teevrat Garg

School of Global Policy and Strategy, UCSD

Akshaya Jha

Carnegie Mellon University

Date Written: November 9, 2018

Abstract

Developing countries characterized by increasing electricity demand face a dilemma: fossil-fuel fired electricity production is cheap and reliable yet has substantial environmental consequences. This paper uses a difference-in-differences framework to quantify the economic costs versus environmental benefits of increases in coal-fired capacity on locations close to versus far away from power plants in India. Within this framework, we show that increases in coal-fired capacity result in sizable increases in air pollution and infant mortality. In contrast, coal-fired capacity increases have small, statistically insignificant impacts on local economic benefits, measured using data on district-level GDP as well as output, wages, and employment in the manufacturing and agricultural sectors. Combined, our results indicate that the environmental costs of coal-fired power plants vary substantially over space while the economic benefits associated with these plants are distributed equally across the state. This suggests that new coal-fired power plants should primarily be sited based on environmental costs.

Keywords: Coal, Electricity, India, Developing Countries, Environmental Costs, Air Pollution, Infant Mortality, Economic Benefits, Power Plant Siting

JEL Classification: I15, Q51, Q56, Q48

Suggested Citation

Barrows, Geoffrey and Garg, Teevrat and Jha, Akshaya, The Economic Benefits versus Environmental Costs of India's Coal Fired Power Plants (November 9, 2018). Available at SSRN: https://ssrn.com/abstract=3281904 or http://dx.doi.org/10.2139/ssrn.3281904

Geoffrey Barrows

University of California, Berkeley - Department of Agricultural and Resource Economics ( email )

207 Giannini Hall
University of California
Berkeley, CA 94720
United States

HOME PAGE: http://sites.google.com/site/geoffreybarrows/

Teevrat Garg (Contact Author)

School of Global Policy and Strategy, UCSD ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States

Akshaya Jha

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

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