Shreekant Gupta

Do stock markets penalize environment-unfriendly behaviour? Evidence from India

A growing body of research points to the fact that capital markets react to environmental news and thus create incentives for pollution control in both developed and emerging market economies. In this paper we conduct an event study to examine the impact of environmental rating of large pulp and paper, auto and chlor alkali firms on their stock prices. We find that the market generally penalizes environmentally un-friendly behaviour in that announcement of weak environmental performance by firms leads to negative abnormal returns of up to 43 percent. A positive correlation is found between abnormal returns to a firms stock and the level of its environmental performance. These findings should be viewed as further evidence of the important role that capital markets could play in environmental management, particularly in developing countries where environmental monitoring and enforcement are weak.

Poverty and the Environment: Exploring the Relationship Between Household Incomes, Private Assets, and Natural Assets

This paper develops an analytical framework to examine how rural households in developing countries derive income from common-pool natural resource stocks. The focus is on how three types of private assets—land, livestock, and human capital—and one household characteristic—its size—interact with the natural assets to form the basis of household livelihood strategies. Predictions of the model are tested using purpose-collected data from rural households in Jhabua, India. Implications of our results for the potential of improved natural resource management to alleviate poverty are discussed.

Paying for Permanence: An Economic Analysis of EPA's Cleanup Decisions at Superfund Sites

We analyze EPAs cleanup decisions at over 100 Superfund sites and examine whether and how EPA trades off the cost against the permanence of cleanup. EPAs decisions reveal both a preference for permanent solutions and an aversion to cost. For example, EPA prefers incinerating soils to isolating and containing them in place, but not at any price. At larger sites EPA appears willing to accept additional costs of as much as

India's Firewood Crisis Re-Examined

40 million to incinerate. With regard to environmental equity, we find little evidence that EPAs cost-permanence tradeoff is affected by socioeconomic characteristics in the communities surrounding the sites.

Impact of Climate Change on the Indian Economy: Evidence from Foodgrain Yields

Households in rural India are highly dependent on firewood as their main source of energy, partly because non-biofuels tend to be expensive. The prevailing view is therefore that, when faced with shortages of firewood in the village commons, such households, and especially the women in them, have to spend more and more time searching for firewood and eventually settle for poorer-quality biomass such as twigs, branches and dry leaves. Using data from a random sample of rural households in the Indian state of Madhya Pradesh, we come to very different conclusions, however. We find that households in villages with degraded forests do not spend longer hours searching for firewood, but instead switch to either using firewood from private trees or to using agricultural waste for fuel. In the long run, moreover, households respond to the firewood shortage by altering the mix of private trees on their land in favor of firewood, as opposed to fruit, trees. We find also that, Joint Forest Management, a government program initiated in the 1990s, is having a positive impact on the firewood economy.

Environmental policies in Asia : perspectives from seven Asian countries

We analyse the effects of rainfall and temperature on yields of paddy and millets (pearl millet and sorghum) in India for the period 1966–1999, at the district level. Unlike other studies, we control for fertiliser use and irrigation. We find that paddy (Indias leading food crop) is sensitive to the climate variables but also to fertiliser use and irrigation. Millets are less affected by climate variables although sorghum shows some sensitivity to temperature. Our results have important implications for how Indias agriculture will adapt to climate change.

Resource Use Efficiency of U.S. Electricity Generating Plants During the SO2 Trading Regime: A Distance Function Approach

Environmental Policies in Asia highlights the environmental challenges Asian planners and policymakers face as the continent undergoes rapid economic growth in the 21st Century. Edited by Jing Huang and Shreekant Gupta, with contributions from leading Asian scholar practitioners, this timely and unique volume is the first of its kind to look at environmental policies and governance from the perspective of seven dynamic Asian countries. These include developed economies of Japan and Singapore, emerging giants such as China and India and rapidly developing nations such as Vietnam, Indonesia and Malaysia. The volume discusses environmental challenges that stem from issues as local as poor recycling practices, to ones that are as vast and complex as global climate change. Engaging, accessible, and pan-Asian in scope, the essays also present creative ways in which these challenges are being addressed. This book is valuable to anyone who is keen on understanding Asia, its growth, and whether its rise is environmentally sustainable.

Does Greater Autonomy Improve Performance? Evidence from Water Service Providers in Indian Cities

This paper measures resource use efficiency of electricity generating plants in the United States under the SO2 trading regime. Resource use efficiency is defined as the product of technical efficiency and environmental efficiency, where the latter is the ratio of good output (electricity) to bad output (SO2) with reference to the best practice firm, i.e., one that is producing an optimal mix of good and bad outputs. This concept of environmental efficiency is similar to that of output oriented allocative efficiency. Using output distance functions we compare three methods for the calculation of resource use efficiency, namely, stochastic frontier analysis (SFA), deterministic parametric programming and nonparametric linear programming. This paper reveals the strengths and weaknesses of these methods for estimating efficiency. Both SFA and linear programming approaches can estimate the efficiency scores. For plants in the dataset the overall geometric mean of the three methods for technical efficiency, environmental efficiency and resource use efficiency is 0.737, 0.335 and 0.248, respectively. The rank correlation coefficient between technical efficiency, environmental efficiency and resource use efficiency is 0.213, 0.617 and 0.877, respectively. The regression analyses of performance across plants shows units in phase I of the SO2 trading programme are negatively related to measures of economic and environmental performance. This suggests that the market for SO2 allowances, per se, may not be minimizing compliance cost. We also find that a decrease in SO2 emission rates not only increases environmental efficiency but also leads to an increase in resource use efficiency. This finding concurs with the hypothesis that enhancement in the environmental performance of a firm leads to an increase in its overall efficiency of resource use as well.

Poverty and resource dependence in rural India

We assess the efficiency of urban water supply in 27 Indian cities using data envelopment analysis (DEA). We also group cities by the management structure of their water utilities. Utilities with greater degree of functional autonomy perform better, supporting the hypothesis that more autonomy in management leads to better performance among water utilites. Our results also have implications for urban domestic water pricing--most of the utilities operate under decreasing returns to scale (DRS) implying water should be priced at marginal cost of supply.