The Economic Cost of Air Pollution Due to Stubble Burning : Evidence from Delhi

Stubble burning in North India has been a major contributing factor to the growing menace of air pollution in the National Capital Region of India for the last two decades. Though the environmental and health aspects of air pollution due to stubble burning have been studied, its economic costs have not been studied much. We attempt to estimate these costs using Instrumental Variable (IV) Analysis. Using VIIRS Data from NASA, we count the number of field fires per day in Punjab and Haryana during the September-December harvesting season. We use FIRECOUNT as the IV to estimate the concentration of PM2.5 and PM10 due to stubble burning. This is then regressed against the Gross State Domestic Product (GSDP) of New Delhi to identify the effect of increase in PM2.5 or PM10 on the GSDP of New Delhi. We find that field fires in North India contribute significantly to PM2.5 and PM10 concentration in New Delhi, and that increase in PM2.5 by 100 per cent causes the GSDP of New Delhi to decrease by approximately 1 per cent. This has strong policy implications for lawmakers in New Delhi