Chatterjee, S., Dhavala K. K. & Murty M.

N (2007) Estimating Cost of Air Pollution Abatement

for Road Transport in India: Case Studies of Andhra Pradesh and Himachal Pradesh.
Economic and Political Weekly, 42, 3662-3668. Retrieved from http://www.jstor.org/
This paper provides some methods of estimation of physical and monetary accounts of air
pollution from road transport. Using data from secondary sources and a vehicular survey,
estimates of annual air pollution abatement cost for vehicles complying with Euro norms are
made for the road transport sector in Andhra Pradesh and Himachal Prades.
Two methods are used to develop the monetary accounts of air pollution. In one method,
the annual cost of air pollution abatement for a vehicle is estimated by annualising the
incremental capital cost of changing the technology and the additional cost for using fuels
compatible with the new technology. The estimates of capital cost of air pollution abatement of
different vehicles complying with Euro norms given by TERI and SIAM studies could be used to
estimate the per vehicle annual cost of air pollution abatement from the change in vehicular
technology. Estimation of the second component of air pollution abatement cost of a vehicle - the
cost of improving the fuel quality compatible with Euro norms - requires data on the incremental
production cost of improving the quality of fuels, distance travelled by the vehicle per liter of
fuel, and the distance travelled by the vehicle per day.
Another method uses the hedonic travel cost method for estimating the annual cost of air
pollution abatement for each type of vehicle. The survey of vehicles conducted in Shimla covers
a sample of 700 vehicles pertaining to different vehicle categories. Information has been
obtained on the per day distance travelled by the vehicles, model and age of the vehicle,
characteristic features such as the size of the vehicle, type of fuel used, mileage, cost related
information such as fuel cost, maintenance cost and insurance cost, and purchase and current
price of the vehicle. The hedonic travel cost function which is a function of various
characteristics of the vehicle: size of vehicle, distance travelled per day, and the emission
coefficients is estimated for the passenger cars. Using the estimated hedonic cost functions, the
annual abatement cost of vehicular pollution can be calculated for CO2, NOX, and HC.
The estimates of air pollution abatement cost of road transport required for complying
with Euro III norms constitute 2.13 and 2.16 per cent of the state domestic product in Andhra
Pradesh and Himachal Pradesh respectively. Similar estimates for complying with Euro II norms
are obtained as 0.578 and 0.76 per cent.