Studying the impacts of the Montreal protocol: a case study of manufacturing firms in India
Student name: Ms Shikha Bali
Guide: Dr Seema Sangita
Year of completion: 2017
Host Organisation: Centre for WTO Studies- IIFT, New Delhi
Supervisor (Host Organisation): Dr Murali Kallummal
Abstract: In most countries, environmental regulations are increasingly being used for the purpose of pollution abatement. The critics of such regulations argue that although the aforementioned mitigate the harm caused to human health and the environment, they negatively influence certain agents in the economy.
More specifically, the producers whose economic activities pollute the environment. This study attempts to empirically test the aforementioned claim in the context of the Montreal Protocol. The Protocol is a Multilateral Environmental Agreement that was implemented to protect the Ozone layer by phasing out the use of Ozone Depleting Substances(ODS).
In order to meet these ODS phase out targets, MOEF implemented the Ozone Depleting Substances regulations in the year 2000. The regulations imposed many restrictions on manufacturing firms in India. Certain firms, were granted financial assistance under the Protocol to meet these regulatory compliance costs and certain firms were not.
This study attempts to estimate the influence that such divisive assistance could have had on the TFP growth of manufacturing firms in India. In order to do the same, a two-part methodology is adopted. The first part uses Data Envelopment Analysis to estimate the TFP growth of the firms in the sample. The second part makes use of panel data regression techniques to estimate the influence of the assistance on TFP growth.
We conclude that in the Indian scenario, firms that were granted financial assistance in order to transition to Non-ODS substitutes and technologies, seem to have performed better in terms of TFP growth than the firms who were not given such assistance. We further conclude that in order to meet the largescale phase out targets of the Protocol, undue precedence seems to have been given to large firms. This skewed compensation of regulatory compliance expenditures, seems to have come at the cost of the TFP growth, of the smaller firms in the industry.
Keywords:- Montreal Protocol ,ODS Phase Out Targets , Multilateral Fund ,DEA , TFP Growth
