Externalities of Agricultural Fires for Economic Productivity

Agricultural fires that burn crop stubble, are a substantial source of air pollution in developing countries across Asia, Africa, and South America. According to the World Health Organization (WHO), pollution from such fires kills 7 million people a year including 650,000 children (UNEP, 2021). Black carbon, a by-product of such fires, is a short-lived climate pollutant whose impact on climate is 450-1500 times higher than carbon dioxide (UNEP, 2021). As a result, these fires exacerbate the already pressing climate change effects experienced by the developing world. Health and human capital consequences of agricultural fires have been established in various parts of the world. The air pollution resulting from agricultural fires can affect businesses through various channels. However, there is no causal evidence of the impact. We aim to fill this gap by studying agricultural fires in Punjab, India, one of the most polluting hotspots of agricultural fires in the world.

The focus of our research is the institute’s priority area of environmental pollution and health cross-cutting with climate resilience. We aim to examine if the health of workers in factories is affected by the air pollution caused by agricultural fires. This can impact the aggregate productivity of the industrial sector. For developing countries, manufacturing productivity is a major propeller of economic growth. Hence, it is crucial to determine the cost of agricultural fires for manufacturing productivity. From a policy perspective, it is imperative to know the external costs experienced by regions that do not benefit from burning the stubble in order to conduct a cost-benefit analysis. The findings of our study can help inform policy decisions to regulate these fires.