Sustainability Science Program

Governance Innovations

Governance Innovations for Sustainable Development

The Governance Innovations for Sustainable Development initiative examines how policy innovations in environmental regulation can allow for smart design of public policy that best supports growth and poverty reduction in low-income settings. The research umbrella was structured both to enable the launch of a large-scale field experiment on how a new emissions trading system (ETS) can lower abatement costs and air pollutant emissions in India, and support other innovative but early-stage projects on aspects of regulation. Our pilot of an ETS for particulate matter air pollutants in the leading industrial states of Gujarat, Maharashtra and Tamil Nadu specifically tests the viability and impact of a market-based instrument to support growth while achieving targets in emissions abatement for use in India and other developing countries. In the first stage of the ETS project, we will be testing the impact of continuous emissions monitoring systems (CEMS), a technology that allows for transparency of plants' pollutions levels and may lead to improved compliance among industries. The other governance innovations currently being tested under this initiative are: subsidies to encourage the use of modern fuel technologies, which have great health and environmental benefits over traditional fuels; a carbon tax, as applied to a typical electricity market, and whether and how this can make the market more competitive; certification programs, their ability to improve environmental standards, and whether consumers will pay higher prices for certified products; and the ability of energy audits and energy managers to increase industrial plant efficiency at low cost. In the coming year, we will place a special emphasis on supporting studies about how transparency initiatives and regulation interact. These studies include: an examination of private third-party industrial auditors in India who are paid by the firms they audit, and whether independence improves audit accuracy; sanitation audits and whether transparency of their results (to politicians and to the public) effects public service delivery in urban slums; and whether the delivery of household energy-use report cards cuts down on energy wastage among middle-class urban Indian homes. The work of the Governance Innovations for Sustainable Development initiative is being carried forward with a focus on India through the Governance Innovations for Sustainable Development: Building Public-Private Partnerships in India initiative.