Particulate matter is, Michael Greenstone argues, the greatest public health threat on the planet. Worse than HIV, cigarettes, and alcohol. The average person  loses about two years of life expectancy to it. In India, the figure is three and a half years. The solution to this problem has been tested, and it works, at least in high-income countries.

Greenstone and his co-authors ran a randomised controlled trial in Surat, Gujarat: from 300 industrial plants, mostly making textiles, all burning coal, half were randomly assigned to a market where pollution permits could be bought and sold. The results: in the market, pollution fell 25%, compliance was near-perfect, and abatement costs dropped 12%. The cost-benefit ratio is as high as 200 to one. Many plants in the control group asked to be moved into the market.

The research behind this episode:

Greenstone, Michael, Rohini Pande, Nicholas Ryan, and Anant Sudarshan. 2025. “Can Pollution Markets Work in Developing Countries? Experimental Evidence from India.” Quarterly Journal of Economics 140 (2): 1003–1060. An ungated version is available as BFI Working Paper 2025-53