Bhagirath Behera and V.Ratna Reddy: 'Killing Fields': Life Savers And Externalities (A Study of the Impact of Industrial pollution on Rural Communities in A.P). June, 2001

This paper attempts to study the environmental impact of water pollution on the rural communities in general and on agricultural production, human health, and livestock in particular. Direct approaches such as contingent valuation method (CVM) and indirect methods such as Effect on Production (EOP), Replacement Costs (RC), and Human capital (HC) approaches were used to estimate the damages and losses (crops, agricultural equipment and health). The study is based on primary data collected from 50 households inhabiting a village affected by industrial pollution.

It is estimated that the average annual loss to a household is about Rs. 36000, including agriculture, human health and livestock, due to pollution. The effluents from the industries that produce some of the life-saving drugs have rendered the surrounding villages into virtual killing fields. Croplands have become barren, and people are suffering from pollution - related diseases with livestock dying apart from contracting other illnesses. Occurrence of environmental externalities can mainly be attributed to three important failures i.e., market failure, policy failure and institutional failure (Working paper No. 40).