year 2006–07. The output-pollution multiplier is shown in Table 3. Each cell entry
of Table 3 shows the direct, indirect and induced effect on generation of the pollutants due to exogenous injection to the production sectors. Higher the value of this
output-pollution multiplier implies larger the impact on pollution generation.
Therefore, the analysis of this output-pollution multiplier would help us to find out
the leading sectors of the economy which have highest impact on the environment.
According to the data presented in Table 3 we find that the values of
output-pollution multiplier for thermal electricity (NHY), cement (CEM) and iron
and steel (IRS) sectors are higher as compared to the other sectors of the Indian
economy. For example, let us describe the total (direct, indirect and induced) impact
of thermal electricity sector on the CO 2 generation. In case of thermal electricity
sector the output-pollution multiplier corresponding to CO 2 generation is 57.06 (see
Table 3). This implies that if the output of the thermal electricity sector is increased
by Rs. 1 lakh then the total CO 2 generation in the environment will be increased by
57.06 t.
Again, if we look at the direct pollution coefficients matrix, given in Table 2, we
can observe the direct impact of the production sectors on the environment. It has
been observed from Table 2 that the CO 2 generation is increased by 24.53 t directly
due to expansion of thermal electricity sector by Rs. 1 lakh. Now if we compare
this direct effect of the thermal electricity sector with its total effect, we find that the
extra 22.53 t of CO 2 generates indirectly in the environment if the thermal electricity sector’s output expands by Rs. 1 lakh. Hence, this is the indirect and induced
effect of thermal electricity sector on the environmental pollution.
On the other hand, the values of the direct pollution coefficients are very small
for the agricultural sectors of the Indian economy (see Table 2). This shows that the
direct effect of the agriculture sectors on the environment is negligible for each type
of pollutants. But it can be observed from the output-pollution multiplier matrix that
the total effect on NO x generation is significant in agriculture sector as compared to
the manufacturing sectors of the economy (see Table 3). This kind of result is
obtained due to indirect effect of agriculture sectors on the environment. Therefore,
it can be said that the sectors that have negligible direct impact may have significant
indirect effect on the environment. Therefore, in the above way the ESAM multiplier model helps us to analyse the total impact on energy use as well as on
environmental pollution.
This indirect effect on environmental pollution arises due to the backward and
forward linkage of the production sectors of the economy. Growth in a sector with
high backward linkage provides stimulus to other sectors by requiring more inputs,
whereas growth in a sector with high forward linkage stimulates higher outputs in
other sectors by providing more inputs to them. In case of Indian economy the
thermal electricity sector is a key source of the electric supply sector. The share of
thermal electricity sector in total electric supply is about 86 % in the year 2006–07
(Pal et al. 2015). So the other production sectors of the economy are strongly
dependent on the thermal electricity sector for their electricity requirement, and
hence the thermal electricity sector has a high forward linkage. As there is high
forward linkage, the expansion of thermal electricity sector will lead to expand the
The Conflict Between Economy and Environment …
213
of Table 3 shows the direct, indirect and induced effect on generation of the pollutants due to exogenous injection to the production sectors. Higher the value of this
output-pollution multiplier implies larger the impact on pollution generation.
Therefore, the analysis of this output-pollution multiplier would help us to find out
the leading sectors of the economy which have highest impact on the environment.
According to the data presented in Table 3 we find that the values of
output-pollution multiplier for thermal electricity (NHY), cement (CEM) and iron
and steel (IRS) sectors are higher as compared to the other sectors of the Indian
economy. For example, let us describe the total (direct, indirect and induced) impact
of thermal electricity sector on the CO 2 generation. In case of thermal electricity
sector the output-pollution multiplier corresponding to CO 2 generation is 57.06 (see
Table 3). This implies that if the output of the thermal electricity sector is increased
by Rs. 1 lakh then the total CO 2 generation in the environment will be increased by
57.06 t.
Again, if we look at the direct pollution coefficients matrix, given in Table 2, we
can observe the direct impact of the production sectors on the environment. It has
been observed from Table 2 that the CO 2 generation is increased by 24.53 t directly
due to expansion of thermal electricity sector by Rs. 1 lakh. Now if we compare
this direct effect of the thermal electricity sector with its total effect, we find that the
extra 22.53 t of CO 2 generates indirectly in the environment if the thermal electricity sector’s output expands by Rs. 1 lakh. Hence, this is the indirect and induced
effect of thermal electricity sector on the environmental pollution.
On the other hand, the values of the direct pollution coefficients are very small
for the agricultural sectors of the Indian economy (see Table 2). This shows that the
direct effect of the agriculture sectors on the environment is negligible for each type
of pollutants. But it can be observed from the output-pollution multiplier matrix that
the total effect on NO x generation is significant in agriculture sector as compared to
the manufacturing sectors of the economy (see Table 3). This kind of result is
obtained due to indirect effect of agriculture sectors on the environment. Therefore,
it can be said that the sectors that have negligible direct impact may have significant
indirect effect on the environment. Therefore, in the above way the ESAM multiplier model helps us to analyse the total impact on energy use as well as on
environmental pollution.
This indirect effect on environmental pollution arises due to the backward and
forward linkage of the production sectors of the economy. Growth in a sector with
high backward linkage provides stimulus to other sectors by requiring more inputs,
whereas growth in a sector with high forward linkage stimulates higher outputs in
other sectors by providing more inputs to them. In case of Indian economy the
thermal electricity sector is a key source of the electric supply sector. The share of
thermal electricity sector in total electric supply is about 86 % in the year 2006–07
(Pal et al. 2015). So the other production sectors of the economy are strongly
dependent on the thermal electricity sector for their electricity requirement, and
hence the thermal electricity sector has a high forward linkage. As there is high
forward linkage, the expansion of thermal electricity sector will lead to expand the
The Conflict Between Economy and Environment …
213