Greenhouse gases, emission taxes, emission indices and their mechanisms with special reference to rice cultivation in India

Emitters of GHGs do not face full cost insinuations of their actions. Rice cultivation is a source of externality in the form of methane and nitrous oxide emissions. Price internalization of this externality was done by taxing emissions at carbon prices. Emission indices were obtained calculating emission coefficients to address the intensity of emissions in different regions. Emission taxes negatively impacted rice supply function and led to increase in its prices both at market prices and shadow prices of carbon. Emission taxes being components of cost of cultivation result in price variations. To minimize the impact of emission taxes producers can be motivated to adopt alternative cultivation practices that reduce GHG emission.