In India, much of the population breathes air that is 10 times more polluted than what the World Health Organization considers safe. In a study released in the Quarterly Journal of Economics, Yale economists Rohini Pande, Nicholas Ryan, and co-authors examine a cap-and-trade market for particulate pollution and find that it dramatically cut emissions, and at a lower cost to industry than traditional regulations.

The researchers worked with the Indian state of Gujarat to launch and evaluate in Surat, a city of 15 million people, the world’s first market for particulate matter emissions. The policy required industrial plants to install pollution monitors and to trade emissions permits to keep the total combined emissions under a predetermined level.

The plants that participated in the market reduced particulate emissions by 20 to 30% overall, relative to plants that did not participate, the researchers found. And it cost participating plants 11% less, on average, to abate emissions than plants operating under the traditional regulations.