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The progressive deterioration of air quality during winters due to smog in Delhi and other parts of the northern belt has become extremely common. According to official statements and literature, one of the major culprits is ‘crop residue burning’ in the states of Punjab, Haryana, and parts of Western Uttar Pradesh (Pillai & Rambani, 2016). Crop Residue Burning (especially paddy straw burning) is an old age practice of burning the leftover straw of the harvested crop lying on the surface of the soil. Several bans and numerous alternatives have been provided by the State and the Central governments to tackle this problem, but the problem is still prevalent. Although there are a variety of alternatives to paddy straw burning, these are not economically feasible to farmers. There are numerous costs associated with each option that abstain farmers from using them despite environmental and health benefits. Hence, this research argues that an effective way to incentivize the farmers in changing their preference against burning the crop residue is through payment mechanisms by the government. The objective of the study is to suggest different options of paddy straw management to the government incorporating farmers’ opinions from the state of Punjab. It also aims to calculate the monetary incentives in these options of government intervention. The study argues that suggested monetary incentives can curb the problem and alleviate the environmental and health concerns associated with paddy straw burning. The study also recommends that the government and farmers need to understand the environmental concerns associated with economically profitable crops like paddy and wheat, and farmers should gradually shift from the present cropping pattern towards diversification with support from government intervention.
