Willingness to Pay for Voluntary Climate Action and Its Determinants: Field-Experimental Evidence

The determinants of individual, voluntary climate action (VCA) in combating climate change and its potential scale are frequently debated in public but largely underresearched. We provide estimates of the willingness to individually reduce EU greenhouse gas emissions by one ton, using the European Union Emissions Trading Scheme. Estimates are derived from an online field experiment with a large, highly heterogenous, and Internet-representative sample of voting-aged Germans. Jointly estimating willingness to pay (WTP), non-indifference to VCA, and prior knowledge, we uncover important determinants of preferences for VCA, such as education, the information structure among the population, and exogenous environmental conditions.     

The Biodiversity Bargaining Problem

We employ cooperative bargaining theory and Nash’s ‘rational threats’ idea to cast light on the biodiversity bargaining problem. The problem of global environmental negotiations is argued to be of the nature of a bargaining problem, in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier. We discuss the importance of both efficiency (bargaining frontier) and fairness (recognition of characteristics of bargainers) in the choice of the appropriate contract. We show that the incremental cost contract, used to resolve the biodiversity bargaining problem, is of the form of an extreme point contract that fails to recognise the contributions of the South to the production of cooperative surplus. A rational response to such a contract is the use of threats of biodiversity destruction. Contracts must evince both efficiency and fairness in order to represent lasting solutions.     

Environmental quality and welfare effects of improving the reporting capability of citizen monitoring schemes

Public participation in environmental monitoring to alert regulators to possible non-compliance events has been credited with improving environmental quality and regulatory efficiency. At the same time, the reporting capability of such citizen monitoring schemes is known to be limited due to technical and organizational deficiencies. Recent enthusiasm for outside interventions that address these deficiencies in order to lower environmental harm and raise overall welfare therefore seems justified. A game-theoretic analysis of a monitoring and enforcement regime with citizen monitoring shows, however, that the effects of such interventions are likely to be subtle. A higher reporting capability of citizens involves substitution effects that have ambiguous effects on the regulator??s monitoring and enforcement costs: Welfare can actually decline and environmental improvements will fall short of expectations. In an extreme scenario we show that improved citizen monitoring can even have adverse effects on environmental quality.     

The warnings puzzle: an upstream explanation

Enforcement agencies issuing warnings are an empirical regularity in the enforcement of laws and regulations, but a challenge to the standard economic theory of public enforcement. A number of recent contributions explain the popularity of warnings as a response to information asymmetries between regulator and regulatee. We offer a distinct, but complementary explanation: Warnings can serve as a signaling device in the interaction between the enforcement agency and its budget-setting authority. By using costly warnings for minor offenses that would otherwise not be pursued, the agency can generate observable activity to escape budget cuts in subsequent periods. We show in a stylized model that warnings may indeed occur in an equilibrium of a game in which warnings are entirely unproductive in the agency-regulatee interaction, and thereby derive a testable hypothesis on regulatory agency behavior.     

The Intergenerational Transfer of Solar Radiation Management Capabilities and Atmospheric Carbon Stocks

Solar radiation management (SRM) technologies are considered one of the likeliest forms of geoengineering. If developed, a future generation could deploy them to limit the damages caused by the atmospheric carbon stock inherited from the current generation, despite their negative side effects. Should the current generation develop these geoengineering capabilities for a future generation? And how would a decision to develop SRM impact on the current generation’s abatement efforts? Natural scientists, ethicists, and other scholars argue that future generations could be more sanguine about the side effects of SRM deployment than the current generation. In this paper, we add economic rigor to this important debate on the intergenerational transfer of technological capabilities and pollution stocks. We identify three conjectures that constitute potentially rational courses of action for current society, including a ban on the development of SRM. However, the same premises that underpin these conjectures also allow for a novel possibility: If the development of SRM capabilities is sufficiently cheap, the current generation may for reasons of intergenerational strategy decide not just to develop SRM technologies, but also to abate more than in the absence of SRM.     

The Social Value of Biodiversity for R&D

The value of genetic resources for use in research and development (R&D)activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search. Here we develop a moregeneralised framework in which genetic resources are used in R&D at thebase of an industry that addresses recurring problems of resistance, as inthe pharmaceutical or plant breeding industries. The R&D process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction (Schumpeterian competition) andadaptive destruction (natural selection and adaptation). This frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena. We then demonstrate the important differences between firm-based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation. There are six externalitiesin private patent-based genetic resource valuation, and five of theseindicate that private valuations will under-estimate social values.     

The Climate Policy Hold‐Up: Green Technologies,Intellectual Property Rights,and the Abatement Incentives of International Agreements

The success of global climate policies over the coming decades depends on the diffusion of “green” technologies. Using a simple model, we highlight a conflict between international environmental agreements (IEAs) on emissions reductions and international systems of intellectual property rights (IPRs) on abatement technologies. When IPRs are strong and global, IEA signatories anticipate rent extraction by innovators. This hold‐up effect reduces abatement, potentially to levels below those of non‐signatories, and it reduces the number of signatories to self‐enforcing IEAs. We explore policy options that respect existing property rights, but avoid the strategic interaction between signatories to an IEA and innovators.     

Instrument Choice and Motivation: Evidence from a Climate Change Experiment

Are prices or quantities the best regulatory instrument to align private actions with public interests in the presence of externalities? We add another dimension to this ongoing debate by experimentally analyzing the interaction between instrument choice and intrinsic motivation of regulated agents. The response of subjects facing a trade-off between real CO₂ emissions and private monetary payoffs to both a price and a quantity instrument are tested. We find evidence that taxes crowd out intrinsic motivation while emission standards are neutral. Crowding is short term persistent and not well explained by established cognitive theories of motivational crowding.     

Giving is a Question of Time: Response Times and Contributions to an Environmental Public Good

Does it matter whether contribution decisions regarding environmental public goods are arrived at through intuition or reflection? Experimental research in behavioral economics has recently adopted dual-system theories of the mind from psychology in order to address this question. This research uses response time data in public good games to distinguish between the two distinct cognitive processes. We extend this literature towards environmental public goods by analyzing response time data from an online experiment in which over 3400 subjects from the general population faced a dichotomous choice between receiving a monetary payment or contributing to climate change mitigation efforts. Our evidence confirms a strong positive link between response times and contributions: The average response time of contributors is 40 % higher than that of non-contributors. This suggests that reflection, not intuition, is at the root of pro-environmental contributions. This result is robust to a comprehensive set of robustness checks, including a within-subjects analysis that controls for potentially unobserved confounds and recovers the relationship at the individual level.