Julia Blasch

Context effects and heterogeneity in voluntary carbon offsetting – a choice experiment in Switzerland

Voluntary carbon offsets allow individuals to neutralise the CO emissions from their consumption. In a choice experiment among more than a thousand Swiss consumers, we analyse how the propensity to offset varies with consumption contexts and offset project attributes. The adopted latent class model accounts for heterogeneity in consumers’ preferences and in their motivations to buy carbon offsets. We find that consumers are not only responsive to project type and quality aspects – such as government certification – but also to the consumption context. Our results suggest that carbon offsets are perceived as differentiated rather than homogeneous goods. Estimating a single willingness to pay measure for offsets, as previous studies have done, may thus be misleading. To complement our analysis, we provide a characterisation of offset customers as well as insights into the relationship between carbon offsetting and other voluntary mitigation behaviour.

Environmental Protection, Energy Policy and Poverty Reduction – Synergies of an Integrated Approach

This paper describes the mechanisms that link poverty reduction with climate and energy policy. First, there is a brief analysis of the relationship between ongoing climate change, energy use and poverty. This analysis is followed by an overview of different policy options that have the potential to fight poverty while simultaneously limiting global warming and environmental degradation. Mitigating climate change, transforming the energy systems in developing countries and financing adaptation to climate change are pointed out as central policy fields governments and developing agencies should focus on. Furthermore, one can argue that new technologies to increase energy efficiency and the dissemination of renewable energy systems have an especially strong impact on poverty. Access to clean and cost-efficient energy has a direct effect on the income generation potentials of the poor. Finally, this paper identifies appropriate financing mechanisms to implement the aforementioned strategies.

Retail demand for voluntary carbon offsets – a choice experiment among Swiss consumers

Using a choice experiment conducted among more than a thousand Swiss consumers, we analyze the individual demand for voluntary carbon offsets in different contexts. The analysis is used to identify the consumers’ underlying motives for offsetting emissions, the context effects on their willingness to pay and the influence of the offsetting project characteristics on their propensity for contribution. Furthermore, the characteristics of potential buyers as well as the possibilities of behavioral rebound are explored. To support our results, we assess whether the hypothetical preferences are consistent with the revealed behavior. The adopted latent class model accounts for heterogeneity of preferences with respect to offset products offered in the market. The results provide a quantitative assessment of consumers’ marginal valuation of carbon offsets and a better understanding of individual preferences. The results also point to strong heterogeneity among individuals favoring targeted policy measures to induce voluntary contribution.

Boundedly rational consumers, energy and investment literacy, and the display of information on household appliances

It is an ongoing debate how to increase the adoption of energy-efficient light bulbs and household appliances in the presence of the so-called ’energy efficiency gap’. One measure to support consumers’ decision-making towards the purchase of more efficient appliances is the display of energy-related information in the form of energy-efficiency labels on electric consumer products. Another measure is to educate the consumers in order to increase their level of energy and investment literacy. Thus, two questions arise when it comes to the display of energy-related information on appliances: (1) What kind of information should be displayed to enable consumers to make rational and efficient choices? (2) What abilities and prior knowledge do consumers need to have to be able to process this information? In this paper, using a series of recursive bivariate probit models and three samples of 583, 877 and 1, 375 Swiss households from three major Swiss urban areas, we show how displaying information on the future energy consumption of electrical appliances in monetary terms, i.e. as an estimate of yearly energy cost (CHF) rather than in physical units (kWh), increases the probability that an individual performs an investment analysis and hence chooses the most (cost-)efficient appliance. In addition, our econometric results suggest that individuals with a higher level of energy and, in particular, investment literacy are more likely to perform an optimization rather than relying on a decision-making heuristic and are more likely to identify the most (cost-)efficient appliance.

Emission budget approaches for burden sharing: some thoughts from an environmental economics point of view

In this paper, we examine budget approaches as a device for burden sharing in mitigating climate change. The purpose of this comment is twofold: First, we provide an overview over the general concept of budget approaches and investigate into the role of such approaches within the current climate negotiations. Second, as these approaches have an obvious normative dimension, we discuss some of the issues raised by Schuppert and Seidel (2015) in this Special Issue from the stance of an environmental economist. We highlight that budget approaches may serve as a tool to communicate the urgency of action against climate change and to remind representatives from industrialized countries of their responsibility in the historical sense as well as in terms of ability-to-pay. This even holds when the allocation of national emission shares is based on relatively easy-to-calculate sharing rules that can potentially serve as normative heuristics.

Environmental art, prior knowledge about climate change, and carbon offsets

Using a contingent choice survey of US citizens, we investigate the influence of environmental art on individual willingness to purchase voluntary carbon offsets. In a split-sample experiment, we compare the stated preferences of survey respondents in two different treatment groups to the preferences of a control group. One treatment group is shown photographs that illustrate the impacts of climate change; the other is shown animated images that illustrate wind speeds and patterns for extreme weather events. While individuals seeing the photographs show a higher willingness to purchase voluntary offset than the control group, respondents seeing the animated images seem less willing to buy offsets. This result remains stable when accounting for preference heterogeneity related to prior knowledge about climate change issues. We hypothesize that the differential impacts of the two kinds of artistic images are due to a combination of factors influencing individual choices: emotional effect, cognitive interest, and preferences for the prevention of specific climate change impacts, as well as, more generally, internalized and social norms for the mitigation of climate change.

Narrowing the energy efficiency gap: The impact of educational programs, online support tools and energy-related investment literacy

There is evidence that many individuals make sub-optimal investment decisions when the benefits and costs associated with that decision are distributed over time. One example is the decision to adopt new electrical appliances, with the benefits of choosing a more energy efficient device materializing only in the future. This paper analyses the impact of the level of an individual’s energy-related investment literacy on the adoption of energy-efficient appliances. Moreover, the empirical analysis explores the impact of decision support tools such as educational slides on the probability that individuals identify the appliance with the lowest lifetime cost, which is ideally also the most energy-efficient appliance. To test the influence of these decision support tools, we developed an online randomized controlled trial and implemented it on two independently chosen samples of the Swiss population. One treatment offers a short education program on how to calculate the lifetime cost of an appliance – via a set of information slides. The second intervention provides access to an online calculator that supports the investment decision-making of the individual. Results across the two samples are encouraging. We find that i) pre-treatment energy and investment literacy positively impact on the probability of identifying the appliance with the lowest lifetime cost; ii) the reinforcement of energy-related investment literacy increases the rate at which individuals identify the appliance with the lowest lifetime cost; and iii) while both interventions are effective in increasing the chances that an appliance with the lower lifetime cost is chosen, the online calculator turned out to be more effective than the educational program. Public policy implications are discussed.

The role of energy and investment literacy for residential electricity demand and end-use efficiency

This paper estimates the level of transient and persistent efficiency in the use of electricity in Swiss households using the generalized true random effects model (GTREM). A panel dataset of 1,994 Swiss households from 2010 to 2014 collected via a household survey is used to estimate an electricity demand frontier function. We further investigate whether energy and investment literacy have an influence on the household electricity consumption. The results show significant inefficiencies in the use of electricity among Swiss households, both transient (11%) and persistent (22%). We note that the high persistent inefficiency is indicative of structural problems faced by households and systematic behavioral shortcomings in residential electricity consumption. These results indicate a considerable potential for electricity savings and thus reaching the reduction targets defined by the Swiss federal council as part of the Energy Strategy 2050, wherein end-use efficiency improvement is one of the main pillars. The results support a positive role of energy and, in particular, investment literacy in reducing household electricity consumption. Policies targeting an improvement of these attributes could help to improve efficiency in the use of energy within households.