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.

Grün aus der Krise – Was können «grüne» Konjunkturpakete leisten?

Global Green Recovery, Economic Stimulus Package, Job Creation, Cliamte Change

Risk reduction in compulsory disaster insurance:Experimental evidence on moral hazard and financial incentives

In a world in which economic losses due to natural disasters are set to increase, it is essential to study risk reduction strategies, including individual homeowner investments in damage-reducing (mitigation) measures. In this lab experiment (N = 357), we investigated the effects of different financial incentives, probability levels, and deductibles on self-insurance investments in a natural disaster insurance market with compulsory coverage. In particular, we examined how these investments are jointly influenced by financial incentives, such as insurance, premium discounts, and mitigation loans. We also studied the influence of behavioral characteristics, including individual time and risk preferences. We found that investments increase when the expected value of the damage increases (i.e., higher deductibles, higher probabilities). Moral hazard is found in the high-probability (15%) scenarios, but not in the low-probability (3%) scenarios. This suggests that moral hazard is less of an issue in an insurance market where probabilities are low. Our results demonstrate that a premium discount can increase investment in damage-reduction, as can a policyholder‘s risk aversion, perceived efficacy of protective measures, and worry about flooding

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

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

Behavioral motivations for self-insurance under different disaster risk insurance schemes

This paper presents a lab-in-the-field experiment with 2111 Dutch homeowners in floodplain areas to examine the impacts of financial incentives and behavioral motivations for self-insurance under different flood insurance schemes. We experimentally varied the insurance type (mandatory public versus voluntary private) and the availability of a premium discount incentive for investing in flood damage mitigation measures. This set-up allowed us to examine the existence of moral hazard, advantageous selection and the behavioral motivations of individual agents who face these different insurance types, without the selection bias that makes a causal inference from survey studies problematic. The main results show that a premium discount can increase investments in self-insurance under both private and public insurance. Moreover, we find no support for moral hazard in our natural disaster insurance market, but we do find a substantial share of cautious people who invest both in private insurance as well as in self-insurance, indicating advantageous selection. The results have implications for the design of insurance schemes to cope with increasing natural disaster risks

A new approach to explain farmers’ adoption of climate change mitigation measures

The determinants of farmers’ decisions to reduce greenhouse gas (GHG) emissions are currently not well understood. This study takes several new angles in investigating farmers’ climate change mitigation behaviour. Based on two identical surveys among representative samples of Dutch farmers, this study examines the underlying determinants and motivating factors for three different types of climate change mitigation measures on farms: energy saving, the production of renewable energy and reduction of emissions of methane and nitrous oxide (non-CO2 emissions). Furthermore, the study explores whether farmers’ awareness and behaviour has been influenced by a communication campaign carried out by the government of the Netherlands between 2012 and 2015. Four major conclusions emerge. Firstly, the analyses demonstrate that accounting for the cost-effectiveness and technology readiness level (TRL) of different types of climate change mitigation measures provides for a better understanding of the factors that motivate farmers to adopt these measures. Secondly, neither the willingness to take GHG reduction measures nor knowledge on GHG emissions are consistent motivating factors for energy-related measures. Thirdly, it seems that external factors, such as economic hardship, dominate the overall environmental awareness of farmers. Fourthly, the farmer’s propensity to innovate proved to be the strongest and most consistent predictor of both the willingness and the actual adoption of climate change mitigation technologies. Therefore, focusing on making farmers more open to change and general innovation in campaigns in the agricultural sector might be more effective than campaigns focusing specifically on climate change mitigation

Empower the consumer! : energy-related financial literacy and its implications for economic decision making

Untapped energy savings potential in the residential sector might lead to substantial welfare losses. While several studies have focused on the role of behavioral biases in explaining the lack of adoption of energy-efficient durable goods, little is known about the role of limited energy-specific knowledge and financial literacy. In this paper, we propose an integrated concept of ‘energy-related financial literacy’, which combines both energy cost-specific knowledge and skills needed to process this information. Using data from a large household survey in three European countries, we explore the determinants of different measures of literacy and, most importantly, we provide empirical evidence on the association between limited knowledge and skills to perform an intertemporal optimization and the adoption of energy-efficient light bulbs. Our findings support the promotion of energy-specific financial education programs and tools to increase the adoption of energy-efficient durable goods

Theoretical framework focusing on learning in polycentric settings

This deliverable provides the theoretical underpinning of the NEWCOMERS project, including the key concepts and definitions as well as the formulation of research propositions in order to enhance the project’s coherence. To this end, it develops a novel theoretical framework based on polycentric governance theory, combined with elements from socio-technical systems theory, social innovationtheory, and value theory in order to facilitate the analysis of the emergence and diffusion of new clean energy communities and explore opportunities for learning in different national and local polycentric settings.The deliverable is structured as follows. Chapter 2 provides the background of the NEWCOMERS project and introduces the theoretical perspectives that will be used in the analyses, including polycentric governance theory, socio-technical systems theory, and social innovation theory. Chapter 3 explores the concept of clean energy communities and develops a definition of new clean energycommunities to be used in the project. Chapter 4 provides a state-of-the-art account of current thinking about polycentric governance and identifies the main themes of polycentric governance theory that are relevant for studying new clean energy communities. Chapter 5 summarises the set of research propositions to be tested in the NEWCOMERS project