Adding fuel to fire? Social spillovers in the adoption of LPG in India

In many developing countries, many households, especially in rural areas, are still heavily reliant on solid biomass as a cooking fuel, despite its negative health and environmental implications. Liquefied petroleum gas (LPG) is a clean alternative, but its higher cost implies that its use is often limited to the richer, urban areas of a country. This paper focuses on the Indian context and investigates, over a relatively long time-frame, whether social spillover effects might have played a role in a household's decision to use LPG, and how these effects varied across different sub-populations. Using data from several waves of the National Sample Survey (NSS), the recent ACCESS survey, and the India Human Development Survey (IHDS), this paper provides multiple strands of evidence that, taken jointly, suggest that positive social spillovers are present. Spillovers are also found to be stronger for households that belong to social networks, than for households that do not belong to any network. Our results provide partial evidence on convergence in LPG use rates across subgroups of the Indian population, and have strong implications for policy-makers around the world who could leverage lessons from social learning to encourage consumers to switch to cleaner sources of energy

Effectiveness, Earmarking, and Labeling: Testing the Acceptability of Carbon Taxes with Survey Data

This paper analyzes the drivers of carbon taxes acceptability with survey data and a randomized labeling treatment. Based on a sample of more than 300individuals, it assesses the effect on acceptability of specific policy designs and individuals’ perceptions of carbon taxes advantages and disadvantages. We find that the lack of perception of primary and ancillary benefits is one of the main barriers to the acceptability of carbon taxes. In addition, policy design matters for acceptability and in particular earmarking fiscal revenues for environmental purposes can lead to larger support. We also find an effect of labeling, comparing the wording ‘‘climate contribution’’ with ‘‘carbon tax’’. We argue that proper policy design coupled with effective communication on the effects of carbon taxes may lead to a substantial improvement in acceptability

How Green Are Green Economists?

This paper analyzes the decision of “green” economists to participate in the carbon offset market, and how this decision is related with the views that these experts hold on offsets. It also compares the preferences of economists with those of the general public, as emphasized in the literature. The paper exploits a unique dataset examining the decision to purchase carbon offsets at two academic conferences in environmental and ecological economics. We find that having the conference expenses covered by one\u27s institution increases the likelihood of offsetting, but practical and ethical reservations as well as personal characteristics and preferences also play an important role. We focus on the effect of objecting to the use of offsets and discuss the implications for practitioners and policy-makers. Based on our findings, we suggest that ecological and environmental economists should be more involved in the design and use of carbon offsets

Managing Momentum in Climate Negotiations

The Conference of the Parties (COP) has proven a valuable outlet to advance the climate agenda. The combination of high media coverage, extremely high expectations set by influential environmentalists, and unanimity rules has, however, started to limit its effectiveness. Technical issues can legitimately require years to be addressed. Delays on such issues should not lead society to ignore progress in other areas. If anything, defining expectations based on technical issues creates more incentives for unwilling countries to delay action and spread pessimism. The coronavirus is bad news for climate action, but also provides opportunities. The absence of a session of the COP in 2020 gives negotiators additional time to address technical issues behind the scenes, including through club approaches. Virtual forums can be used to increase interactions, also involving top diplomats. The extra time also allows global leaders and influential environmentalists to improve their communication strategies, increasing ambition while effectively managing momentum

Think locally, act globally

Individuals follow local social norms in adopting climate-friendly behaviour, write Stefano Carattini and Alessandro Tavon

Carbon Taxes and Stranded Assets: Evidence from Washington State

The climate challenge requires ambitious climate policy. A sudden increase in carbon prices can lead to major shocks to the stock market. Some assets will lose part of their value, others all of it, and hence become “stranded”. If the markets are not ready to absorb the shock, a financial crisis could follow. How well investors anticipate, and thus how large these shocks may be, is an empirical question. We analyze stock market reactions to the rejection of two carbon tax initiatives by voters in Washington state. We build proper counterfactuals for Washington state firms and find that these modest policy proposals with limited jurisdiction caused substantial readjustments on the stock market, especially for carbon-intensive stocks. Our results reinforce concerns about “stranded assets” and the risk of financial contagion. Our policy implications support the inclusion of transition risks in macroprudential policymaking and carbon disclosure and climate stress tests as the main policy responses

People first resist but later tend to embrace garbage taxes

Taxing trash bags reduces unsorted waste by 40%, argue Stefano Carattini, Andrea Baranzini and Rafael Laliv

Observing the unobservable: a field experiment on early adopters of a climate-friendly behavior

Encouraging rapid and widespread adoption of non-normative climate-friendly behaviors represents a crucial challenge for practitioners and policymakers alike, and a new frontier in the transition to a greener economy. Yet, several such behaviors are unobservable and undertaken privately. We devise a novel approach that makes household renewable energy use visible to peers through yard signs and window clings, thus creating social rewards for early adopters and sending a signal within their communities. We implement a field experiment comprising over 20,000 customers of a renewable energy utility in the United Kingdom and find that a significant proportion are intrinsically motivated to put their invisible climate-friendly behavior on display. Indeed, participation and display are identical across treatments with and without a financial incentive

Designing Effective and Acceptable Road Pricing Schemes: Evidence from the Geneva Congestion Charge

While instruments to price congestion exist since the 1970s, less than a dozen cities around the world have a cordon or zone pricing scheme. Geneva, Switzerland, may be soon joining them. This paper builds on a detailed review of the existing schemes to identify a set of plausible design options for the Geneva congestion charge. In turn, it analyzes their acceptability, leveraging a large survey of residents of both Geneva and the surrounding areas of Switzerland and France. Our original approach combines a discrete choice experiment with randomized informational treatments. We consider an extensive set of attributes, such as perimeter, price and price modulation, use of revenues, and exemption levels and beneficiaries. The informational treatments address potential biased beliefs concerning the charge’s expected effects on congestion and pollution. We find that public support depends crucially on the policy design. We identify an important demand for exemptions, which, albeit frequently used in the design of environmental taxation, is underexplored in the analysis of public support. This demand for exemptions is not motivated by efficiency reasons. It comes mostly by local residents, for local residents. Further, people show a marked preference for constant prices, even if efficiency would point to dynamic pricing based on external costs. Hence, we highlight a clear trade-off between efficiency and acceptability. However, we also show, causally, that this gap can in part be closed, with information provision. Analyzing heterogeneity, we show that preferences vary substantially with where people live and how they commute. Even so, we identify several designs that reach majority support

Is Taxing Waste a Waste of Time? Evidence from a Supreme Court Decision

Environmental taxes are often underexploited. This paper analyses the effectiveness of a garbage tax, assessing its effects on multiple outcomes as well as its acceptability. We study how a Supreme Court decision, mandating the Swiss Canton of Vaud to implement a tax on garbage, affects garbage production and beliefs about the tax. We adopt a difference-in-differences approach exploiting that parts of Vaud already implemented a garbage tax before the mandate. Pricing garbage by the bag (PGB) is highly effective, reducing unsorted garbage by 40%, increasing recycling of aluminium and organic waste, without causing negative spillovers on adjacent regions. The effects of PGB seem very persistent over time. Our assessment of PGB looks very favourable. It may surprise that PGB is not implemented more often. Hence, we look at people\u27s perceptions. We find that people are very concerned with PGB ex ante. Public opposition seems to be the main obstacle to PGB. However, implementing PGB reduces concerns with effectiveness and fairness substantially. After implementing PGB, people accept 70% higher garbage taxes compared to before PGB. We argue that environmental taxes could be much more diffused, if people had the chance to experience their functioning and correct their belief