Essays on environmentally friendly behaviour and environmental policy

Abstract

The thesis consists of three chapters of self-contained studies. In Chapter 1, I examine the decision of individuals to secure the provision of an environmental service under a Psychological Games framework. Since environmental services are considered public goods, there is an ongoing depletion of natural resources. While standard economic theory predicts the introduction of a PES is supposed to correct the associated externality by establishing a market which offers a monetary compensation to owners of vital natural resources as a recognition of their effort in providing the environmental services, this chapter argues such intervention might backfire: a motivation crowding-out arises if individuals believe others reciprocate friendly behaviour solely to receive the monetary compensation, ultimately decreasing total environmental protection. Even if environmental protection does take place, the motivation of individuals to secure the provision of the environmental service becomes commodified by the PES. Finally, awarding the PES only to a subset of individuals will also have negative effects on environmental protection, since those not receiving the PES will not want to do for free something that others are being paid to do. Environmental policy implications of this economic instrument are further discussed. In Chapter 2, a sample of the World Values Survey dataset is analyzed to show there are substantial behavioural differences between immigrants and native-born regarding pro-environmental action. In particular, while neither native-born nor immigrants are more willing to sacrifice money to save the environment, immigrants actually engage more on activities like choosing products that are better for the environment, recycling, and reducing water consumption. The engagement in proenvironmental behaviour of immigrants is region-specific and depends on their source region. Moreover, such relatively higher actual engagement in environmentally friendly behaviours can be explained by their high socio-economic status and their high education level, i.e. “selective immigration”. When the behaviour of immigrants by their length of residence in the host country is analyzed, no differences in proenvironmental attitudes or pro-environmental behaviour are found, a result which suggests they do not develop a “sense of belongingness” to the host country. Finally, in line with the standard finding in the literature of acculturation in environmental behaviour, this chapter finds that immigrants conform through time to some of the proenvironmental actions of native-born. In Chapter 3, I investigate the indirect effects on norm activation produced by monetary environmental policy instruments which introduce a situational cue that fosters a change of identity among individuals with potential negative consequences on their pro-environmental behaviour. For that purpose, a two-period identity selection model based on self-verification theory is developed. In each period there are two types of selves an individual can adopt: selfish and pro-environmental. The process of identity selection is driven by the desire of individuals to be consistent across the two periods in order to avoid social disapproval due to self-change. Results show that the monetary environmental policy introduces an asymmetry in the identity selection process that produces a failure of norm activation: while selfish agents preserve their selfish identity after the policy is implemented, pro-environmental agents might change their identity despite they experience social disapproval due to a reduction in the cognitive benefits of keeping such identity produced by the monetary component of the policy. Implications for environmental policy design are discussed