Enhancing carbon emissions mitigation through behavioral insights: some Thoughts from the Carbon Forum North America 2017
When on Wednesday evening I left the Carbon Forum North America (CFNA) I felt a rare sense of hope and intellectual excitement. It was not only the inspiring commitment of many political and business leaders to meaningfully tackle carbon emissions or the shared agreement displayed in many panels on the way forward. There was a belief that despite the results achieved in many businesses, national and subnational realities, there is a lot more that can be done if we use the right key(s). The type of keys I am looking at are behavioral ones.
Behavioral insights are nowadays widely implemented by business and public authorities to nudge decision-making in various directions. Listening to some of the debates at CFNA reinforced my belief in the potential of a behavioral approach to climate change mitigation. Many panelists highlighted challenges in implementing green policies. For instance, the panel on internal carbon pricing stressed that successful implementation in large corporations would often require obtaining support from senior management. It was suggested that this support could be incentivized by linking management bonuses to the carbon emissions of their unit. Behavioral studies suggest a simple way to improve the effectiveness of this measure: paying bonuses upfront and take them away if the target is not achieved. The upfront payment is likely to change managers’ perception of the failure to meet the target from a decrease in future gains to an increase in future losses. Since “losses loom larger than gains”, this relatively simple strategy could significantly enhance managers’ motivation to implement internal carbon pricing.
Similarly, panelists stressed that governance structures may sometimes require large support to impose new taxes and it is not necessarily a trivial endeavor to find consensus between political forces on the preferable way forward. In this case, citizens’ support can be a crucial determinant of success. Behavioral studies suggest that green campaigns can have spillover effects on the support for subsequent low carbon policies. The strength of the spillover may depend on the framing of the issue. For instance, a campaign could stress either the monetary savings for the consumers or the environmental benefits of a behavior (e.g. reduce energy consumption). Research indicates that depending on which of these elements is made more salient in the campaign, the support for a subsequent green policy may improve.
The panel on aviation and offsets also offered some thoughts on the potential for the application of behavioral insights to carbon emissions mitigation. A panelist stressed the crucial role of consumers in stimulating the creation and expansion of offsets markets. Here a simple and cost-effective precaution could be included to increase the demand for offsets. For instance, behavioral studies suggest that setting the offset purchase as the default option might significantly help in this endeavor.
These are just some examples of the number of the potential behaviorally informed strategies that could be implemented to enhance the effectiveness and speedup the implementation of climate change mitigation policies. It is important to stress that the effectiveness of many behavioral strategies is sometimes dependent on context and therefore, in line with the approach of the Paris Agreement, there is not necessarily one size fits all. Yet, a behavioral approach would expand the set of keys available to the war on carbon and unchain its true potential.
Goran Dominioni conducts research in the fields of behavioral law and economics and carbon pricing at Erasmus University Rotterdam and Cornell Law School. His research has been presented and published in leading academic outlets and was awarded three prizes from the MIT Climate CoLab. He is also an Associate Member of Transatlantic Maritime Emission Research Network and has conducted research for the Carbon Pricing Leadership Coalition.