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Behavioral Environmental Economics: Promises and Challenges

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Abstract

Environmental issues provide a rich ground for identifying the existence and consequences of human limitations. In this paper, we present a growing literature lying at the interface between behavioral and environmental economics. This literature identifies alternative solutions to traditional economic instruments in environmental domains that often work imperfectly. But it also faces a set of challenges, including the difficulty of computing welfare effects, and the identification of a robust environmental policy based on context-dependent (socio-) psychological effects. We illustrate our critical discussion with two behavioral schemes that have been widely implemented: “green nudges” and “corporate environmental responsibility.”

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Acknowledgments

We thank Stefan Ambec, Ian Bateman, Denis Hilton, Janet Swim and Laurent Waroquier as well as two anonymous reviewers for comments and suggestions. This paper follows the David Pearce keynote lecture delivered by Rachel Croson at the European Association of Environmental and Resource Economists (EAERE) conference in June 2013 in Toulouse (see especially Sect. 2 on “green nudges”). It also uses some insights from the presentations and discussions at the “Behavioral Environmental Economics” workshop organized by Nicolas Treich at the Toulouse School of Economics in October 2012. Nicolas Treich acknowledges financial support from the ANR INCRESP project, the French Ministry of Environment and the Chair “Finance Durable et Investissement Responsable” (FDIR).

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  1. University of Texas at Arlington, Arlington, TX, USA

    Rachel Croson

  2. Toulouse School of Economics (LERNA, INRA), Toulouse, France

    Nicolas Treich

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  1. Rachel Croson
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Correspondence to Nicolas Treich.

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Croson, R., Treich, N. Behavioral Environmental Economics: Promises and Challenges. Environ Resource Econ 58, 335–351 (2014). https://doi.org/10.1007/s10640-014-9783-y

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