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The primary aim of this reference volume is to provide an accessible and comprehensive review of current methods used to address resource evaluation and environmental as well as climate issues, and in a manner easily understood by decision-makers and the non-economists interested in environmental policy matters. Theoretical insight and empirical observations from various countries will be presented and recommendations on sustainable environmental decision-making will be given. Natural resource managers, environmental and climate decision-makers, government policy makers, and economics scholars will all find this volume to be an essential reference.



1. Energy Efficiency Gap in Switzerland: An Empirical Study on Online Purchases of White Goods

An energy efficiency gap implies that purchases of more energy-efficient equipment result in monetary (and energy) savings. This chapter analyzes the energy efficiency gap for white goods in Switzerland. Hereby, it takes advantage of the unique characteristics of “twin” products – i.e., two products sharing identical characteristics except for their energy efficiency and their purchase price. The energy efficiency gap requires two conditions to be met: First, the energy-efficient twin has to have a lower present value of total costs than its inefficient counterpart, and second, the inefficient twin has to be purchased nonetheless. In an empirical analysis of the Swiss online market for twin white goods, this chapter illustrates cases meeting both conditions for different discount rates. Based on these cases, the size of the respective energy efficiency gap is calculated. The energy efficiency gap is measured by the relative difference between the mean annual electricity consumption of the products actually purchased and the mean annual electricity consumption of products hypothetically purchased by fully rational economic agents. It seems that for reasonable discount rates the energy efficiency gap is rather small. One key reason seems to be the generally high purchase price premium of energy-efficient appliances.
Marcel Stadelmann

2. Behavioral Spillovers in Environmental Behavior

Domains, Links, and Economic and Psychological Factors
Favorable environmental behavior in daily life can make a substantial contribution in tackling current environmental challenges. For understanding and influencing environmental behavior, knowledge on behavioral spillovers is crucial: How does one beneficial act affect subsequent environmental behavior? Recent studies on behavioral spillovers observed two opposing phenomena: Moral consistency describes a gratifying effect where people’s subsequent behavior is improved due to a first favorable action. Moral self-licensing depicts people’s tendency for adverse conduct subsequent to a beneficial initial behavior. Two questions are pertinent: (1) Which environmental behaviors are linked and could be prone to spillover effects? (2) Which economic and psychological factors might moderate whether moral consistency or moral self-licensing is more likely to occur? In a first study, we administer a survey with a representative sample of the Swiss population and investigate correlations among a range of environmental behaviors that extends the scope of previous studies. We identify four clusters of environmental behavior that are strongly connected to each other. A second study employs an online experiment that tests proposed moderators of moral consistency and moral self-licensing effects. We find that none of the examined moderators is capable of triggering moral self-licensing in the realm of environmental behavior. However, our evidence shows that generally more closely related behaviors are more susceptible to behavioral spillovers as compared to distantly related behaviors.
Jan Portmann, Claus Ghesla, Renate Schubert

3. Predictors of Environmental Behaviour

The Role of Value Orientations, Environmental Concern, and Beliefs in Singapore
In this study, we examine the relationships between 3 value orientations (egoistic, altruistic, and biospheric), environmental concern, and a set of 9 everyday environmental behaviours among a sample of 146 individuals living in Singapore. Specifically, we explore if greater environmental concerns and stronger biospheric value orientation predict environmental behaviours, and if so, which types of environmental behaviours give the best prediction. We find that some of the environmental behaviours (turning the TV off standby mode, purchasing products with less packaging, choosing to use public transport whenever possible, and choosing to walk or cycle for short journeys when possible) are predicted by the extent that individuals internalize a sense of responsibility for the potential impact that their actions might have on the environment. However, we find limited “spillover” from the conduct of one environmental behaviour to another. Nevertheless, we identify a group of environmental behaviours that were least conducted by individuals in our Singapore sample (purchasing products with less packaging and choosing to purchase products made of recycled paper whenever possible) that would be prone to be targeted in future interventions and initiatives.
Samuel Chng, Natalia Borzino

4. Using Incentives and Social Information to Promote Energy Conservation Behavior

Field Experiment
Improving the efficiency in the domestic energy consumption has become a showpiece of how behavioral economics can be applied to the field of environmental economics. This study builds upon the literature by providing subjects with individual and social energy performance information at group level in a controlled field experiment setting. We aim to test whether extrinsic incentives accentuate or crowd out the intrinsic motivation to save energy and how heterogeneity in environmental attitudes also impacts on electricity conservation. Besides, we test for the persistence of energy-saving habits after the information is removed. Results suggest that the provision of individual feedback and social information increase energy conserving behavior, with this being most effective among those who signaled in a previous stage preferences for pro-environmental and sustainable living. However, treatment variations indicate that subjects overall fail to maintain “good habits” once the intervention stops, with exception of pro-environmental subjects who continue to consume less electricity in the post-intervention phase. Furthermore, our findings indicate that rewarding groups in a competitive environment may create perverse long-run effects. While providing individual and social information could improve both consumer welfare and energy demand forecasting, the timescale, frequency, and mechanism undertaken require careful scrutiny and planning if these potential benefits are to be maximized and undesirable side effects prevented.
Mike Brock, Natalia Borzino

5. Environmental Decision Making in Small Companies: A Behavioral Economics Perspective

Small and medium-sized enterprises (SMEs) are often considered the backbone of the economy. Indeed, in most economies around the world, SMEs are the largest group of companies, and they are responsible for a substantial share of economic output and resource use. Sustainability-related decisions and the environmental management in SMEs are thus key factors to consider in order to increase the environmental sustainability in an economy. However, SMEs often do not have the capabilities and the knowledge that would be required to implement best practices in environmental management. Moreover, because of their smaller size, behavioral motivations and “biases” in decision making may be more important in SMEs than in larger companies. Such factors might be relevant for the effectiveness of public policy measures directed at SMEs, and they make SMEs potential targets for policy instruments from the behavioral economics toolkit, such as “nudges” or other measures. This chapter focuses on three elements of behavioral motivations and decision making that are relevant for SMEs – social preferences, present bias, and loss aversion – and discusses how they can affect environmental management and sustainability-related decisions in SMEs. The chapter finally considers to what extent behavioral economics approaches could be helpful for fostering more sustainable management practices in SMEs by addressing these behavioral elements of decision making in SMEs.
Manuel Grieder, Deborah Kistler, Jan Schmitz

6. Valuing the Environment for Public Policies

The provision of environmental goods and services often requires public intervention. In adopting the appropriate public policies, one begins with weighing society’s degree of preference for the environment vis-à-vis other goods and services by attributing monetary values to the nonmarket goods. The value measure serves to inform policy making and thereby justify the allocation of limited resources among competing uses. This chapter provides an overview of economic valuation methods for environmental goods with examples of policy applications. Valuation methods include demand and nondemand curve approaches, including the dose-response method, contingent valuation method, and hedonic pricing. The chapter further discusses the damage schedules approach and benefits transfer in cases where conventional valuation methods are less suitable.
Euston Quah, Tsiat Siong Tan

7. Applied General Equilibrium in Environmental Decision-Making

This chapter documents and reviews studies in environmental decision-making in the framework of the applied general equilibrium analysis. The applied general equilibrium has been widely used in the research of environmental decision-making, such as the evaluation of the welfare change and the corresponding cost incurred by the environmental regulations, or the assessment of the emissions trading schemes adopted within a region that contains multiple countries and multiple sectors. The applied general equilibrium analysis has been extended to international trade to explore how to set a border tax on imported goods or to provide subsidies on exported goods in an environmental regulation setting. Linking the applied general equilibrium methodologies to the popular research topics in environmental decision-making and the corresponding regulation tools together, this chapter presents a critical review of the literature in the areas of applied general equilibrium and environmental decision-making for the past ten years. Out of 243 studies screened from keywords search, 104 studies were selected for review. Neither empirical studies nor studies with a theoretical game framework were selected for review. This chapter presents a review of studies in terms of the employed methodologies by three dimensions – the functional type, the time horizon, and the model randomness. It also presents discussions of studies by research topics and environmental policy instruments that were chosen and analyzed. It concludes with suggesting potential research areas in the future.
Di Yin, Youngho Chang

8. Environmental Policy and Sustainable Growth in Japan

This chapter assesses the current decarbonization policies in Japan. As with other environmental policies, its decarbonization policies have been characterized by its voluntary approach, avoiding heavy-handed regulations to control greenhouse gas (GHG) emissions directly. The policies present a long-term vision to achieve an aggressive numerical target built on Japan’s high level of energy-saving technologies. However, they are still halfway without clear focus defined in short-term actions. Hence, we highlight the importance of taking a clear stance in designing the future direction toward decarbonization. In particular, there is much more room for the Japanese government to strengthen its voluntary approach by providing large-scale back-end support for Japanese firms’ voluntary commitment toward decarbonization, which has recently spurred with increasing pressure from institutional investors.
Go Tamakoshi, Shigeyuki Hamori

9. Eco-civilization and Sustainable Development: The Case of China’s Countryside

Green development, one of the five development philosophies of “innovation, coordination, green, openness and sharing” raised by Chinese president Xi Jinping, has been officially issued as a political resolution by the Chinese central government. This is the principle that China follows in its development, and it is also the hope of China’s development. The ideology of green development has become the popular creed in China, and the goal of ecological civilization is also increasingly close to China’s social reality. Green development has been defined and positioned as the green development concept and philosophy in China, but it is not only just a concept or philosophy of development but has been fully integrated into economic and social development. Across China, from the local to the national level, the whole country has been working hard in the experimentation of the green production and green living, exploring the sustainable development. In many places, Chinese have paved out their paths of eco-friendly and sustainable development in line with local characteristics. The eco-friendly and sustainable development has become the path of high-quality growth for China.
Zhikai Wang, Chong He, Simin Zhang

10. Energy Sustainability Policies in Malaysia: Addressing Energy Efficiency and Environmental Greening

This chapter seeks to analyze government policies launched to promote environmental sustainability in Malaysia. Critical theoretical arguments filled up the environment literature over the years. Energy sustainability and greening policies are explored followed by sources of energy consumption in the country. Then, the impact of the energy policies against their desired policy objectives is screened critically.
Santha Chenayah, Rajah Rasiah

11. Sustainable Development for Vietnam’s Economy in the Context of Globalization and Industrial Revolution 4.0

Since the Doi Moi comprehensive economic reforms in 1986, the normalization of diplomacy with the US, and accession to the world trade organization, Vietnam has successfully achieved several great socio-economic achievements. To transform entirely into a higher-income nation with inclusive and sustainable growth, Vietnam needs to promptly seize precious opportunities and take measures to mitigate possible risks and challenges in the context of globalization and the fourth industrial revolution. This research posed four significant risks that Vietnam certainly confronts in the next stage of development, including (1) heavy dependence on international trade and the FDI sector, (2) out of global value chain, (3) facing with cybersecurity and privacy, and (4) redundancy of low-skilled labor. Accordingly, the authors propose a sustainable development model involving three main aspects: economic – social – environmental, corresponding to the digital economy, green economy, and human resource development.
Dong Phong Nguyen, Xuan Vinh Vo, Van Chien Nguyen, Xuan Duc Mai, Quoc Khanh Duong

12. Singapore’s Energy Sustainability Policies

Balance Between Market and Government
This chapter discusses and evaluates Singapore’s energy sustainability policies. We begin by describing what sustainability means in the context of energy policy. We then provide a critical evaluation of Singapore’s existing policies as it relates to energy sustainability, covering a wide range of policies including the recently introduced carbon tax and incentives for the development of electric vehicles as well as the more well-established policies targeting energy efficiency improvements and enhancing energy security.
Tilak K. Doshi, Nahim B. Zahur

13. Promoting Electricity Conservation in Singapore

Interventions based on social norms are used in Singapore to promote electricity conservation. However, evidence on the role that social norms play in driving electricity saving behavior in Singapore is largely missing. With a survey on 365 Singaporean citizens and permanent residents, this study investigates whether social norms are strong predictors of electricity saving behavior or if other constructs such as personal norms or habit are more relevant. We also test how individuals respond to changes in social norms over time with the use of short fictional stories (vignettes). Results indicate that habit is the strongest driver of electricity saving behavior, while the effect of social norms is rather weak. However, we find that when individuals experience a change in social norms over time, their behavior is significantly affected. These findings suggest that providing information on the historical trajectory of the norm may increase the effectiveness of norm-based interventions to promote electricity conservation.
Martina Cecchini

14. The Effects of Upward and Downward Social Comparisons on Energy Consumption Behavior

Evidence from a Field Study on Air-Conditioning Usage
This study aims to (1) disentangle the effects of upward and downward social comparisons on individual electricity consumption behavior and (2) figure out how these effects differ across individuals with heterogeneous electricity consumption. A field study on air-conditioning usage behavior of residents was conducted in a university dormitory. The dormitory residents were randomly allocated to the upward comparison and downward comparison treatment groups and the control group. Those in the treatment groups received weekly feedback about their own electricity consumption for air-conditioning and a distribution of all residents’ consumption, while those in the control group received no feedback. The feedback to the upward comparison (downward comparison) treatment group framed comparisons as upward (downward) by highlighting the proportion of residents who behaved in a more (less) desirable way, i.e., consumed less (more) electricity for air-conditioning than the feedback recipient. The results are twofold: (1) there were no statistically significant consumption differences between any of the treatment groups and the control group and (2) significantly lowered consumption was observed only among the subgroup of the upward comparison group residents whose electricity consumption for air-conditioning was in the lowest 20th percentile. Hence, the feedback had significant effects on certain subgroups of the residents, but no overall effect.
Lorenz Göette, Zhengyi Jiang, Jan Schmitz, Renate Schubert

15. Role of International Remittances as an Economic Instrument for Poverty Eradication in Line with Sustainable Development Goals

International remittances represent the most important source of external funding for developing countries. This chapter examines the impact of international remittances on poverty reduction, which is set as the first goal in the Sustainable Development Goals (SDGs) framework, using the panel data of 12 Asian developing countries. In terms of the dependent variables, this study picks up three poverty indicators: poverty headcount ratio, poverty gap ratio, and poverty severity ratio. The results show that international remittances have a statistically significant impact on reducing the poverty gap ratio and poverty severity ratio using the random-effect model of ordinary least squares (OLS) estimates. A 1% increase in international remittances as a percentage of GDP can lead to a 0.19% decline in the poverty headcount ratio, a 0.3% decline in the poverty gap ratio, and a 0.6% decline in the poverty severity ratio in sample 12 Asian developing countries from 1981 to 2018. Besides, the results indicate that trade openness can decrease poverty measures and that higher inflation rates may be one of the causes of poverty.
Farhad Taghizadeh-Hesary, Naoyuki Yoshino, Miyu Otsuka


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