Department Environmental Social Sciences
Understanding the demand for carbon-neutral products and services
The main idea of the project is to investigate the private provision of a global public good - carbon-neutral products and services - in the context of combating climate change. The research questions that will be addressed in this project are:
- Which are the main drivers of consumers’ decisions to purchase a carbon-neutral product or service?
- Are people willing to pay more for carbon-neutral products?
- Do customers reward climate-friendly businesses?
- Can randomized controlled trials inform about the degree of hypothetical bias in discrete choice experiments?
Emerging voluntary carbon markets, such as carbon offset programs, are becoming increasingly widespread and important, which resulted in a record-high of 42.8 MtCO2e sequestered or avoided in 2018. By purchasing voluntary carbon offsets, one pays for compensating the carbon emissions caused by own consumption or production activities through projects that aim at reducing these emissions. The own activities are hence rendered ‘carbon neutral’. A more recent phenomenon is that companies aim to become carbon neutral. While “green marketing” has existed for a while now, carbon neutrality is taking the concept to the next level.
This project aims to study the demand, preferences, and willingness to pay for carbon-neutral products and services. That is, this project will investigate to what extent consumers reward companies’ green actions and whether any strategies can be used to make such actions more salient. The effect of using multiple product labels, carbon neutrality being one of them, will be examined. Hence, our goal is to provide both lessons to policymakers and practitioners on low-cost strategies to increase the adoption of green behaviors as well as methodological insights on overlapping product features. The project relies on two different methods for collecting empirical data: an online survey including a discrete choice experiment and a randomized controlled trial. As new product lines enter the market and carbon-neutral products become more and more popular, hedonic methods could also be used as they are based on the observed market behavior.
