would increase the price of red meat by 1, 2 or 5 euro per kg.” They are given similar data for energy usage in their homes, fuel for their cars, and airline ticket prices. Each respondent is randomly assigned one of the three price variables and a variable indicating if the charge was voluntary or obligatory. Voluntary meant there was a conventional substitute available at the current price; obligatory meant there was no substitute. The results we analysed showed that for ecologically-friendly meat and energy, those willing to pay more in the voluntary category were in the majority up to the highest price increase, showing a willingness to pay a premium up to a point. However, for fuel and flights, most respondents were unwilling to pay the premium across all the price variables. The proportion of people willing to pay extra for fuel showed particularly minor variation across the different price increases. As prices increase for meat, electricity and air travel, our results indicate individuals were less willing to purchase or consume them. Respondents were indifferent to price hikes on fuel for car travel, however, possibly because prices are highly inelastic in any case, and alternatives to car travel often lack the convenience. This suggests that mitigating the environmental impact of car travel may have to come from other factors. For example, increasing the accessibility and viability of alternatives such as electric cars, through schemes such as the UK’s Plug-in Car subsidy payments of up to £3,000 for consumers buying an electric vehicle, which saw a growth in the market. A COMPLICATED ISSUE One way to encourage consumers to engage in environment-conscious purchases would be through a ‘carbon tax’, increasing prices of products with a higher environmental impact. Imposing a tax on the consumption of meat, air travel or household energy, for example, targets not only those keen to take measures to protect the environment, but also those who will reduce their demand to save money – for them, environmental benefits are a positive by-product. However, many governments worldwide have implemented some form of carbon tax, and the overall impact has been modest. Consumer budget constraints play a significant role in the purchase of green products, as many of them are expensive. It is possible that people on lower incomes have strong preferences towards green goods, but cannot afford to purchase them, and therefore choose the standard alternative. In turn, consumption taxes tend to be regressive and have potentially dangerous welfare repercussions, disproportionately impacting low-income individuals. This is problematic, as our results show it is higher-income earners who have a far greater impact on the environment. Instead, targeted policies, such as a carbon tax aimed at high-income individuals, would be needed. TARGETING THE RIGHT PEOPLE These findings have important implications for policy-makers, as interventions to reduce individual environmental impact can be more effective if they are tailored to diverse groups in society. Policy changes that increase the price of goods might motivate people to commit to more ecologically responsible consumption practices, as paying higher prices is less attractive. That people were willing to pay a price premium for sustainably produced meat and household energy presents policy implications for those products. Persuasion campaigns might be a promising avenue, as they demonstrate a positive voluntary response, and they might be particularly successful when targeted at higher-income homes with the means to switch to green energy. There is no blanket solution, but our results show where taxation, price increases or premiums might work to make a real difference. FIFTY FOUR DEGREES | 13 Dr Anita Schiller is a Lecturer in Economics, whose research interests include the impacts of natural hazards on societies, the effects of renewable and nonrenewable energy policies on local economies, and environmental economics. Professor Dakshina De Silva works in the Department of Economics, specialising in Industrial Organisation, Environmental and Natural Resource Economics, Regional and Urban Economics, and Applied Microeconomics. This article is based on Ecological footprint and willingness to pay for green goods: Evidence from the Netherlands, by Professor Dakshina De Silva and Dr Anita Schiller, of Lancaster University Management School; Tiffany Head, a BSc and MSc Economics graduate at Lancaster University, now an Economic Analyst at London Economics; and Professor Rachel Pownall, of Maastricht University. anita.schiller@lancaster.ac.uk; d.desilva@lancaster.ac.uk
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