How tangible environmental commitments spur cooperative behaviour in local and global dilemmas
Stefano Carattini, Simon A. Levin, Alessandro Tavoni 23 October 2019
Academics and policymakers have long debated the chances of seeing cooperation emerge in the climate commons. Nobel laureates Richard Thaler and Elinor Ostrom challenged, respectively, the commonly held views that cooperation cannot be achieved in public-good situations, or in the management of local, common, pooled resources (Dawes and Thaler 1988, Ostrom 1990, 2000). But climate change mitigation is a global public good. Can cooperative patterns emerge in the management of the climate commons? At what scale can cooperation be observed, and how can cooperative behaviour be encouraged?
Learning from the management of local dilemmas
Against conventional wisdom in economics, our recent research suggests that lessons from managing local commons may also apply to global dilemmas (Carattini et al. 2019). Standard theory predicts that in the climate commons, there should be little cooperation beyond what can be rationalised on the basis of the expected benefits from undertaking mitigation efforts. Our review of the evidence on the adoption of behaviours with implications for climate change mitigation suggests something different: that individuals are, to some extent, inclined to behave cooperatively in the face of this global dilemma. That is, individuals are more willing to cooperate than predicted when tackling climate change, and their individual behaviours may scale up to collective action and country commitments.
Local social norms drive climate-friendly behaviours
Evidence from solar panels, hybrid cars, energy conservation, and carbon offsets, among other examples, suggests that when people decide whether to adopt a climate-friendly behaviour, local social norms matter, despite the global public good property of climate change mitigation.
Because of their visibility, rooftop solar photovoltaic panels convey information about the behaviour of others in a given community. Empirical evidence of peer effects in the adoption of rooftop PV technology adoption has been identified in various contexts, including California, Connecticut, and Germany (Bollinger and Gillingham 2012, Graziano and Gillingham 2015, Rode and Weber 2016). Evidence from Switzerland shows that the most visible installations are the most ‘contagious’, leading to the highest rate of adoption by other neighbours (Baranzini et al. 2017). Hybrid cars provide further evidence of the role that visibility plays in determining peer effects in the adoption of green technologies. Peer effects drive the adoption of hybrid cars in California, but only for the Toyota Prius Hybrid and not, for instance, the Honda Civic Hybrid. While the Prius exists only in its hybrid form and is thus immediately identified as a ‘green’ car, the hybrid versions of the Civic look exactly like their non-hybrid versions (Narayanan and Nair 2013). This suggests that ‘going green’ leads to peer effects only when such behaviour is sufficiently visible.
But it is not only the visibility of people’s climate-friendly behaviour that increases the chances that others will adopt it, but whether that climate-friendly behaviour can be observed by others in a setting that reaps social rewards. For instance, in the US, states with a high share of Democratic-party voters are more likely to be socially rewarded for climate-friendly behaviour. Residents of these states are willing to pay a premium of up to $4200 to drive a Prius that signals their ‘greenness’ rather than another hybrid car with comparable characteristics but without the unique ‘green’ status (Sexton and Sexton 2014).
When behaviour is not visible, social interventions can foster visibility
In many cases, the norm is not directly visible but can be made visible through external intervention. An increasing number of studies have focused on information campaigns and social interventions aimed at influencing individuals’ perception of the social norm, especially when the social norm is sufficiently high (that is, when a given behaviour is relatively widespread). Descriptive norms (about what people do) have been increasingly combined with injunctive norms (about what people should do) in order to redirect citizens’ behaviour toward socially preferable alternatives. These interventions are effective at reducing energy consumption (Schultz et al. 2007, Allcott and Rogers 2014). The key driver for behavioural change is the information about the behaviour of others, the local social norm, and not learning about privately efficient behaviour. Indeed, when descriptive norms are not combined with injunctive norms, information about others’ behaviour can lead to more energy consumption for people who previously consumed below the norm.
Interventions can play a key role in facilitating behavioural change by increasing the visibility of otherwise invisible behaviours such as green energy adoption. Indeed, evidence points to a largely untapped potential for leveraging human proclivities for cooperation, which are typically observed in local commons, in order to contribute to the provision of the global public good of climate mitigation. Such interventions would not only make the social norm more salient, but also create social rewards for those individuals engaging in cooperative behaviour. However, social interventions that rely on descriptive norms may backfire if such behaviour is rarely adopted, as is the case with carbon offsets. Given the important ethical and practical drawbacks of deception, strategies need to be developed to kick-start and foster contagion even when the initial adoption level is low. This will require researchers and policymakers to find creative ways to adapt social interventions to leverage the example of early adopters (Spencer et al. 2019).
Beliefs and trust
In most cases, it remains particularly difficult to infer the extent to which others are cooperating. When the level of cooperation of others is uncertain, we can expect people to form beliefs about it and behave accordingly. In our review, we find that expectations about other people’s cooperative behaviour drives, for instance, demand for carbon offsets (Blasch and Farsi 2014, Schwirplies and Ziegler 2016). Furthermore, the empirical literature that we survey suggests that deep cultural traits of a society, such as trust and its culture of cooperation, are beneficial for tackling global dilemmas (Carattini et al. 2015, Volland 2017, Carattini and Jo 2018, Tam and Chan 2018). The challenge here is finding ways to increase trust. While cultural aspects of a society tend to be persistent, economists have suggested using education to spur civic spirit and increase cooperation (Tabellini 2008, Dixit and Levin 2017). But these are long-term investments, which themselves present a collective action problem. In the short run, interventions aimed at increasing the observability of cooperative behaviour may already contribute to building trust among relevant actors.
Theories of international environmental negotiations have recently started to consider elements such as reciprocity, domestic demand for climate policy, and other deviations from self-regarding preferences, as the latter do not manage to explain cooperative ‘anomalies’ such as the Paris Agreement (Marchiori et al. 2017, Nyborg 2017, Iris and Tavoni 2018, Iris et al. 2019). In our paper, we call for more research along these lines. In fact, in the spirit of Elinor Ostrom, we call for an “updated theory of international environmental negotiations”. While international climate negotiations may not provide a mass of observations, a set of stylized facts has started to emerge from anecdotal evidence.
In 2007, for instance, Norway announced that it was aiming to be carbon neutral by 2050, and called upon other developed countries to do the same. Recently, Norway increased its ambition by aiming for the same target by 2030. Finland followed suit, initially aiming to be carbon neutral by 2045, and later by 2035. Costa Rica aims to be the first country to do so. Sweden passed a law to become carbon neutral by 2045. Switzerland and the United Kingdom pledged carbon neutrality in the first semester of 2019, with a 2050 deadline. On 23 September 2019, 66 countries committed to achieving neutrality by 2050, along with many regions, cities, and businesses, as part of a process led by the United Nations. This process of ‘conditional cooperation’, initiated with strong commitments by ‘high-trust countries’, is similar to the pledge and review process that led to broad membership in the Paris Agreement. Along the same lines, Ireland announced a carbon tax earlier this year, stating that it would be ready to increase the tax rate up to €80 per ton of CO2 (the upper-bound estimate in the Stern-Stiglitz High-Level Commission on Carbon Prices for a global carbon price), thereby meeting the goals of the Paris Agreement (Stiglitz et al. 2017). When Germany announced its carbon trading scheme on 20 September 2019 (for sectors not covered by the European Union Emissions Trading System), it emphasized its minimum carbon price, which gradually increases every year. In this case, the ultimate goal is to achieve a global carbon price (Carattini et al. 2019, Council of Economic Analysis and German Council of Economic Experts 2019, IMF 2019).
While we have yet to see how the voluntary nature of the nationally determined contributions of the Paris Agreement will play out, it is important to note that the US decision to withdraw from the Agreement did not lead to a cascade of withdrawals. Instead, some countries appear to be pushing for a club approach (Nordhaus 2015, Dannenberg et al. 2017). French President Emmanuel Macron organized a climate summit in December 2017 for “committed co-operators only”, while the European Union has increasingly tied international trade and climate cooperation together and is seriously considering carbon border tax adjustments. While we observe these strategies play out, we encourage all stakeholders to consider and test the potential of club approaches and polycentric governance (Ostrom 2009, Tavoni and Levin 2014) at multiple scales, with the ultimate goal of leveraging reciprocal preferences and spurring cooperation in the climate commons.
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