Unintended Consequences of Environmental Policies in the United States
Efficiency improvements and policies, while aimed at promoting sustainability and resource conservation, often encounter the unintended consequence known as the “rebound effect.” A striking example is the unintended outcome of voluntary green-electricity programs, as explored in a study covered by the National Bureau of Economic Research (NBER). These programs, designed to encourage renewable energy adoption by offsetting emissions from electricity consumption, paradoxically led to increased electricity use among some participants.
Matthew Kotchen, along with collaborators Grant Jacobsen and Mike Vandenbergh, investigates the question, “[d]oes giving consumers a way to pay for their “sins of emissions” help justify an increase in polluting activities?” They collected electricity billing data for residential households in Tennessee before and after a utility company introduced a voluntary green electricity program. A fundamental component of the program was the ability for households to join at various levels in support of new wind and solar energy aimed at offsetting emissions from their electricity consumption.
The study examined how the intention to offset emissions through the support of wind and solar generation led to an increase in electricity consumption among households participating at the minimum level. This “buy-in” mentality, where minimal participation was seen as sufficient, resulted in a 2.5% increase in electricity use among these households, highlighting the complex interplay between pro-environmental actions and actual behavior changes.
Through this observation of individual behaviors, Kotchen begins to analyze the existing literature on corporate social responsibility (CSR) within corporations. He wonders whether companies might pursue CSR strategies to offset corporate social irresponsibility (CSI). After analyzing data on more than 3,000 publicly traded companies over 14 years, they found that CSI is a significant predictor of CSR.
Furthermore, another example from Matthew Kotchen’s research involves daylight saving time (DST). Initially intended as an energy conservation measure, a study found that in Indiana, DST actually increased electricity consumption. This counterintuitive result highlights the complexity of energy policies and their impacts, demonstrating that interventions like DST can have unintended consequences contrary to their original goals of saving energy.
Kotchen’s research illustrates the challenge of designing policies and programs that effectively drive the desired environmental outcomes without encouraging counterproductive behaviors. To tackle this challenge, it might be beneficial to design programs that not only encourage participation but also ensure that participants are actively engaged in reducing their overall consumption. Additionally, providing clear information about the actual impact of participation and setting up structures that reward deeper engagement and real reductions in consumption could help mitigate such unintended consequences.
