Making or buying environmental public goods: do consumers care?
Résumé
Firms may voluntary abate pollution using one of two options. The firm internalizes its own external effects and incurs abatement costs ("making") or the firm delegates environmental protection to other firms ("buying"). We consider greenhouse gases (GHG) emission where a firm can change its production process or purchase carbon offsets. The firms’ choice between the two options is not neutral from the consumer’s viewpoint. There may be spatial effects; that is offsetting may shift joint local public goods to another region. Besides, offsets induce strong opinions. Notably, some describe offsets as indulgences like in the medieval times. The aim of our paper is threefold. First, we aim at eliciting consumers’ WTP for producers’ use of the "making" option (producers’ own green practices) as compared to the "buying" option (purchase of offsets), controling for spatial effects (joint local public goods). Second, we seek to determine if consumers’ attitudes towards offsets translate into their choices. Third, we elicit consumers’ WTP for GHG emission reduction and its determinants. We use a stated choice survey with 722 respondents. We find consumers are more willing to pay for a "making" policy (producers’ own green practices) than for a "buying" policy (purchase of offsets). Consumers do not significantly care for the producers’ use of offsets when the level of local externalities is controlled for. We find positive attitudes on offsets positively influence preferences for offsets whereas negative attitudes do not. Finaly, respondents are willing to pay for lower levels of GHG emissions. The main motivation is gift-giving while those who do not support green products, those who feel their contribution will be wasted and the free riders have lower WTP.