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Offsetting Versus Mitigation Activities to Reduce [Formula: see text] Emissions: A Theoretical and Empirical Analysis for the U.S. and Germany

Lange, Andreas, Ziegler, Andreas
Environmental and resource economics 2017 v.66 no.1 pp. 113-133
climate change, data collection, emissions, empirical research, pollution, public services and goods, travel, Germany, United States
This paper studies the voluntary provision of public goods that is partially driven by a desire to offset for individual polluting activities. We first extend existing theory and show that offsets allow a reduction in effective environmental pollution levels while not necessarily extending the consumption of a polluting good. We further discuss the impact of an increased environmental preference on purchases of offsets and mitigation activities. Several theoretical results are then econometrically tested using a novel dataset on activities to reduce [Formula: see text] emissions for the case of vehicle purchases in the U.S. and Germany. We show that environmental preference triggers the stated use of [Formula: see text] offsetting and mitigation channels in both countries. However, we find strong country differences for the stated purchase of [Formula: see text] offsets. While such activities are mainly triggered by a high general awareness of the climate change problem in the U.S., the perception that road travel is responsible for [Formula: see text] emissions to a large extent is more important for driver’s license holders in Germany.