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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.