Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - EVOCLIM (Behavioral-evolutionary analysis of climate policy: Bounded rationality, markets and social interactions)

Teaser

Distinct climate policies are studied with incomparable approaches involving unique criteria and impacts. I propose to unite core features of such approaches within a behavioral-evolutionary framework, offering three advantages: evaluate the effectiveness of very different...

Summary

Distinct climate policies are studied with incomparable approaches involving unique criteria and impacts. I propose to unite core features of such approaches within a behavioral-evolutionary framework, offering three advantages: evaluate the effectiveness of very different climate policy instruments in a consistent and comparative way; examine policy mixes by considering interaction between instruments from a behavioral as well as systemic perspective; and simultaneously assessing policy impacts mediated by markets and social interactions.

The key novelty is linking climate policies to populations of heterogeneous consumer and producers characterized by bounded rationality and social interactions. The resulting models will be used to assess the performance of policy instruments – such as various carbon pricing and information provision instruments – in terms of employment, equity and CO2 emissions. The approach is guided by 5 goals: (1) test robustness of insights on carbon pricing from benchmark approaches that assume representative, rational agents; (2) test contested views on joint employment-climate effects of shifting taxes from labor to carbon; (3) examine various instruments of information provision under distinct assumptions about social preferences and interactions; (4) study regulation of commercial advertising as a climate policy option in the context of status-seeking and high-carbon consumption; and (5) explore behavioral roots of energy/carbon rebound.

The research has a general, conceptual-theoretical rather than a particular country focus. Given the complexity of the developed models, it involves numerical analyses with parameter values in realistic ranges, partly supported by insights from questionnaire-based surveys among consumers and firms. One survey examines information provision instruments and social interaction channels, while another assesses behavioral foundations of rebound. The project will culminate in improved advice on climate policy.

The project is ground-breaking in that it would develop the first systematic program on behavioral-evolutionary thinking about climate policy. This would create bridges between environmental economics, evolutionary economics and modelling, policy sciences, sociology and environmental psychology. It will support a consistent comparison of the full range of regulatory (both pricing and standard-setting) and information-provisioning instruments in climate policy. The project can further provide useful methodological lessons for other areas of public policy from an evolutionary systems angle (Wilson and Gowdy, 2013). In addition, it can broaden the scope of evolutionary economics which so far has paid scant attention to environmental and climate policies. In particular, as discussed below in sub-project 1, it contributes to a wave of macro-oriented evolutionary, multi-agent models, which serve as an alternative to both general equilibrium and mainstream macroeconomic models in public policy and economic analyses (Cincotti et al., 2010). Next, the project extends the application of behavioral economics to public policy issues in the areas of environment and climate change, by providing a more systems and population oriented rather than individual-agent based approach. Finally, the approach will contribute to the field of energy/sustainability transition studies (Grin et al., 2010; van den Bergh et al., 2011).

The EVOCLIM team consists of:

- Project leader prof. dr. Jeroen van den Bergh

- Postdocs Dr Stefan Drews, Dr Filippos Exadaktylos and Dr Ivan Savin

- PhD students Juana Castro, Joël Foramitti, Franzi(ska) Klein & Théo Konc

- Project manager Marta Viana Diaz

Work performed

The first join team output is a paper entitled “A Review of Agent based Modelling of Climate Mitigation Policy” submitted to WIREs Climate Change. The aim of this was to learn from existing ABM studies of climate (and energy) as the EVOCLIM project aims to make much use of this method. The review covers 65 studies and pays special attention to behavioural assumptions, the structure of social networks, empirical underpinning (data, parameter values and calibration), and instruments of and insights about climate policy. The main insights of the review are: there is a wide diversity of behavioral assumptions, market combinations, data sources, policies studied, and applications, making it difficult to compare and generalize; most studies are partial while few develop or use a macro ABM; specific research questions of EVOCLIM not addressed by any of the studies.

Progress on the sub-projects is as follows:

Sub-project 1 has developed a proposal for EVOCLIM macro model, integrating elements of all sub projects with additional innovative ideas about macro dimensions; supported other projects in terms of programming and modelling social networks.

Sub-project 2a has developed a first ABM model and set of simulations to compare the performance of two ways of carbon pricing, namely a tax and emissions trading, under bounded rationality.

Sub-project 2b has made a start with testing joint employment and climate effects (= “double dividend”) of shifting taxes from labor to carbon (=“environmental tax revision”, ETR), relieving rational agent assumptions of traditional studies. A first paper “Double dividend of ETR through a behavioral evolutionary lens” has been submitted, and ideas for a first model have been put on paper.

Sub-project 3a has developed a first model on social reinforcement with weighted interactions (with I. Savin, accepted for publication); a second model on “The social multiplier of carbon taxation” (close to finished); and initial ideas about “optimal dynamics of carbon pricing over time”.

Sub-project 3b has developed a plan for a first survey and experiment about advertising and social norms for high vs low carbon products with an innovative Facebook simulation.

Sub-project 4 has generated a draft paper on “Energy/Carbon Rebound under Bounded
Rationality and Social Interactions”.

Sub-project 5 has submitted a paper on “Synergy of price incentives and behavioral nudges in the policy mix” to Nature Sustainability; and developed a proposal for a model study of endogenous climate policy and public opinion.

Final results

\"Several publications have been realized and several others results have been submitted to journals. See the item \"\"Publications\"\".


The EVOCLIM project has a scientific advisory board (SAB). Its aim is to provide feedback on research ideas and results, and identify important overlooked issues and literature.
The members of the SAB are:

- Prof. Dr. Valentina Bosetti (Department of Economics, Bocconi University, Milan, Italy), with expertise on climate economics and related policy modelling,

- Prof. Dr. Herbert Dawid (Faculty of Business Administration and Economics, Bielefeld University, Germany), with expertise on agent-based modelling of (macro)economic systems,

- Prof. Dr. Wouter Poortinga (School of Psychology at Cardiff University, United Kingdom), with expertise on social and environmental psychology, focused on climate change and policy,

- Prof. Dr. Steven Sorrell (Science Policy Research Unit/SPRU, University of Sussex, Brighton, UK), with expertise on energy rebound, behavior and policy.\"

Website & more info

More info: https://ictaweb.uab.cat/noticies_news_detail.php.