Nudging effective climate policy design

Author/s (editor/s):

Bowman, Megan

Publication year:

2011

Publication type:

Journal article

Find this publication at:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1986456

This paper applies insights from behavioural economics literature to design options in climate policy in order to make suggestions on how to create and pass effective climate regulation.  It posits that policymakers can have a more comprehensive toolkit for tackling climate change by utilizing knowledge of flawed human behaviour.  It makes three main suggestions.  First, when pricing carbon, the use of policy bundling helps to counter cognitive biases such as 'loss aversion'.  Second, financial incentives are required for clean tech and renewable energy sectors to become comptetitive with traditional energy markets.  Third, climate policy needs to target the finance sector, particularly the banking industry, to encourage copital flow to these alternative energy markets.  In this way, effective climate policy may have a nudging effect on a spectrum of decision-makers, with the net benefit of facilitating climate change mitigation and timely transition to a low-carbon global enconomy

Cite the publication as

Bowman, Megan, 2011, ‘Nudging effective climate policy design’, International Journal of Global Energy Issues, 35, 2, 3, 4, 242-254

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