Monetary incentives and environmental concern. Effects of a differentiated garbage fee

Abstract

Market-based instruments, i.e., economic incentives and disincentives, are gaining popularity in environmental policy. However, research on the effectiveness of economic incentives for regulating environmentally relevant consumer behaviour demonstrates convincingly that the implementation of this instrument is based on inadequate assumptions concerning the motivation guiding consumer behaviour. In this paper it is argued that stronger focus should be placed on studying how the regulation instrument influences the perception of the environmentally relevant activity that it was meant to regulate. The attitudes of Danish citizens towards differentiated garbage fees (implying a relatively small economic incentive) and the impact of its implementation on the attitude towards recycling are analysed. The attitude towards differentiated garbage fees is primarily determined by the perceived equity of differentiated garbage fees and its perceived effectiveness with regard to combating waste problems. The most important determinant of the attitudes towards recycling activities is the expected environmental and public benefits. However, empirical support is found for the hypothesis that the use of monetary incentives at the consumer level may "re-frame" the recycling issue into the sphere where private cost-benefit calculations apply. The negative effects of this re-framing can more than outweigh the positive impact of the monetary incentive on attitudes and behaviour.