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Enhancing the informational nudge of energy labels: Evidence from a DCE in New Delhi

Author

Listed:
  • Grover, Charu

    (Shaheed Bhagat Singh College, University of Delhi, India)

  • Bansal, Sangeeta

    (Centre for International Trade and Development, Jawaharlal Nehru University, India)

  • Martinez-Cruz, Adan L.

    (CERE - the Center for Environmental and Resource Economics)

Abstract

India's contribution to global CO2 emissions makes it a priority case for policy makers worldwide. The Indian government is considering the adoption of energy labels for new passenger cars to tackle CO2 emissions. This paper's first aim is to asses New Delhi's car buyers' preferences for cars displaying energy labels. To do so, a discrete choice experiment (DCE) has been designed to document both WTP for energy efficiency (212 USD for one kilometer per liter) and WTP for the best efficiency label (4.93 thousand USD). The informational nudge embedded in a labeling system may not be enough to boost uptake of efficient cars. Thus this paper investigates the potential of combining a labeling system and car driving restrictions. Via a split-sample approach, this paper documents an increase of 2.55 thousand USD in stated WTP for the best efficiency label. This number can be interpreted as reflecting the costs imposed by the driving restrictions on car drivers. Under this interpretation, 2.55 thousand USD fall within the range of estimations reported in previous studies. The results in this paper suggest that a combination of driving restrictions and a labeling system may deliver an increase in energy efficient cars in New Delhi.

Suggested Citation

  • Grover, Charu & Bansal, Sangeeta & Martinez-Cruz, Adan L., 2021. "Enhancing the informational nudge of energy labels: Evidence from a DCE in New Delhi," CERE Working Papers 2021:4, CERE - the Center for Environmental and Resource Economics.
    • Handle: RePEc:hhs:slucer:2021_004
    DOI: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3795176
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    Keywords

    Energy labeling system; driving restrictions; willingness to pay; discrete choice experiment; split-sample approach; New Delhi.;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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