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Institutions, Motivations and Public Goods: Theory, Evidence and Implications for Environmental Policy

Author

Listed:
  • Andrew F Reeson

    (CSIRO Sustainable Ecosystems, Australia)

Abstract

In economic terms, the environment is largely a public good. Contributing to a public good is costly to an individual, while the benefits are enjoyed by all. Despite this, many people voluntarily contribute to public goods, both in laboratory economic experiments and through day-to-day environmental decisions. These voluntary contributions are largely motivated intrinsically, that is satisfaction comes from the act itself rather than external rewards. Policy interventions are often required to increase the provision of public goods to the socially optimal level, which usually take the form of extrinsic incentives such as payments or regulations. Theoretical and empirical evidence from psychology and economics suggests that such extrinsic incentives can crowd out the intrinsic motivations which underlie voluntary contributions. As a result, a policy may have less than the anticipated impact. It is even possible for a costly policy intervention to lead to a decrease in overall public good provision, as individuals cease to contribute voluntarily. This paper argues that environmental policy design should proceed with caution in the presence of intrinsic motivations. Weak regulations and small, competitive financial incentives have the greatest potential for negative effects. Recognising and supporting existing efforts can crowd in, rather than crowd out, voluntary contributions. With careful design and implementation, there is the potential to maintain and support intrinsic motivations while also providing robust extrinsic incentives.

Suggested Citation

  • Andrew F Reeson, 2008. "Institutions, Motivations and Public Goods: Theory, Evidence and Implications for Environmental Policy," Socio-Economics and the Environment in Discussion (SEED) Working Paper Series 2008-01, CSIRO Sustainable Ecosystems.
  • Handle: RePEc:cse:wpaper:2008-01
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    File URL: http://www.csiro.au/files/files/pjki.pdf
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    Citations

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    Cited by:

    1. Cadigan, John & Wayland, Patrick T. & Schmitt, Pamela & Swope, Kurtis, 2011. "An experimental dynamic public goods game with carryover," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 523-531.
    2. Cécile Bazart & Dimitri Dubois & Kate Farrow & Lisette Ibanez & Alain Marciano & Nathalie Moureau & Rustam Romaniuc & Julie Rosaz & Sébastien Roussel, 2017. "NORMES : NORmes sociales, Motivations Externes et internes, et politiques publiqueS," Working Papers hal-02938187, HAL.
    3. Cécile Bazart & Raphaël Trouillet & Hélène Rey-Valette & Nicole Lautrédou-Audouy, 2020. "Improving relocation acceptability by improving information and governance quality/results from a survey conducted in France," Climatic Change, Springer, vol. 160(1), pages 157-177, May.
    4. John M. Kerr & Maria K. Lapinski & Rain Wuyu Liu & Jinhua Zhao, 2017. "Long-Term Effects of Payments for Environmental Services: Combining Insights from Communication and Economics," Sustainability, MDPI, vol. 9(9), pages 1-13, September.

    More about this item

    Keywords

    public goods; environmental policy; intrinsic motivation; crowding out;
    All these keywords.

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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