2004 Progress Report: Decision Making and Valuation for Environmental Policy

EPA Grant Number: R830988
Title: Decision Making and Valuation for Environmental Policy
Investigators: Teisl, Mario F. , Jones, Sue , Rubin, Jonathan
Current Investigators: Teisl, Mario F. , Rubin, Jonathan
Institution: University of Maine , Natural Resources Council of Maine
Current Institution: University of Maine
EPA Project Officer: Hahn, Intaek
Project Period: September 1, 2003 through August 31, 2006 (Extended to August 31, 2007)
Project Period Covered by this Report: September 1, 2003 through August 31, 2004
Project Amount: $399,979
RFA: Market Mechanisms and Incentives for Environmental Management (2002) RFA Text |  Recipients Lists
Research Category: Economics and Decision Sciences

Objective:

The objective of this research project is to implement and study the effects of an eco-labeling and marketing program for vehicles sold in Maine. Both qualitative (focus groups) and quantitative (survey and market data-based) research will be performed.

Progress Summary:

Activities

Six focus groups were held in Maine during the fall of 2003. The groups were used to develop and evaluate the communication messages used as part of the marketing program and to identify perceptual issues related to vehicle emissions in Maine. The latter information informs the marketing strategy and also identifies areas of consumer misperceptions that need to be documented quantitatively as part of the baseline mail survey. A mail survey was designed during the spring and administered during the summer of 2004 to a random sample of 1,148 Maine adults who had registered vehicles in Maine; 620 residents responded for a response rate of 60 percent. In general, our respondents were similar to the characteristics of the Maine adult population, except in terms of gender. Although survey respondents are more likely to be males, this correctly reflects the underlying distribution in the registration data. Vehicle sales data are not available for the state. A proxy for sales data has been collected in the form of vehicle registration data (covering all vehicles registered in Maine during the 11-month period from July 1, 2003 to May 31, 2004). The data allowed us to identify, with some degree of certainty, new car sales within the state.

Results

Focus groups indicated that Mainers place a low level of importance on emissions when purchasing a vehicle because participants believed that air pollution was not a problem in Maine, that vehicle emissions were not a major contributor to air pollution, and that all vehicles “pollute about the same.” The proposed labeling program needs to educate consumers about the magnitude of the air pollution problem, help them understand that emissions can vary greatly among vehicles, and that vehicles contribute significant amounts of air emissions.

When vehicle shopping, many participants get their information from online sources, vehicle-related publications, and friends/relatives; dealerships often were not visited until late in the car-buying process and were used only to gather monetary and “experiential” information. A limitation of a localized eco-marketing effort, therefore, is that some important information channels (e.g., nationally distributed vehicle publications) will be largely unavailable. A concerted marketing effort will be needed to alert individuals to other new sources of information (e.g., research project Web site).

Many participants were in favor of an eco-labeling program for new vehicles sold in Maine; however, many questioned the likelihood of success. Participants’ negative reaction seemed contingent on the assumption that relatively few vehicles would obtain an environmentally friendly rating. When told many vehicles across a variety of vehicle classes would meet Maine’s standard, many participants thought this would bode well for the success of the label. The eco-marketing effort needs to highlight that many eco-preferred vehicles and vehicle classes will be available to consumers.

Participants preferred labels that were the clearest and simplest at conveying the eco-message, emphasizing both nature and vehicles/driving. Logos alone, however, were seen as inadequate; supporting text was needed. With respect to more detailed environmental labels, most participants preferred graphical approaches to facilitate vehicle choice. Many participants thought detailed information should only be provided off-label (e.g., on a Web site or in brochures available at the dealership).

Most participants liked the idea of including a reference value in addition to the value presented for the specific vehicle. They preferred, however, that the reference be based on vehicles within the same class of vehicle rather than being based on all vehicles. This was because participants believed that most people shop for a type of vehicle and would like to know how the vehicle they are considering for purchase rates relative to close substitutes.

Preliminary analysis of the survey data supports the focus group findings about Mainers’ perceptions of air quality and vehicle emissions. Mainers underestimate the importance of vehicles’ contribution to air pollution and most think that all vehicles create the same amount of pollution. Although respondents generally are split on whether lower emission vehicles have lower performance, most perceive these types of vehicles will be more expensive. Recognition of this information will be crucial in designing the education and marketing stage to target the prevailing erroneous perceptions of Maine consumers.

On a positive note, most respondents find emissions information important and indicate they want environmental information readily available. In addition, preliminary results of the valuation (choice) scenario indicate that environmental information has the potential to impact consumer behavior. Even if the eco-labeling program is extremely successful, however, the full impact of the program would take several years to measure. This primarily is because most respondents hold on to their vehicles for several years and only about one-half of the respondents buy new vehicles as opposed to preowned vehicles.

Future Activities:

The eco-marketing strategy will be implemented this spring; activities include both radio and newspaper advertisements. Other public affair efforts will be performed (e.g., news releases, op-ed pieces, dealer events). Most of the marketing will be performed solely in the southwestern portion of the state, allowing for a quasi-experimental treatment-control study. At the conclusion of the marketing effort, data again will be collected through a mail survey; this second survey will allow us to compare consumer knowledge, awareness, perceptions, and preferences across the two survey efforts. Vehicle registration data also will be collected for the period from July 1, 2004 to May 31, 2006. In total, we will have 36 months of vehicle registration data (19 months before the marketing effort, 5 months during the marketing effort, and 12 months after the marketing effort is complete). The quasi-experimental design of the marketing will allow us to use the survey and market data to isolate any changes caused by the marketing effort.

Journal Articles:

No journal articles submitted with this report: View all 22 publications for this project

Supplemental Keywords:

experimental economics, marketing, green labeling, eco-information, environmental economics, environmental marketing, environmental policy, green products, green vehicles, market incentives, market valuation models,, RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, POLLUTION PREVENTION, Energy, Economics and Business, decision-making, Market mechanisms, Social Science, Economics & Decision Making, eco-efficiency, market incentives, consumer perception, decision making, environmental decision making, green vehicles, green products, market valuation models, socioeconomics, environmental policy, eco-labeling, energy efficiency, consumer behavior, behavior change, environmental marketing, cost effectiveness

Relevant Websites:

http:// www.levforme.org Exit (site is under construction)

Progress and Final Reports:

Original Abstract
  • 2005
  • 2006
  • Final Report