A Conceptual and Empirical Framework for Analyzing Information Disclosure ProgramsEPA Grant Number: R832851
Title: A Conceptual and Empirical Framework for Analyzing Information Disclosure Programs
Investigators: Parry, Ian , Fischer, Carolyn , Lyon, Thomas , Newell, Richard , Oates, Wallace , Siikamäki, Juha
Current Investigators: Parry, Ian , Fischer, Carolyn , Lyon, Thomas , Newell, Richard , Oates, Wallace , Siikamäki, Juha
Institution: Resources for the Future , University of Maryland , University of Michigan
EPA Project Officer: Michaud, Jayne
Project Period: September 1, 2006 through August 31, 2008
Project Amount: $327,322
RFA: Environmental Behavior and Decisionmaking: Determining the Effectiveness of Environmental Information Disclosure and Provision (2005) RFA Text | Recipients Lists
Research Category: Economics and Decision Sciences
The first objective is to develop a comprehensive conceptual framework for evaluating a broad range of environmental information disclosure programs, revealing important “rules of thumb” that drive their effectiveness, and the desirable balance between disclosure and direct regulation. Key parameters will be identified, paying close attention to the role of market structure, risk misperception, and stakeholder decision making. The second objective is to develop new empirical estimates of behavioral responses to certain information disclosure programs, with a particular focus on energy efficiency labeling. The third objective is to apply the conceptual framework empirically to several distinct disclosure programs, including energy efficiency, smog and mercury alerts, and toxic releases.
The conceptual component will develop a series of analytical models allowing for an array of channels through which information disclosure can mitigate environmental risks: averting behavior by households, improved consumer choice with regard to energy efficiency, community pressure for cleanup of local facilities, and the response of firms to consumers and input suppliers with green preferences. As appropriate, the models will consider competition, multi-product price discrimination and vertical product differentiation. The major empirical effort will involve an internet-based survey of 800 households on recent and planned equipment purchases, using statistical methods to infer willingness to pay for energy efficiency and the response to several alternative ways of conveying information about energy efficiency. These results, along with other parameter estimates and collected data, will be used to calibrate the analytical models for numerical simulations exploring the costs, benefits, and key drivers of information disclosure programs.
Information disclosure programs are playing an increasingly visible role in environmental protection. They are particularly appealing to policymakers, as they avoid transactions costs (e.g., interest group lobbying costs) and policy compromises (e.g., provisions excluding firms with older capital) associated with direct pollution controls. However, the lack of a unifying conceptual framework for understanding the potential for disclosure programs to achieve environmental objectives—and of empirical evidence on behavioral responses in key program areas—is a major obstacle to assessing their appropriate role in the broader suite of measures for environmental protection. This project will develop and apply such a conceptual framework, as well as providing new empirical evidence on program effectiveness.