Meeting a national emission reduction target in an experimental setting

Climate change mitigation presents us with a social dilemma: while mitigation benefits everyone, individuals lack the incentive to alter their behaviour, since they can reap its benefits while failing to reduce their own emissions.

Using a `public good' experiment with a climate change framing, the scope for cooperation in meeting a national mitigation goal is examined: in particular, how different sectors with differing marginal abatement costs distribute the responsibility of reducing emissions between themselves. The experiment consists of four scenarios: (1) a counterfactual baseline scenario in which cooperation is voluntary although communication is prohibited, (2) a communication scenario in which communication is permitted, and finally, (3) and (4) two scenarios in which there is a carbon tax, where the tax reflects an electricity levy. The results suggest that relying on the voluntary cooperation of individuals will not be sufficient to meet the mitigation target; while communication significantly increases average contribution levels, it also polarizes the strategies of individual players between full cooperation and free-riding. While introducing a carbon tax crowds out contributions, in excess of a specified mitigation target, cooperation becomes near-universal, thus emphasizing the importance of choosing the correct tax level.