In December talks in Paris involving more than 200 countries may result in a new agreement aimed at reducing carbon emissions. In the months leading up to the conference, The Economist will be publishing guest columns by experts on the economic issues involved. Here, Céline Nauges, of the Toulouse School of Economics, and Sarah Ann Wheeler, of the University of Adelaide, warn governments to be conscious of unintended side effects of policies designed to encourage green behaviour.

REDUCING carbon footprints will require fundamental changes in consumer, producer and government behaviour. Economists argue that consumers will adopt pro-environmental behaviour when doing so saves money, but they are less likely to undertake measures that are costly, do not satisfy their aims or require inconvenient lifestyle changes. But economic motives are only part of the story and psychological studies have shown there may be more complex mechanisms involved, sometimes with unexpected consequences.

The adoption of a more efficient technology is sometimes followed by an increase in energy consumption. For economists, this rebound effect can be explained by the cheaper energy prices due to improved efficiency. However, there are other types of rebound effects, in particular psychological ones. Evidence exists in various domains for moral self-licensing, when people allow themselves to indulge after doing something positive. A recent study showed that residents who were exposed to a water conservation campaign reduced their water use but increased their electricity consumption.

Ongoing research from an OECD survey covering more than 12,000 households in 11 countries sheds light on drivers of pro-environmental behaviour. The focus is on water and energy domains, with behaviour divided into high-cost (adoption of costly water- and energy-efficient equipment) and low-cost (habits such as switching off lights or taking showers instead of baths). Environmentally motivated households, in the context of this study, believe that human actions can help mitigate the negative consequences of climate change. The rest undertake pro-environmental actions for a variety of other reasons, including financial gain.

Results confirm that economic incentives matter but the effect of income is ambiguous. Rich households can adopt high-cost energy mitigation but poorer households are much more likely to develop less wasteful habits about energy and water use. When electricity bills were based directly on households’ electricity consumption this induced high-cost energy mitigation only for non-environmentally motivated households. Volumetric water charges, on the other hand, encouraged both high-cost and low-cost pro-environmental behaviour across all types of households.

This study also sheds light on the relationship between climate-change attitudes and pro-environmental behaviour. Results confirm other studies’ findings that attitudes—here the level of concern related to climate change—positively influence the adoption of pro-environmental behaviour. They also provide evidence that the more costly the mitigation, the more likely it will directly lessen the household’s climate-change concerns. This negative rebound effect is more likely in environmentally motivated households.

These results are striking but they are based on only one year of data. Further insights could be gained from tracking households’ beliefs and actions over time or by conducting more experiments.

The findings call for improved economic incentives and educational campaigns that remind households about climate-change risks. Policy-makers who wish to provide incentives must be aware of the possibility of psychological rebound effects with unintended side effects—which may take different forms depending on households’ motivations for preserving the environment.