Companies could make money by helping consumers go green

Ah, the baffling dilemmas of the environmentally aware consumer: Local tomatoes versus organic tomatoes. Cloth diapers versus disposables. CFL versus LED light bulbs. Many people want to make green choices, but don’t have the information they need in order to do so.

That’s because few companies provide information about the environmental impacts of different products they sell, even though many could do so quite easily. And if they did, according to a study published yesterday in the Proceedings of the National Academy of Sciences, they might even reduce their own costs.

In the study, researchers asked volunteers to make hypothetical purchasing choices using mockups of the websites of four companies: lodging website AirBnB, ride-sharing service Uber, online retailer Amazon, and video streaming service Netflix. (None of the companies approved or were associated with the study.)

The study tested two primary strategies for encouraging green consumer choices: labeling products with information about their carbon footprint, and facilitating the purchase of carbon offsets to make up for the climate impact of a product.

For example, in one experiment researchers added a green leaf icon to some listings on AirBnB, indicating that these properties had a lower environmental impact than other similar listings. People were willing to pay an average premium of $6.68 per night to stay in a property with a leaf icon, the researchers found. For an $80-a-night property that represents an 8% increase in price, which could add up to enable hosts to earn significantly more from their listings.

However, relatively few participant—between 7.6% and 12.5%, depending on the price of carbon—said that they’d be willing to add the cost of carbon offsets to their AirBnB bill.

In contrast, the majority of participants in a second experiment said they would choose to add carbon offsets to their Uber bill, regardless of the cost of carbon. (In this experiment the researchers assumed a carbon cost of either $6 per ton or $50 per ton, resulting in an increase of $0.02 or $0.20 to the hypothetical trip’s bill.)

Even at the higher carbon price, half of participants were willing to have carbon offsets automatically added to all of their Uber bills.

The researchers don’t offer any explanation for this difference in results. I think it might indicate that people are only willing to purchase carbon offsets for carbon-intensive activities, and they don’t think of lodging as having a large climate impact the way they do transportation.

If that’s true, then people are also aware of the climate impact of shipping consumer goods, the experiment involving Amazon suggests.

Amazon currently offers its Prime customers free two-day shipping, or a $1 book or e-book credit for choosing ‘no-rush’ shipping. The researchers found that a hypothetical third option, no-rush shipping and having Amazon purchase carbon offsets to make the shipping carbon neutral, would be about as popular as the $1 credit.

No-rush shipping is cheaper for Amazon than two-day shipping and also involves lower carbon emissions, because goods generally travel by land (including rail) rather than by air. If consumers chose carbon offsets instead of the $1 credit for no-rush shipping, this would save Amazon even more money, because carbon offsets for shipping many products would cost mere pennies.

The researchers also found that about 40 percent of participants would choose to add carbon offsets to their bill, regardless of shipping option. This idea has a certain brilliant logic given Amazon’s behemoth status in the online marketplace: people buy pretty much everything else from Amazon, why not carbon offsets as well?

On the other hand, an option that the researchers expected to be a runaway winner—no-rush shipping with a $1 credit, minus the cost of carbon offsets—was only about as popular as the no-rush shipping with carbon offsets alone. That illustrates the need to keep green purchasing options simple, the researchers say.

Along these lines, a final experiment sought to determine the most user-friendly way to provide information about carbon savings. Here the researchers modified the Netflix interface to enable participants to choose their preferred streaming resolution for different kinds of content, like old TV shows or recently released full-length movies. (Lower-resolution streaming saves Netflix money and also involves lower carbon emissions.)

The researchers provided information about the emissions saved by lower-resolution choices in terms of kilograms of carbon dioxide, kilowatt hours of electricity, days of leaving a light bulb on, tree seedlings planted, or miles driven. Miles driven was the most effective way to communicate the impact of these choices, they found, leading to an average 24% reduction in viewers’ carbon footprint from video streaming.

In the U.S., supply chains of consumer purchases generate twice the emissions of household energy use and individual travel. So all these individual consumer decisions could add up to significant carbon savings.

Of course, addressing the so-called externalized costs of goods and services isn’t as simple as adding a few cents to your Netflix bill. And we can’t carbon-offset our way out of climate change. Still, the results of the study seem hopeful to me, an indication that many people are not only aware of these costs but also feel some responsibility to contribute to paying them. —Sarah DeWeerdt | 16 August 2016

Source: Isley S.C. et al. “Online purchasing creates opportunities to lower the life cycle carbon footprints of consumer products.” Proceedings of the National Academy of Sciences DOI: 10.1073/pnas.1522211113

Header image: Chiara Marra via Flickr.