Will Green Taxes Undermine Moral Motivation?(Report‪)‬

GREEN TAXES AND INTRINSIC MOTIVATION For many years, environmental economists have recommended market-based instruments for environmental policy--mainly green taxes, subsidies, and tradable emission permits--claiming that such policy instruments are typically more efficient than command-and-control measures like prohibitions and mandatory standards (see, e.g., Cropper and Oates, 1992). More recently, however, some researchers have expressed doubt concerning the efficiency of green taxes, pointing out that monetary incentives may potentially undermine individuals' moral or intrinsic motivation to contribute to a better environment (see, in particular, Frey 1994, 1997, 1999). If such crowding-out effects are present, they might reduce, or potentially even reverse, the positive environmental impacts of green taxes.