Abstract
In the light of large country differences in terms of environmental performance, various explanations have been provided on the question of why some nations have been more successful than others in their efforts to, for example, reduce emissions, make more effective use of natural resources, and mitigate environmental deterioration. This paper examines whether nationally aggregated risk and time preferences are predictors for differences in countries’ environmental performance. Economic preference values are obtained from the Global Preference Survey (GPS). For the assessment of each country’s environmental sustainability it is drawn on the Environmental Performance Index (EPI). In line with theoretical considerations and anecdotal empirical evidence, this study finds (via OLS and Poisson regressions) that countries with higher levels of patience and risk aversion more successfully respond to challenges to environmental sustainability. These findings are robust across different model specifications and alternative econometric approaches. Estimating the relationship at a subnational level leads to similar patterns. A systematic investigation of the role of risk and time preferences can deepen the understanding of cross-country differences in environmental performance and, thereby, help policy makers and international institutions to develop and implement adequate programs, which promote sustainable development (more) effectively. For instance, taking into account the diverse preference profiles can facilitate working up implementation mechanisms for environmental agreements and assessing whether environmental practices and instruments being in place in one region can be applied successfully to another region.
Presenters
Lisa WesterPhD Student, Research Assistant, Management, University of Paderborn, Germany
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
Economic, Social, and Cultural Context
KEYWORDS
Environmental Performance, Sustainable Development, Economic Preferences, Patience, Risk aversion
