Enhancing the informational nudge of energy labels: Evidence from a DCE in New Delhi

Abstract

India's contribution to global CO2 emissions makes it a priority case for policy makers worldwide. The Indian government is considering the adoption of energy labels for new passenger cars to tackle CO2 emissions. This paper's first aim is to asses New Delhi's car buyers' preferences for cars displaying energy labels. To do so, a discrete choice experiment (DCE) has been designed to document both WTP for energy efficiency (212 USD for one kilometer per liter) and WTP for the best efficiency label (4.93 thousand USD). The informational nudge embedded in a labeling system may not be enough to boost uptake of efficient cars. Thus this paper investigates the potential of combining a labeling system and car driving restrictions. Via a split-sample approach, this paper documents an increase of 2.55 thousand USD in stated WTP for the best efficiency label. This number can be interpreted as reflecting the costs imposed by the driving restrictions on car drivers. Under this interpretation, 2.55 thousand USD fall within the range of estimations reported in previous studies. The results in this paper suggest that a combination of driving restrictions and a labeling system may deliver an increase in energy efficient cars in New Delhi.

CO2 Emission Labels in India: Whistling in the Wind?

“…Hence, we expect the respondents to be sensitive to this issue and ready to do their part if the cost of the effort put in by them is minimal. This phenomenon is confirmed by a study with respect to New Delhi, where those who drive, report a willingness to pay for both fuel efficiency and fuel efficiency label (Grover et al, 2021).…”