Willingness-to-pay for carbon dioxide offsets: Field evidence on revealed preferences in the aviation industry

Abstract

Voluntary offsetting of flight-related emissions is an important cornerstone of passengers’ individual efforts to contribute to climate change mitigation. Hence, many scientific studies have tried to assess people's willingness-to-pay to offset their own flight-related carbon emissions. Up-to-date, these studies are overwhelmingly grounded in hypothetical stated-preference approaches, with very limited knowledge about external validity. Here, we report on an observational field study involving a final sample of 63,520 bookings made with a European airline, allowing us to gauge actual willingness-to-pay for carbon dioxide compensation in a revealed-preference approach. Our pre-registered study shows that the median willingness-to-pay to voluntarily offset a ton of carbon dioxide from flight-related emissions is zero, with the mean willingness-to-pay being around 1 EUR. Aggregated voluntary willingness-to-pay thus dramatically falls short of current prices to offset carbon dioxide, for example through the EU-ETS. Our results thereby question the suitability of self-reported, hypothetical assessments of offsetting and raise caution about the effectiveness of offsetting schemes, which currently do not very successfully internalize flight-related cost of emissions.