LONDON – While Corporate Social Responsibility is becoming increasingly popular for airline positioning, a study shows that passengers might say they would pay a small fee to compensate for their flight, but they clearly aren’t.
The study “Willingness-to-pay for carbon dioxide offsets: Field evidence on revealed preferences in the aviation industry”, performed at the University of Bern, Switzerland, looked at 63,520 bookings made with a European airline to gauge actual willingness-to-pay for carbon dioxide compensation.
It found that passengers were largely unwilling to offset their flights. Only 4.46 percent of bookings include compensation.
“The median willingness-to-pay to offset 1 ton of CO2 is, therefore, zero, the mean willingness-to-pay ranges between 0.95 and 1.27 EUR”, the paper states.
The data was collected between August 2019 and October 2020 and contained all bookings made directly on the airline’s website, which was about 20 percent of all sales during the period.
According to IATA, carbon offsetting is a way for individuals to “neutralize” their proportion of an aircraft’s carbon emissions on a particular journey by investing in carbon reduction projects.
Some 30 member airlines operate an offset program either integrated into their web-sales engines or to a third-party offset provider.
The authors of the study raise skepticism about the degree to which voluntary offsetting works, from a consumer perspective:
“Quite obviously, our data allow the conclusion that adequately offsetting one’s own emissions does not seem a behavioral priority for most passengers.”
The paper also raises “caution about the effectiveness of offsetting schemes” – even if everyone does decide to pay.
Airlines offer relatively small charges that have little impact anyway on reducing the environmental impact, the report states.
“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 ($1.14).
Aggregated voluntary willingness-to-pay thus dramatically falls short of current prices to offset carbon dioxide, for example through the European Union Emissions Trading System.”
The carbon price in the EU Emissions Trading System reached more than €90 in December 2021, it added.
“This extreme difference between voluntary payments and actual carbon prices shows how such voluntary offsets are likely not a meaningful element to internalize the cost resulting from pollution.”
- Berger et al (2022), Willingness-to-pay for carbon dioxide offsets: Field evidence on revealed preferences in the aviation industry, Global Environmental Change, Vol 73, ScienceDirect, https://doi.org/10.1016/j.gloenvcha.2022.102470 [Last Accessed 12/2/22]