Imperfect emissions information during flight choices and the role of CO2 labelling

Although the airline sector contributes to just 3% of the world's CO2 emissions, air travel is a highly CO2-intensive activity. Unlike other energy-related household decisions, there is little standardised, comparable, regulated information available to consumers regarding the environmental impacts of different airlines. Imperfect information in this market therefore appears very likely. This paper presents the results of a discrete choice experiment which uses a nationally representative sample of 209 participants in Ireland to explore how point-of-sale flight emission labelling influences choice. There are two keys findings: first, a comparative CO2 label, similar to existing EU colour-coded labels (appliances, for example), leads to a shift to lower emission flight choices, even when they cost more; second, the effect is very large: on average, households are willing to pay €77 more for each tonne of CO2 reduced. Unlike other household energy efficiency decisions (appliances, cars and buildings, for example), choosing more energy efficient flights has no private monetary return in the form of lower future energy bills. It therefore represents a purer test of willingness to pay for a public good (a low CO2 environment). Results provide evidence to support policy recommendations of emission labelling in the short-run and environmental education in the long-run.