Are environmental offsets indulgences ?

Environmental offsetting is a concept whereby a company can offset its environmental impacts by paying for another party to reduce its environmental impacts. Offsets are designed for greenhouse gases emissions (carbon) and biodiversity. Though the concept is new in the debate, it relies on the idea common to environmental economists of flexibility and cost efficiency where the firms that have the lowest pollution abatement costs reduce more pollution than firms that have high abatement costs. Even if the offsetting concept makes sense from an economic point of view, the public may oppose it on several grounds. It may be for moral reasons (the polluter must pay), for equity reasons (the victims of the local pollution cannot escape pollution), or for economic reasons (preference for a local public good jointly produced with the global one, or in a dynamic model, incentive for polluters to pollute less in the future). These multiple motivations make difficult eliciting preferences of consumers for products where producers used offsets. Therefore, we use stated choice to elicit these preferences for a good produced using offsets while controlling for attributes such as level and location of joint local public good (water pollution). We find that although respondents declare opposing offsets (indulgence argument), it does not translate in their purchase choices in the choice experiment when controlling for the level of joint local public good