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Jacobsen, G.D., M.J. Kotchen, M.P. Vandenbergh (2010). The Behavioral Response to Voluntary Provision of an Environmental Public Good: Evidence from Residential Electricity Demand.  NBER Working Paper No. 16608, Dec 2010.http://www.nber.org/papers/w16608This paper develops a theory of voluntary provision of a public good in  which a household’s decision to engage in a form of environmentally  friendly behavior is based on the desire to offset another behavior that  is environmentally harmful. The model generates predictions about (1)  participation in a green-electricity program at the extensive and  intensive margins, and (2) changes in electricity consumption in  response to participation. We test the theory using billing data for  participants and nonparticipants in a green-electricity program in  Memphis, Tennessee. High-consumption households are more likely to  participate, and they participate at higher levels. In terms of a  behavioral response, households participating above the minimum  threshold level do not change electricity consumption, but those  participating at the minimum threshold increase electricity consumption  2.5 percent after enrolling in the program. The result is based on  identification strategies that exploit before-after differences between  participants and nonparticipants, and differences in the timing of  enrollment among participants only. Despite the increase in electricity  demand upon the purchase of green electricity for the households with a  “buy-in” mentality, the net effect for the buy-in households is a  reduction in pollution emissions, as the behavioral response is not  large enough to offset the environmental benefit of the  green-electricity purchase. (© NBER)