Environmental identity economics: an application to farmers' pro-environmental investment behaviour

This study proposes an environmental identity economics theory that can improve our understanding of pro-environmental behaviour. We test the potential of the theory by analysing farmers' decisions to invest in renewable energy production using a hybrid choice model. Our findings illustrate that farmers with a strong environmental identity require less financial incentive to invest. Furthermore, lower compensation is found to be sufficient to induce farmers with a strong environmental identity to commit to more binding investment contracts. Our findings stress the need for differentiated designs of agri-environmental programmes and mechanisms that enhance farmers' environmental identity.

Automated summary

This study proposes an environmental identity economics theory to improve understanding of pro-environmental behaviour, and tests its potential by analyzing farmers' decisions to invest in renewable energy production. The findings show that farmers with a strong environmental identity require less financial incentive to invest and lower compensation is sufficient to induce them to commit to more binding investment contracts. These results highlight the importance of differentiated designs of agri-environmental programmes and mechanisms that enhance farmers' environmental identity.