Private Environmental Nudges

Abstract

Environmentalist outcry against single-use plastics has rapidly translated into municipal and state policy. Bans and taxes on plastic bags, and, to a lesser extent, polices targeting plastic food/drink containers and plastic straws, have popped up all over the country. Many large national corporations, including Starbucks, Disney, and Hyatt to name a few, have also taken steps to reduce the amount of single-use plastics that their customers add to the waste stream.

Two ongoing discussions in the environmental law scholarship parallel these innovations in policy. The first re-examines the proper role for subnational governments in environmental policymaking, reviving a debate about environmental federalism that dates back decades. The second, to which this paper contributes, examines the role for what Professor Michael Vandenbergh dubbed “Private Environmental Governance” (PEG). That research has thusfar focused on the efforts of some of the world’s largest corporations. But small, locally-owned businesses can contribute positively to private environmental governance, too.

This paper identifies a subset of PEG rooted in Richard Thaler and Cass Sunstein’s famous behavioral economics theory of “nudges.” Their basic insight was that the way choices are presented (“choice architecture”) greatly influences the quick valuation calculations and decisions humans make. In addition to providing a typology of private environmental nudges, describing four archetypes, this work presents a case study based on empirical observation of a local business.

Keywords: private governance, environmental law, nudge, behavioral economics

JEL Classification: K22, K32