Invitation to Tender: Use of Economic Instruments in Environmental Policy and the Potential to Influence Behaviour

Faced with the need to transition towards a more sustainable and greener future, the authorities in major economies like the US and EU have shown the political will to use regulatory and economic instruments to intervene in new and more active ways. The Nordic countries have a tradition of using economic and regulatory instruments in environmental policy. The use of green charges to achieve goals is often motivated by the need for a higher degree of internalisation of environmental costs in market prices. Often, such charges, frequently combined with other instruments, are expected to help change the incentive structure in the market, lead to behavioural changes and, to some extent or another, reduce the negative impact on the environment of existing patterns of behaviour. Other reasons for introducing green charges may be more indirect, for example, to help fund environmental measures or stimulate the long-term technical development and innovation of environmentally friendly alternatives. Green taxes and charges can also have a certain fiscal impact.

In theory, and all else being equal, a green charge will help raise the market price, and this may reduce the volume of the goods/services concerned. The link between the amount and the expected market reaction in the form of higher prices and lower sales varies between different markets and types of goods/services. However, it is often assumed that there is a causal link between the amount and the actual changes in price and volume. Price elasticity can be used to estimate how much the demand for the product or service will react to the price change. However, market players often react differently to changing price signals due to individual circumstances, perceptions of the framework conditions, opportunities for adaptation and perhaps information bias. Such estimates also presuppose market players will act rationally, which is not always the case.

The consultant running the project is expected to: 

1. Analyse and describe in brief a selection of different types of green charges currently in use or recently deployed in the Nordic countries (at least three of them) and which are deemed to have probably led to significant and possibly lasting changes in market volume for the goods/services concerned.

    

2. Analyse and describe in brief a selection of different types of green charges currently in use or recently deployed in the Nordic countries (at least three of them) and which do not appear to have led to significant and lasting changes in the market volume for the goods/services concerned. When covering points 1 and 2, reference should be made to any studies and reports that have analysed the effects of the policy instrument.

    

3. Analyse and describe different probable causes of differences in results in terms of changes in market volume between goods/services covered by points 1 and 2. Analyse and explain, in particular, whether the ratio between the amount of the charge and the market price has been/is or may be an important cause for differences in results between goods/services covered under points 1 and 2. The importance of price elasticity for behavioural change should also be discussed.

The budget for the project is DKK 400,000 (incl. VAT) to cover standard project expenses and any travel costs and expenses related to outreach work presenting the findings. 

The NME must receive tenders no later than 3 June 2024, at 15:00 CET. All documents must be submitted by this deadline. Material received after this date will not be taken into consideration. A decision will be made in early June, and all applicants will be informed of it. The date for reporting will be set in the project contract.

Applications must be e-mailed to NME’s administrative body (registratur.sodraosterbotten@ntm-centralen.fi). The project description/application form and compulsory budget form must all be in one of the Nordic languages or English. Applications must cite the journal number EPOELY/1105/2024.

Link to the invitation to tender:

Attach as separate files the appendices describing in greater detail the factors NME takes into consideration, e.g. an independent project description and CVs.

In assessing submissions, emphasis will be placed on: 

• The project plan – presentation and planning of the work involved
• Methodology and how relevant data and information will be collected and processed
• Competencies, qualifications and allocation of responsibilities between those involved in the project
• Costs per person for the proposed project period, including hourly rates (and other expenses)
• Relevant testimonials
• The Nordic contacts and networks that will be used in the project plus details of proficiency in the Nordic languages
• A timetable
• Plans to communicate the project findings. 

As per the Nordic Council of Ministers’ funding scheme, the project must be of benefit to the Nordic Region and include at least three of Sweden, Finland, Norway, Denmark, Iceland, the Faroe Islands, Greenland and Åland. 

Further information about funding from the Nordic Council of Ministers is available here:

NME will assess the applications and choose the successful one. However, the working group reserves the right to reject all applications.

For further information about project content and funding requirements, please refer to the appendices: