Abstract
This paper contributes to the debate on the effectiveness of carbon trading schemes when contrasted with carbon taxes in reducing environmental externalities. An experimental survey explored individual's behavioural response to a personal carbon trading (PCT) scheme or a carbon tax (CT), both affecting personal transport and domestic energy choices. Responses were two-staged: first, whether to change behaviour or not, and second, how much to change. Results from the first stage indicate that those on high incomes and car users were less likely to change their behaviour, while those who had already changed their behaviour due to concern about climate change, lived in larger households or faced the CT were more likely to change. The second stage revealed fewer significant effects, the impact of already changing behaviour persisted and, in this case, those who faced PCT were likely to make greater changes. Both schemes appear to be capable of reducing individual carbon consumption; however, the evidence on the effectiveness of a PCT relative to a simpler CT is mixed and insufficient to make a strong case for such a complex scheme over a more straightforward tax.