Conservation Law Foundation Announces Study to Measure How Financial Incentives Impact Massachusetts Motorists' Driving Habits

Study will reward participating motorists for driving less, help Commonwealth meet climate goals

BOSTON--Sept. 16, 2013: The Conservation Law Foundation (CLF) announced today that its market innovation affiliate, CLF Ventures, will conduct a three-year pilot study to measure how motorists' driving habits are affected by financial incentives to drive less. The pilot study will test the effectiveness of financial incentive programs to reduce miles driven as a viable market-based solution to the environmental impacts of driving and the problems associated with traffic congestion. CLF Ventures will conduct the study in part through a $2.1 million grant from the Federal Highway Administration's (FHWA) Value Pricing Pilot Program, supplemented by a $450,000 in-kind contribution from Plymouth Rock Assurance Corporation, a leading Boston-based auto insurance provider, and a $40,000 in-kind contribution from CLF Ventures.

The goal of the study is to measure the impact of financial rewards in motivating people to adjust the amount, location, and timing of their driving. It will also improve understanding of the economic and environmental implications of these behavioral changes. The study will provide, for the first time, publicly available data about these behavioral impacts so that states, insurers, and motorists can learn more about the effectiveness of various incentives for reducing driving.

"CLF strongly believes in market-based approaches to addressing environmental problems," said John Kassel, president of CLF. "For more than 15 years, we've championed innovative methods to reduce driving as a way to achieve real environmental benefits. This study is an important next step in providing the data policymakers and insurance companies need to design effective voluntary programs that encourage reductions in driving on a large scale. We need to pursue every option available to reduce greenhouse gas emissions in order to meet Massachusetts's – and the region's – climate goals."

Approximately 3,000 Plymouth Rock auto insurance policyholders in 164 Massachusetts communities will be randomly selected to participate in the program, which will begin in 2014. Offers will be extended to policyholders from a representative mix of vehicle classes, geographic territories, and coverage characteristics. Existing coverage and premiums for each participant will remain the same. Participants will earn per-mile rewards paid by the FHWA grant for reducing mileage over the course of the study. To help ensure the study's integrity in providing insight on typical customer behavior, potential participants can accept or decline the invitation to participate; they cannot "volunteer" to join.

"Our customers have come to expect more than just typical insurance from Plymouth Rock," said Chris Olie, president of Plymouth Rock. "Collaborating with CLF on this program to offer thousands of our customers the opportunity to earn rewards for themselves, and help the environment and their fellow drivers, is just another example of that commitment. As an innovator in the insurance field, we're excited to contribute to the creation of a publicly available body of data that can help stimulate voluntary, market-based programs that can benefit both consumers and the environment."

Mileage from each enrolled vehicle will be collected using in-vehicle electronic devices or odometer readings taken during annual safety checks. At the conclusion of the study, a comprehensive report of the findings will be made publicly available. Findings will be used to facilitate the evaluation of the environmental and transportation benefits of incenting motorists to drive less. Other expected results include the effects, across several groups of participants, of changes in per-mile incentives, the form and timing of payments, and how policyholders are informed of their mileage savings and driving behavior.

The federal grant will be administered by the Massachusetts Department of Transportation (MassDOT), and the pilot experiment and data analysis was designed by MIT Professor Joseph Ferreira, Jr.

"This study and its results will aid MassDOT's ongoing efforts to promote sustainable transportation in the Commonwealth," said David Mohler, Executive Director of MassDOT's Office of Transportation Planning. "Developing incentives that motivate people to drive less complements existing GreenDOT initiatives to increase the number of trips taken via healthy modes of transportation like walking and biking and encourages smarter vehicle trip planning to help reduce emissions and relieve traffic congestion."

"As the Commonwealth works toward the benchmarks laid out in the Global Warming Solutions Act, it's important that we explore innovative ways to reduce greenhouse gas emissions," said Energy and Environmental Affairs Secretary Rick Sullivan. "This pilot study will help determine how Massachusetts drivers respond to incentives for driving less, helping to reduce our emissions while putting money back in participants' pockets."

The mileage-based pricing pilot is one of the policies included in the Massachusetts Clean Energy and Climate Plan for 2020, issued in 2010 by the Commonwealth's Executive Office of Energy and Environmental Affairs. This policy is consistent with MassDOT's GreenDOT policy and is designed to save drivers money and reduce greenhouse gas (GHG) emissions. Through GreenDOT, MassDOT is implementing multiple initiatives to reduce GHG emissions from the transportation sector in furtherance of the Commonwealth's GHG reduction limits required under the Global Warming Solutions Act.