Objective
Environmental externalities provide the classic rationale for government intervention, yet political constraints leave regulation incomplete. In this space, market-based mechanisms have proliferated to mobilize private resources—either by reducing environmental damages (mitigation markets) or by pricing environmental risks (compensation markets). Both markets could complement incomplete regulation but suffer from severe informational frictions.
A prominent failure in mitigation markets are carbon offsets whose claims to reduce emissions are often unverifiable. This created a “market for lemons” where most projects deliver little climate benefits. In compensation markets, widely debated examples are corporations that pay bonuses to workers for exposure to heatwaves or toxic air episodes. Since workers are often poorly informed about the true health risks, these contracts are criticized for attracting uninformed workers into dangerous conditions.
M4E asks whether institutional and technological innovation can overcome information barriers and transform markets into credible policy complements. Pillar A introduces blockchain-based monitoring in a field experiment with an offset provider to quantify verified carbon abatement and to find incentives that maximize emission reductions. Pillar B runs experiments with consumers and firms to study whether AI-enhanced disclosure can help offset buyers identify projects with genuine climate impact. Pillar C leverages administrative data covering 7 million food deliveries by e-bike couriers to test payment algorithms that compensate workers for pollution and heat while accounting for misperceptions about health risks.
The project aims to be transformative as it could reshape how billions of euros in climate finance are allocated, equip regulators and firms with monitoring tools to mitigate greenwashing, and offer a blueprint for protecting millions of workers in an era of rising environmental risks.
Fields of science (EuroSciVoc)
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Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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HORIZON.1.1 - European Research Council (ERC)
MAIN PROGRAMME
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Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
HORIZON-ERC - HORIZON ERC Grants
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Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2026-STG
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Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
20136 Milano
Italy
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.