Behavioral Economics and Environmental Sustainability—The Complicated Nexus

“Behavioral economics” is a branch of economics that combines ideas from psychology and economics to get a deeper comprehension of the factors that influence individuals’ economic choices. The relationship between environmental sustainability and behavioral economics is a dynamic and expanding area of research. Behavioural economics, which combines psychological and economic concepts, gives light on how human decision-making biases and cognitive limits influence environmental choices and behaviors. Understanding this relationship is critical for developing effective policies and interventions to enhance sustainability in a world confronted with serious environmental concerns. In this article, we will look at some of the most important facets of this relationship, such as behavioral biases and heuristics, policy implications, and the impact of nudges. Through a review of researches in the arena of behavioural economics, especially in the context of rewards and penalties, defaults and green nudges as well as human biases like loss aversion and status quo, an attempt is made to shed light on how policymakers can design mire effective policies to steer pro-environment behaviors. The chapter addresses case studies and real-world applications of behavioral economics in environmental situations, as well as the possibilities for future research and policy initiatives that harness the power of behavioral insights to support sustainable behaviors.