| Understanding why government officials behave in certain ways under particular circumstances is an important theme in political science. This research explores the design of policies and incentives targeted at public sector officials, in particular the use of market based policy tools in a non-market environment, and the influence of that organizational environment on the effectiveness of the policy. The research examines the case of Department of Defense (DoD) facility energy management. DoD energy policy includes a provision for the retention of savings generated by conservation activities: two-thirds of the savings is retained at the installation generating the savings, half to used for further investment in energy conservation, and half to be used for general morale, welfare, and recreation activities. This policy creates a financial incentive for installation energy managers to establish higher quality and more active conservation programs.; A formal written survey of installation energy managers within DoD was conducted, providing data to test hypotheses regarding policy effectiveness and factors affecting policy implementation. Additionally, two detailed implementation case studies were conducted in order to gain further insights.; Results suggest that policy design needs to account for the environment within which the policy will be implemented, particularly organizational culture and standard operating procedures. The retention of savings policy failed to achieve its intended outcome—retention of savings for re-investment in energy conservation—because the role required of the financial management community was outside its normal mode of operation and interests and the budget process for allocating resources did not include a mechanism for retention of savings. The policy design did not adequately address these start-up barriers to implementation. This analysis has shown that in order for retention of savings, or similar policies based on market-type mechanisms, to be effective in the public sector context, the required cultural changes and appropriate implementing mechanisms must be provided for in the policy design. |
