A Review of Willingness to Pay Studies for Climate Change Mitigation in the Energy Sector

Abstract

A wide range of climate change mitigation policies have been developed around the world and these policies have become one of the major concerns, however there is still debate among scientists about what are the main external benefits and how to account for them and prepare effective climate change mitigation policies that might be widely accepted by society in general. One of the main ways to assess external benefit of climate change mitigation in energy sector is to conduct Willingness to Pay (WTP) assessments for climate change mitigation options by households. There are many studies on WTP assessment for climate stability conducted in recent years. The paper surveys the existing literature on WTP for climate change mitigation policy in the energy sector. The aim of the paper is to identify the common variables across a varied set of WTP studies in order to establish a basis for comparison. The key variables selected for analysis of WTP studies for climate change mitigation in energy sector addressed in the paper are: the WTP assessment methods; the main attributes used for comparing alternatives in WTP studies, targeted climate change mitigation policies in energy sector, mathematical model used to estimate WTP, the main socio-demographic factors having impact on WTP for climate change mitigation policies. The analysis of WTP studies for climate change mitigation is grouped in two areas: renewables and energy efficiency measures in households. The paper provides analytical structure for future studies to evaluate the effects of variation in key comparative elements upon WTP.

Society’s Willingness to Pay for Certified Dry Firewood Energy in Chile

“…Regarding the determining variables of the WTP for certified dry firewood, it was found that income is a relevant variable, which is consistent with the literature on the valuation of other sources of alternative energy for households (Johnson and Takama, 2012;Kooser, 2014;Streimikiene et al, 2019;Nduka, 2021). However, we did not find statistically significant evidence that education has an influence, contrary to what was found by authors such as Nduka (2021).…”

“…According to different authors, the methods of economic valuation have been classified into three categories: direct valuation, indirect valuation, and contingent valuation. The third is what is addressed here (Dixon and Hufschmidt, 1986;James, 1994;Haab and McConnell, 2002;Segerson, 2017;Streimikiene et al, 2019;Cuccia, 2020).…”

The future protection from the climate change-related hazards and the willingness to pay for home insurance in the coastal wetlands of West Sardinia, Italy

“…For example, a recent study on an Italian nationwide survey shows that WTP ranges a lot and the heterogeneity due to proposed public policies and individual characteristics is similar [35]. While these approaches generally focus on green technologies [28,29], many studies focus on adaptation strategies, such as coastal adaptation policies facing sea-level rise [76,77]. Very recently studies focused on stated preferences started analysing WTP for the adoption of nature-based solutions [30].…”

Analysis of Academic Literature on Environmental Valuation

“…Researchers must develop new approaches to deal with new elements in the valuation process. We expect that climate change, as one of the defining challenges of the 21st century, will attract most attention from researchers to propose new approaches in environmental valuation [41,42]. As knowledge and perception are subjective, the intangible aspects must be explicitly considered in the new valuation methods [13].…”