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Public's willingness to pay a premium for bioethanol in Korea: A contingent valuation study

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  • Lim, Seul-Ye
  • Kim, Hyo-Jin
  • Yoo, Seung-Hoon

Abstract

Bioethanol (BE), a renewable energy, is well-known to mitigate the greenhouse gas emissions compared with conventional gasoline. Thus, the Korean government is considering the introduction of a BE mandate in which the legal blend is 5% BE and 95% gasoline (E5) until 2020 in order to expand BE use. We should examine the public acceptability of the introduction, which incurs a rise in the fuel price. This study attempts to assess the public's willingness to pay (WTP) a premium for introducing the E5 program in Korea. To this end, a contingent valuation (CV) survey of 1000 randomly selected consumers was conducted in 2014 across the nation. We used a one-and-one-half-bound dichotomous choice question in the CV survey and applied the spike model to handle the WTP data with zeros. The mean WTP, a premium for the E5 per liter, is estimated to be KRW 290 (USD 0.27), which is statistically meaningful at the 1% level. This value amounts to 15.6% of the gasoline retail price in 2014 (KRW 1856 or USD 1.70) and can be interpreted as the external benefit of BE. We can conclude that gasoline consumers in Korea are ready to pay a significant premium for the E5.

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  • Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2017. "Public's willingness to pay a premium for bioethanol in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 101(C), pages 20-27.
    • Handle: RePEc:eee:enepol:v:101:y:2017:i:c:p:20-27
    DOI: 10.1016/j.enpol.2016.11.010
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    2. Dacinia Crina Petrescu & Ruxandra Mălina Petrescu-Mag, 2017. "Setting the Scene for a Healthier Indoor Living Environment: Citizens’ Knowledge, Awareness, and Habits Related to Residential Radon Exposure in Romania," Sustainability, MDPI, vol. 9(11), pages 1-19, November.
    3. Xie, Bai-Chen & Zhao, Wei, 2018. "Willingness to pay for green electricity in Tianjin, China: Based on the contingent valuation method," Energy Policy, Elsevier, vol. 114(C), pages 98-107.
    4. Kim, Hyo-Jin & Lee, Hye-Jeong & Yoo, Seung-Hoon, 2018. "Are South Korean people willing to pay for official development assistance for building renewable power plants in developing countries?," Energy Policy, Elsevier, vol. 118(C), pages 626-632.
    5. Seo-Hyeon Min & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "The environmental benefits of reducing thermal discharge from nuclear power generation," Energy & Environment, , vol. 28(8), pages 885-894, December.
    6. Anthony PARIS & Pascal GASTINEAU & Pierre-Alexandre MAHIEU & Benoît CHEZE, 2020. "Citizen involvement in the energy transition: Highlighting the role played by the spatial heterogeneity of preferences in the public acceptance of biofuels," LEO Working Papers / DR LEO 2828, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    7. Joseph Kim & Hyo-Jin Kim & Seung-Hoon Yoo, 2018. "Public Value of Marine Biodiesel Technology Development in South Korea," Sustainability, MDPI, vol. 10(11), pages 1-12, November.
    8. Mamadzhanov, Alisher & McCluskey, Jill J. & Li, Tongzhe, 2019. "Willingness to pay for a second-generation bioethanol: A case study of Korea," Energy Policy, Elsevier, vol. 127(C), pages 464-474.
    9. Min-Kyu Lee & Ju-Hee Kim & Seung-Hoon Yoo, 2018. "Public Willingness to Pay for Increasing Photovoltaic Power Generation: The Case of Korea," Sustainability, MDPI, vol. 10(4), pages 1-11, April.
    10. Lee, Kyung-Sook & Kim, Ju-Hee & Yoo, Seung-Hoon, 2021. "Would people pay a price premium for electricity from domestic wind power facilities? The case of South Korea," Energy Policy, Elsevier, vol. 156(C).
    11. Gal Hochman & Chrysostomos Tabakis, 2020. "Biofuels and Their Potential in South Korea," Sustainability, MDPI, vol. 12(17), pages 1-17, September.
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    13. Jåstad, Eirik Ogner & Bolkesjø, Torjus Folsland & Rørstad, Per Kristian, 2020. "Modelling effects of policies for increased production of forest-based liquid biofuel in the Nordic countries," Forest Policy and Economics, Elsevier, vol. 113(C).

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