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The Impact of Location and Proximity on Consumers’ Willingness to Pay for Renewable and Alternative Electricity: The Case of West Virginia

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  • Nkansah, Kofi
  • Collins, Alan

Abstract

In 2015, West Virginia will implement a Renewable and Alternative Energy Portfolio Standards Act. Meeting these standards with either natural gas or wind power will generate different welfare impacts across society. In particular, this study examined how energy source and generation proximity influence consumers’ willingness-to-pay (WTP) for electricity. Using choice modelling, residents within two counties with distinct location characteristics (existing coal power plant or wind farm) were asked to choose between a renewable source (wind farm) and an alternative energy source (natural gas power plant). We also seek to determine how residents’ proximity to a hypothetical electricity generation facility (wind farm or natural gas generation source) influences their WTP for renewable and alternative electricity. Results showed that the sampled population in both counties were willing to pay a much higher positive premium to site a natural gas-fired power plant at a distances far from their residence compared to siting wind turbines at a similar distance. Compensation was required to site a natural gas-fired power plant at a moderate distance from an individuals’ residence.

Suggested Citation

  • Nkansah, Kofi & Collins, Alan, 2014. "The Impact of Location and Proximity on Consumers’ Willingness to Pay for Renewable and Alternative Electricity: The Case of West Virginia," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 175698, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:175698
    DOI: 10.22004/ag.econ.175698
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    References listed on IDEAS

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    1. Ståle Navrud & Kirsten Grønvik Bråten, 2007. "Consumers' Preferences for Green and Brown Electricity : a Choice Modelling Approach," Revue d'économie politique, Dalloz, vol. 117(5), pages 795-811.
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    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Environmental Economics and Policy; Institutional and Behavioral Economics; Resource /Energy Economics and Policy;
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