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Willingness to Pay for Energy-Saving Measures in Residential Buildings

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Author Info

  • Silvia Banfi

    ()
    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Mehdi Farsi

    ()
    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Massimo Filippini

    ()
    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Martin Jakob

    ()
    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

Abstract

This paper uses a choice experiment to evaluate the consumers’ willingness to pay for energysaving measures in residential buildings. These measures include air renewal systems as well as thermal insulation of windows and facades. In addition to considerable savings in energy consumption, these systems incur other “private” benefits such as thermal comfort, air quality and protection against noise. The extremely low rates of usage of these systems in Switzerland’s residential buildings is generally explained by consumers’ lack of information and/or the insignificance of private benefits, which have led the Swiss authorities to adopt a promotion policy through direct subsidies and information campaigns. The valuation of private benefits of energy-saving measures has been estimated using hypothetical choice experiments performed on two samples consisting respectively of 163 tenants living in apartment buildings and 142 residents of single-family houses. The respondents were repeatedly asked to choose between their status quo and an alternative situation characterized by different attributes and prices. The estimation method is based on a fixed effect logit model. The results suggest a significant willingness to pay for energy-saving attributes.

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Bibliographic Info

Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 05-41.

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Length: 15 pages
Date of creation: Apr 2005
Date of revision:
Handle: RePEc:cee:wpcepe:05-41

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Keywords: energy efficiency; choice experiment; conjoint analysis; discrete choice; housing;

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References

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  1. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
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  4. Cameron, Trudy Ann, 1985. "A Nested Logit Model of Energy Conservation Activity by Owners of Existing Single Family Dwellings," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 205-11, May.
  5. Jakob, Martin, 2006. "Marginal costs and co-benefits of energy efficiency investments: The case of the Swiss residential sector," Energy Policy, Elsevier, vol. 34(2), pages 172-187, January.
  6. Poortinga, Wouter & Steg, Linda & Vlek, Charles & Wiersma, Gerwin, 2003. "Household preferences for energy-saving measures: A conjoint analysis," Journal of Economic Psychology, Elsevier, vol. 24(1), pages 49-64, February.
  7. Sayman, Serdar & Onculer, Ayse, 2005. "Effects of study design characteristics on the WTA-WTP disparity: A meta analytical framework," Journal of Economic Psychology, Elsevier, vol. 26(2), pages 289-312, April.
  8. Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
  9. Bergmann, Ariel & Hanley, Nick & Wright, Robert, 2006. "Valuing the attributes of renewable energy investments," Energy Policy, Elsevier, vol. 34(9), pages 1004-1014, June.
  10. Franses, Ph.H.B.F. & Verhoef, P.C., 2002. "On combining revealed and stated preferences to forecast customer behaviour: three case studies," Econometric Institute Research Papers EI 2002-04, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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