Determinants of the price-premium for Green Energy: Evidence from an OECD cross-section
AbstractUsing data from a large, multi-country survey, this paper investigates the determinants of preferences for a completely green residential electricity system. Three important questions are addressed: (i) how much are households willing to pay to use only renewable energy? (ii) does willingnesstopay (WTP) vary significantly across household groups and countries? and (iii) what drives the decision to enter the (hypothetical) market for green energy and, given entry, what drives the level of WTP? The analysis here differs from previous ones in the literature in two distinct ways: first, data and analyses are comparable across countries and second, a comprehensive attempt to understanding 0 WTP and to accommodating unobserved heterogeneity is pursued. The survey data indicate, in common with prior analyses and market experience, a low WTP, about 910%. This study addresses a key aspect: how important is income for understanding WTP, relative to more âattitudinalâ determinants? Surprisingly, income exerts a small (and insignificant) effect on WTP, at the margin; this result is robust to accounting for censoring and unobserved heterogeneity. Key determinants of the WTP decision appear to be environmental attitudes, particularly membership in an environmental organization.
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Bibliographic InfoPaper provided by CERE - the Center for Environmental and Resource Economics in its series CERE Working Papers with number 2013:7.
Length: 40 pages
Date of creation: 27 Oct 2013
Date of revision: 30 Jun 2014
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Web page: http://www.cere.se
green electricity; willingness-to-pay; censoring; quantile regression; renewable energy;
Find related papers by JEL classification:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-ENE-2014-02-02 (Energy Economics)
- NEP-ENV-2014-02-02 (Environmental Economics)
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