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Valuation of environmental and societal trade-offs of renewable energy sources

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  • Kosenius, Anna-Kaisa
  • Ollikainen, Markku

Abstract

Use of renewable energy sources is one solution to decrease green house gas emissions and the use of polluting fossil fuels. Renewables differ in their environmental and societal impacts, and to design sound renewable energy policy, societies need to assess the trade-offs between alternative sources. To enable the evaluation and comparison of renewable energy production alternatives in Finland, this paper applies the choice experiment to elicit the monetary information on people's preferences for four renewable energy sources: wind power, hydro power and energy from crops and wood, and considers four impacts of energy production: effects on biodiversity, local jobs, carbon emissions and household's electricity bill. The nested logit analysis reveals that higher income, male gender, young age, and pro-environmental attitude increase the probability to choose renewable energy instead of the current energy mix. Wind power is, on average, the most popular renewable energy technology, but regional differences exist. Biodiversity deterioration should be avoided. The national aggregate willingness to pay, based on stated preferences rather than preferences revealed by actual market behavior, for a combination of renewable energy technologies that corresponds to Finland's climate change and energy policy is over 500 million Euros.

Suggested Citation

  • Kosenius, Anna-Kaisa & Ollikainen, Markku, 2013. "Valuation of environmental and societal trade-offs of renewable energy sources," Energy Policy, Elsevier, vol. 62(C), pages 1148-1156.
  • Handle: RePEc:eee:enepol:v:62:y:2013:i:c:p:1148-1156
    DOI: 10.1016/j.enpol.2013.07.020
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    References listed on IDEAS

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