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Estimating the economic value of residential electricity use in the Republic of Korea using contingent valuation

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  • Lim, Kyoung-Min
  • Lim, Seul-Ye
  • Yoo, Seung-Hoon

Abstract

This study attempts to estimate the economic value of residential electricity use in the Republic of Korea. According to micro-economic theory, the economic benefit of residential electricity consumed is the sum of the actual residential electricity price and the additional WTP (willingness to pay) for the consumption. We apply the dichotomous choice contingent valuation method to assess the additional WTP. Moreover, the spike model is applied to dealing with the zero WTP responses. The results show that the mean additional WTP for the residential electricity is estimated to be KRW 15.38 (USD 0.01) per kWh. Given that the average price of residential electricity is KRW 103.40 (USD 0.10) per kWh at the time of the survey, the economic benefit that ensues from the residential electricity consumption is computed as KRW 118.78 (USD 0.11) per kWh. This information can be beneficially utilized in conducting an economic feasibility study for a new project related to residential electricity supply service.

Suggested Citation

  • Lim, Kyoung-Min & Lim, Seul-Ye & Yoo, Seung-Hoon, 2014. "Estimating the economic value of residential electricity use in the Republic of Korea using contingent valuation," Energy, Elsevier, vol. 64(C), pages 601-606.
  • Handle: RePEc:eee:energy:v:64:y:2014:i:c:p:601-606
    DOI: 10.1016/j.energy.2013.11.016
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    Cited by:

    1. Lin, Boqiang & Tan, Ruipeng, 2017. "Are people willing to pay more for new energy bus fares?," Energy, Elsevier, vol. 130(C), pages 365-372.
    2. Ju-Hee Kim & Hyo-Jin Kim & Seung-Hoon Yoo, 2018. "Consumers’ Willingness to Pay for Net-Zero Energy Apartment in South Korea," Sustainability, MDPI, Open Access Journal, vol. 10(5), pages 1-12, May.
    3. Ladenburg, Jacob, 2014. "Dynamic properties of the preferences for renewable energy sources – A wind power experience-based approach," Energy, Elsevier, vol. 76(C), pages 542-551.
    4. Ju-Hee Kim & Kyung-Kyu Lim & Seung-Hoon Yoo, 2019. "Evaluating Residential Consumers’ Willingness to Pay to Avoid Power Outages in South Korea," Sustainability, MDPI, Open Access Journal, vol. 11(5), pages 1-12, February.
    5. Hyo-Jin Kim & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households," Sustainability, MDPI, Open Access Journal, vol. 9(8), pages 1-12, August.
    6. Nkosi, Nomsa Phindile & Dikgang, Johane, 2018. "Pricing electricity blackouts among South African households," Journal of Commodity Markets, Elsevier, vol. 11(C), pages 37-47.
    7. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2018. "Household willingness to pay for expanding fuel cell power generation in Korea: A view from CO2 emissions reduction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 242-249.
    8. Hyo-Jin Kim & Su-Mi Han & Seung-Hoon Yoo, 2018. "Measuring the Economic Benefits of Industrial Natural Gas Use in South Korea," Sustainability, MDPI, Open Access Journal, vol. 10(7), pages 1-10, June.
    9. Do,Quy-Toan & Jacoby,Hanan G., 2020. "Sophisticated Policy with Naive Agents : Habit Formation and Piped Water in Vietnam," Policy Research Working Paper Series 9207, The World Bank.
    10. Song, Tae-Ho & Lim, Kyoung-Min & Yoo, Seung-Hoon, 2015. "Estimating the public’s value of implementing the CO2 emissions trading scheme in Korea," Energy Policy, Elsevier, vol. 83(C), pages 82-86.
    11. Hyo-Jin Kim & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "Are Korean Households Willing to Pay a Premium for Induction Cooktops over Gas Stoves?," Sustainability, MDPI, Open Access Journal, vol. 9(9), pages 1-10, August.
    12. Hye-Jeong Lee & Hyo-Jin Kim & Seung-Hoon Yoo, 2018. "The Public Willingness to Pay for Reducing the Incidence of Hazardous Chemical Spill Accidents by Half in South Korea," Sustainability, MDPI, Open Access Journal, vol. 10(8), pages 1-15, July.
    13. Lee, Chul-Yong & Lee, Min-Kyu & Yoo, Seung-Hoon, 2017. "Willingness to pay for replacing traditional energies with renewable energy in South Korea," Energy, Elsevier, vol. 128(C), pages 284-290.
    14. Kim, Hyo-Jin & Lim, Seul-Ye & Yoo, Seung-Hoon, 2017. "Is the Korean public willing to pay for a decentralized generation source? The case of natural gas-based combined heat and power," Energy Policy, Elsevier, vol. 102(C), pages 125-131.
    15. 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.
    16. Seo-Hyeon Min & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "Consumers’ Willingness to Pay a Premium for Eco-Labeled LED TVs in Korea: A Contingent Valuation Study," Sustainability, MDPI, Open Access Journal, vol. 9(5), pages 1-12, May.
    17. Poder, Thomas G. & He, Jie, 2017. "Willingness to pay for a cleaner car: The case of car pollution in Quebec and France," Energy, Elsevier, vol. 130(C), pages 48-54.
    18. Sun, Chuanwang & Yuan, Xiang & Yao, Xin, 2016. "Social acceptance towards the air pollution in China: Evidence from public's willingness to pay for smog mitigation," Energy Policy, Elsevier, vol. 92(C), pages 313-324.
    19. Nejat, Payam & Jomehzadeh, Fatemeh & Taheri, Mohammad Mahdi & Gohari, Mohammad & Abd. Majid, Muhd Zaimi, 2015. "A global review of energy consumption, CO2 emissions and policy in the residential sector (with an overview of the top ten CO2 emitting countries)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 843-862.
    20. Johannes Breit & Satoru Komatsu & Shinji Kaneko & Partha Pratim Ghosh, 2016. "Evaluating households’ preferences regarding reducing power outages in rural areas: cases in the Ganges Floodplain in Bangladesh," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(1), pages 73-94, February.
    21. Kim, Kayoung & Nam, Heekoo & Cho, Youngsang, 2015. "Estimation of the inconvenience cost of a rolling blackout in the residential sector: The case of South Korea," Energy Policy, Elsevier, vol. 76(C), pages 76-86.

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