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Households’ Willingness to Pay for Substituting Natural Gas with Renewable Methane: A Contingent Valuation Experiment in South Korea

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  • Sung-Min Kim

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

  • Ju-Hee Kim

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

  • Seung-Hoon Yoo

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

Abstract

South Korea is planning to substitute some residential natural gas (NG), a fossil fuel that relies on imports, with renewable methane (RM) from bio-gas, a renewable energy source. Thus, information about households’ willingness to pay (WTP) for implementing the plan is widely needed. This article, therefore, examines the WTP using an economic approach of contingent valuation (CV). More specifically, 1000 households were asked about the additional WTP for RM over NG through in-person face-to-face surveys across the country, adopting a dichotomous choice question format, during August 2018. As a few interviewees responded zero WTP for various reasons, a spike model that could reflect zero WTP observations was utilized. The household additional WTP for RM over NG was estimated, with statistical significance, as 191.46 Korean won (USD 0.17) per m 3 and worth 31.9% of the average price of residential NG. This value means a price premium for RM compared to NG. In other words, this study found that South Korean consumers value residential RM about 1.32 times as much as residential NG. These results from the CV experiment could be a useful reference in establishing and implementing RM-related policies.

Suggested Citation

  • Sung-Min Kim & Ju-Hee Kim & Seung-Hoon Yoo, 2020. "Households’ Willingness to Pay for Substituting Natural Gas with Renewable Methane: A Contingent Valuation Experiment in South Korea," Energies, MDPI, vol. 13(12), pages 1-13, June.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:12:p:3082-:d:371588
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    References listed on IDEAS

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    1. Georgia K. Roberts & Dominique J. Pride & Joseph M. Little & Julie M. Mueller, 2023. "Willingness to Pay for Renewably-Sourced Home Heating in the Fairbanks North Star Borough," Energies, MDPI, vol. 16(8), pages 1-14, April.

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