Abstract

Using data from a survey of households in 11 OECD countries, 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 willingness-to-pay (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 studies on green energy in two ways: first, data and analyses are comparable across countries and second, a comprehensive attempt is made to understand 0 WTP, and to accommodate-using a censored quantile regression (CQR) framework-unobserved heterogeneity. The survey data indicate a low WTP, at 11-12 % of current electric bill. This study also addresses a key question: how important is income for understanding WTP, relative to more "attitudinal" determinants? The effect of income overall appears ambiguous, with Tobit-like models indicating that income is not significant while the CQR indicates that income exerts a significant effect near the center of the distribution of WTP. Across all frameworks used, a key determinant of WTP appears to be environmental attitudes, particularly membership in an environmental organization.

Keywords

Green electricity; Willingness-to-pay; Censoring; Quantile regression; Renewable energy

Published in

Environmental and Resource Economics
2016, Volume: 64, number: 2, pages: 173-204

SLU Authors

• Kriström, Bengt

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    

Sustainable Development Goals

SDG7 Ensure access to affordable, reliable, sustainable and modern energy for all


UKÄ Subject classification

Economics


Publication identifier

DOI: https://doi.org/10.1007/s10640-014-9864-y

Permanent link to this page (URI)

https://res.slu.se/id/publ/66430