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Expected willingness to pay for wind energy in Atlantic Canada

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  • Koto, Prosper Senyo
  • Yiridoe, Emmanuel K.

Abstract

We investigate the demand-side of wind energy in three provinces in Atlantic Canada, including New Brunswick, Nova Scotia and Prince Edward Island. Empirical questions addressed include: (i) What are the determinants of the probability of paying a non-zero premium for electricity generated using wind technology?; (ii) Given participation, what drives how much more households are willing to pay a month, and what is the monthly premium or expected willingness-to-pay (WTP)?; and (iii) Is there heterogeneity in the expected WTP? The study design follows the contingent valuation framework and the survey questionnaire follows a payment-scale format, reducing the starting point bias and reduces the incidence of item non-response. The data is from a stratified random sample. We employ two-stage models, Cragg's hurdle and the two-part econometric models in the analysis. Scope and 0 WTP effects are explicitly explored. We find that the overall probability of participation is 0.73. University education, income, residential property ownership, concerns about the presence of wind turbines in neighborhoods, and externality affect the likelihood of participation. Households are willing to pay 14% more per month in energy bill for wind power. There is evidence of scope sensitivity. The results provide insights on what proportion of the population will participate and how much more they are willing to pay for wind energy.

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  • Koto, Prosper Senyo & Yiridoe, Emmanuel K., 2019. "Expected willingness to pay for wind energy in Atlantic Canada," Energy Policy, Elsevier, vol. 129(C), pages 80-88.
    • Handle: RePEc:eee:enepol:v:129:y:2019:i:c:p:80-88
    DOI: 10.1016/j.enpol.2019.02.009
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    More about this item

    Keywords

    Willingness-to-pay; Two-part model; Hurdle modelling; Wind energy; Externalities; Atlantic Canada;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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