Willingness to pay for domestic biogas plants and distributing carbon revenues to influence their purchase: A case study in Nepal

Despite the potential benefits to human health and greenhouse gas mitigation, the uptake of biogas plants in Nepal and other developing countries has been less than optimal. We investigate the potential to stimulate the market for biogas plants through the distribution of environmental income generated from carbon credits. While previously identified in the literature, this has received limited experimental testing in the context of rural households in developing countries. We first use contingent valuation to assess willingness to pay for domestic biogas plants. Using Heckman selection models, we then examine how the provision of carbon revenue earnings influences household willingness to purchase in the absence of a subsidy. We find that households are willing to pay on average US $361.54 for a biogas digester, which is less than full market price of US $433.79, but higher than the current market price net of government subsidy. Household willingness to purchase is influenced by access to environmental income for those not initially in the market, but has no effect on those initially willing to purchase a biogas plant. Our findings suggest that the provision of environmental income has the potential to lead to more rapid and widespread adoption of biogas plants.