IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v37y2009i12p5408-5416.html
   My bibliography  Save this article

Willingness to pay for green electricity in Korea: A contingent valuation study

Author

Listed:
  • Yoo, Seung-Hoon
  • Kwak, So-Yoon

Abstract

Green electricity is energy that is generated from renewable energy sources such as solar power, wind power, small-scale hydroelectric power, tidal power, and biomass power. These sources mostly do not produce pollutants and are considered environmentally friendly. However, considering the current state of technology, they are more costly. Government should take visible actions to compensate for the increased production costs. This paper attempts to apply a contingent valuation (CV) method to obtain at least a preliminary evaluation of the benefits that ensue from the introduction of the policy that raises the percentage of green electricity consumption from 0.2% of the total electricity supply to 7% by 2011. Overall, the CV survey was successful in eliciting the willingness to pay (WTP) for green electricity considering that the CV method operated within respondents' abilities to answer and the WTP estimates were statistically significant. The monthly mean WTP estimates from parametric and non-parametric methods were KRW 1681 (USD 1.8) and KRW 2072 (USD 2.2), respectively. The estimates of the annual benefits to relevant residents amounted to KRW 150.5 billion (USD 157.5 million) and KRW 185.6 billion (USD 194.2 million), respectively.

Suggested Citation

  • Yoo, Seung-Hoon & Kwak, So-Yoon, 2009. "Willingness to pay for green electricity in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 37(12), pages 5408-5416, December.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:12:p:5408-5416
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301-4215(09)00582-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cameron, Trudy Ann & James, Michelle D, 1987. "Efficient Estimation Methods for "Closed-ended' Contingent Valuation Surveys," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 269-276, May.
    2. Haab, Timothy C. & McConnell, Kenneth E., 1997. "Referendum Models and Negative Willingness to Pay: Alternative Solutions," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 251-270, February.
    3. W. Michael Hanemann, 1989. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Response Data: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 1057-1061.
    4. Seung-Hoon Yoo & Kyung-Suk Chae, 2001. "Measuring the Economic Benefits of the Ozone Pollution Control Policy in Seoul: Results of a Contingent Valuation Survey," Urban Studies, Urban Studies Journal Limited, vol. 38(1), pages 49-60, January.
    5. Roe, Brian & Teisl, Mario F. & Levy, Alan & Russell, Matthew, 2001. "US consumers' willingness to pay for green electricity," Energy Policy, Elsevier, vol. 29(11), pages 917-925, September.
    6. Duffy, Patricia A. & Hite, Diane & Bransby, David & Slaton, Christa, 2007. "Consumer Willingness-to-Pay for Green Energy: Results from Focus Groups," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34913, Southern Agricultural Economics Association.
    7. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    8. Wiser, Ryan H., 2007. "Using contingent valuation to explore willingness to pay for renewable energy: A comparison of collective and voluntary payment vehicles," Ecological Economics, Elsevier, vol. 62(3-4), pages 419-432, May.
    9. Batley, S. L. & Colbourne, D. & Fleming, P. D. & Urwin, P., 2001. "Citizen versus consumer: challenges in the UK green power market," Energy Policy, Elsevier, vol. 29(6), pages 479-487, May.
    10. Bateman, Ian J. & Langford, Ian H. & Jones, Andrew P. & Kerr, Geoffrey N., 2001. "Bound and path effects in double and triple bounded dichotomous choice contingent valuation," Resource and Energy Economics, Elsevier, vol. 23(3), pages 191-213, July.
    11. Wood, Lisa L. & Kenyon, Anne E. & Desvousges, William H. & Morander, Lyn K., 1995. "How much are customers willing to pay for improvements in health and environmental quality?," The Electricity Journal, Elsevier, vol. 8(4), pages 70-77, May.
    12. Daniel McFadden, 1994. "Contingent Valuation and Social Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 689-708.
    13. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
    14. Salmela, Suvi & Varho, Vilja, 2006. "Consumers in the green electricity market in Finland," Energy Policy, Elsevier, vol. 34(18), pages 3669-3683, December.
    15. Cameron Trudy Ann & Quiggin John, 1994. "Estimation Using Contingent Valuation Data from a Dichotomous Choice with Follow-Up Questionnaire," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 218-234, November.
    16. McConnell, K. E., 1990. "Models for referendum data: The structure of discrete choice models for contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 19-34, January.
    17. Zarnikau, Jay, 2003. "Consumer demand for `green power' and energy efficiency," Energy Policy, Elsevier, vol. 31(15), pages 1661-1672, December.
    18. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
    19. Mattias Boman & Göran Bostedt & Bengt Kriström, 1999. "Obtaining Welfare Bounds in Discrete-Response Valuation Studies: A Non-Parametric Approach," Land Economics, University of Wisconsin Press, vol. 75(2), pages 284-294.
    20. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    21. Nomura, Noboru & Akai, Makoto, 2004. "Willingness to pay for green electricity in Japan as estimated through contingent valuation method," Applied Energy, Elsevier, vol. 78(4), pages 453-463, August.
    22. Ek, Kristina, 2005. "Public and private attitudes towards "green" electricity: the case of Swedish wind power," Energy Policy, Elsevier, vol. 33(13), pages 1677-1689, September.
    23. Hansla, Andre & Gamble, Amelie & Juliusson, Asgeir & Garling, Tommy, 2008. "Psychological determinants of attitude towards and willingness to pay for green electricity," Energy Policy, Elsevier, vol. 36(2), pages 768-774, February.
    24. Bengt Kriström, 1997. "Spike Models in Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1013-1023.
    25. Close, Josie & Pang, Huey & Lam, K.H. & Li, Thomas, 2006. "10% from renewables? The potential contribution from an HK schools PV installation programme," Renewable Energy, Elsevier, vol. 31(11), pages 1665-1672.
    26. Borchers, Allison M. & Duke, Joshua M. & Parsons, George R., 2007. "Does willingness to pay for green energy differ by source?," Energy Policy, Elsevier, vol. 35(6), pages 3327-3334, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huh, Sung-Yoon & Lee, Jongsu & Shin, Jungwoo, 2015. "The economic value of South Korea׳s renewable energy policies (RPS, RFS, and RHO): A contingent valuation study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 64-72.
    2. Elcin Akcura, 2013. "Mandatory versus voluntary payment for green electricity," Working Papers 161, European Bank for Reconstruction and Development, Office of the Chief Economist.
    3. Elcin Akcura, 2013. "Mandatory vs Voluntary Payment for Green Electricity," Working Papers EPRG 1316, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    4. Aravena, Claudia & Hutchinson, W. George & Longo, Alberto, 2012. "Environmental pricing of externalities from different sources of electricity generation in Chile," Energy Economics, Elsevier, vol. 34(4), pages 1214-1225.
    5. 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.
    6. Damigos, D. & Tourkolias, C. & Diakoulaki, D., 2009. "Households' willingness to pay for safeguarding security of natural gas supply in electricity generation," Energy Policy, Elsevier, vol. 37(5), pages 2008-2017, May.
    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. Kwak, So-Yoon & Yoo, Seung-Hoon, 2015. "The public’s value for developing ocean energy technology in the Republic of Korea: A contingent valuation study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 432-439.
    9. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    10. Claudy, Marius C. & Michelsen, Claus & O'Driscoll, Aidan, 2011. "The diffusion of microgeneration technologies - assessing the influence of perceived product characteristics on home owners' willingness to pay," Energy Policy, Elsevier, vol. 39(3), pages 1459-1469, March.
    11. Dagher, Leila & Bird, Lori & Heeter, Jenny, 2017. "Residential green power demand in the United States," Renewable Energy, Elsevier, vol. 114(PB), pages 1062-1068.
    12. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    13. John C. Whitehead & O. Ashton Morgan & William L. Huth, 2018. "Convergent validity of stated preference methods to estimate willingness-to-pay for seafood traceability: The case of Gulf of Mexico oysters," Economics Bulletin, AccessEcon, vol. 38(1), pages 326-335.
    14. Won-Seok Lee & Seung-Hoon Yoo & Jeehyeong Kim, 2013. "Measuring the Economic Benefits of the Tap Water Supply Service in Urban Areas: The Case of Korea," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(2), pages 619-627, January.
    15. Herbes, Carsten & Friege, Christian & Baldo, Davide & Mueller, Kai-Markus, 2015. "Willingness to pay lip service? Applying a neuroscience-based method to WTP for green electricity," Energy Policy, Elsevier, vol. 87(C), pages 562-572.
    16. Heng, Yan & Lu, Chao-Lin & Yu, Luqing & Gao, Zhifeng, 2020. "The heterogeneous preferences for solar energy policies among US households," Energy Policy, Elsevier, vol. 137(C).
    17. Zhang, Lei & Wu, Yang, 2012. "Market segmentation and willingness to pay for green electricity among urban residents in China: The case of Jiangsu Province," Energy Policy, Elsevier, vol. 51(C), pages 514-523.
    18. Gracia, Azucena & Barreiro-Hurlé, Jesús & Pérez y Pérez, Luis, 2012. "Can renewable energy be financed with higher electricity prices? Evidence from a Spanish region," Energy Policy, Elsevier, vol. 50(C), pages 784-794.
    19. 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, vol. 9(8), pages 1-12, August.
    20. Menegaki, Angeliki, 2008. "Valuation for renewable energy: A comparative review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(9), pages 2422-2437, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:37:y:2009:i:12:p:5408-5416. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.