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Household Ecological Preferences and Renewable Energy Spending

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  • Maciej Malaczewski

Abstract

In this paper, we propose a model that demonstrates the influence of household ecological preferences on their acceptance of spending on renewable energy. The model discusses the production of energy from both non-renewable and renewable sources, the quality of the natural environment, pollution emissions, and utility maximization. If households choose to reduce pollutant emissions, they should reduce their levels of consumption. The main aspect that distinguishes the proposed model is the assumption of complementarity between physical capital and energy. This complementarity exists due to the fact that non-renewable natural resources are the main energy source throughout the world. The presented model is solved and analysed in detail. Our analysis of the model leads to the conclusion that maximizing the utility share of the total production spent on renewable energy generation depends on the relation of both preference parameters, not on each individual preference parameter. Since the presented model helps to explain several economic mechanisms, it may become incorporated into a larger model.

Suggested Citation

  • Maciej Malaczewski, 2019. "Household Ecological Preferences and Renewable Energy Spending," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(4), pages 465-478.
    • Handle: RePEc:prg:jnlpep:v:2019:y:2019:i:4:id:713:p:465-478
    DOI: 10.18267/j.pep.713
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    More about this item

    Keywords

    ecological preferences; complementarity between natural resources and capital; energy; natural resource use; pollution;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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