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Households’ WTP for the Reliability of Gas Supply

Author

Listed:
  • Chou, Wan-Jung
  • Bigano, Andrea
  • Hunt, Alistair
  • La Branche, Stephane
  • Markandya, Anil
  • Pierfederici, Roberta

Abstract

The security of natural gas supply is an important issue for all EU countries due to the region’s heavy dependence on imported supply sources and in light of energy demand for gas that is continuously increasing. Discussions have emphasised strategies for securing the supply at the macro level, e.g. diversification in supply sources, increase in storage capacity, etc. By contrast, consumers’ demand for the reliability of gas supply is rarely investigated. Hence this study was conducted to examine the economic implications associated with the security of gas supply directly to domestic consumers. Based on the choice experiment approach, household surveys were conducted in France, Italy and the UK. The results confirmed that the degree of the economic impact of a disruption of gas supply to domestic consumers was a function of the duration of a supply disruption and the season in which a supply cut would take place, as well as other preferences of consumers. The willingness to pay to secure per unit of gas consumption, or alternatively the costs of gas unsupplied, was estimated at between €2.65/cubic metre and €41.48/cubic metre across three different European countries.

Suggested Citation

  • Chou, Wan-Jung & Bigano, Andrea & Hunt, Alistair & La Branche, Stephane & Markandya, Anil & Pierfederici, Roberta, 2011. "Households’ WTP for the Reliability of Gas Supply," Energy: Resources and Markets 115740, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemer:115740
    DOI: 10.22004/ag.econ.115740
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    Cited by:

    1. Jang, Jinyong & Lee, Jongsu & Yoo, Seung-Hoon, 2014. "The public׳s willingness to pay for securing a reliable natural gas supply in Korea," Energy Policy, Elsevier, vol. 69(C), pages 3-13.
    2. Kim, Jinsoo & Kim, Jihyo, 2015. "Korean public’s perceptions on supply security of fossil fuels: A contingent valuation analysis," Applied Energy, Elsevier, vol. 137(C), pages 301-309.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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