Willingness to Pay for Climate Policy: A Review of Estimates
Gregory F. Nemet
University of Wisconsin - Madison - La Follette School of Public Affairs
University of Wisconsin - Madison
June 18, 2010
La Follette School Working Paper No. 2010-011
One explanation for the modest pace of efforts to mitigate climate change, both federally and internationally, is that constituents do not ascribe much beneficial value to new laws that change the way we produce and consume energy. We surveyed estimates of consumer willingness to pay (WTP) for climate policy to: (1) assess the validity of this explanation, (2) compare elicitation techniques, and (3) explore factors that might explain variation in WTP estimates. We recalculated WTP estimates on an equivalent basis across 27 studies and found a range for WTP of $22-$437/household annually, with a median of $135. We also discuss outliers not included in this range. Discrepancies among estimates drawn from American, Asian, and European samples enable some preliminary inferences about the effects of nationality on WTP for climate stability. Environmental attitudes and beliefs are common explanatory elements in WTP surveys. Others include income, education, and political views. While valuation methods and survey types vary, the great majority of existing work in this area has relied on contingent valuation.
Number of Pages in PDF File: 35
Keywords: climate policy, willingness to pay
JEL Classification: Q51, Q54, Q58
Date posted: June 19, 2010 ; Last revised: June 23, 2010
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