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Willingness to Pay for Climate Policy: A Review of Estimates

La Follette School Working Paper No. 2010-011

35 Pages Posted: 19 Jun 2010 Last revised: 23 Jun 2010

Gregory F. Nemet

University of Wisconsin - Madison - La Follette School of Public Affairs

Evan Johnson

University of Wisconsin - Madison

Date Written: June 18, 2010

Abstract

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.

Keywords: climate policy, willingness to pay

JEL Classification: Q51, Q54, Q58

Suggested Citation

Nemet, Gregory F. and Johnson, Evan, Willingness to Pay for Climate Policy: A Review of Estimates (June 18, 2010). La Follette School Working Paper No. 2010-011. Available at SSRN: https://ssrn.com/abstract=1626931 or http://dx.doi.org/10.2139/ssrn.1626931

Gregory F. Nemet (Contact Author)

University of Wisconsin - Madison - La Follette School of Public Affairs ( email )

1225 Observatory Drive
Madison, WI 53705
United States

Evan Johnson

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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