Households’ WTP for the Reliability of Gas Supply

23 Pages Posted: 25 Aug 2011

See all articles by Wan-Jung Chou

Wan-Jung Chou

APEC Research Centre for Typhoon and Society

Andrea Bigano

RFF-CMCC European Institute on Economics and the Environment; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici; Ca' Foscari University of Venice

Alistair Hunt

University of Bath - Department of Economics

Stephane La Branche

University of Grenoble - Institute of Political Studies Grenoble (IEP Grenoble)

Anil Markandya

Basque Centre for Climate Change (BC3); University of Bath

Roberta Pierfederici

Fondazione Eni Enrico Mattei (FEEM), CMCC - Euro Mediterranean Centre for Climate Change

Date Written: August 24, 2011

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.

Keywords: Energy Security, Gas Supply, Households, Willingness to Pay, Choice Experiment, EU

JEL Classification: C35, C83, C93, D12, Q41

Suggested Citation

Chou, Wan-Jung and Bigano, Andrea and Hunt, Alistair S. P. and La Branche, Stephane and Markandya, Anil and Pierfederici, Roberta, Households’ WTP for the Reliability of Gas Supply (August 24, 2011). FEEM Working Paper No. 58.2011, Available at SSRN: https://ssrn.com/abstract=1915965 or http://dx.doi.org/10.2139/ssrn.1915965

Wan-Jung Chou (Contact Author)

APEC Research Centre for Typhoon and Society ( email )

9F, No. 97, Sec. 1, Roosevelt Road
10093 Taipei
Taiwan

Andrea Bigano

RFF-CMCC European Institute on Economics and the Environment ( email )

Via Bergognone, 34
Milan, 20144
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Ca' Foscari University of Venice ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy

Alistair S. P. Hunt

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
+44 (0) 1225+826826 (Phone)
+44 (0) 1225+826381 (Fax)

Stephane La Branche

University of Grenoble - Institute of Political Studies Grenoble (IEP Grenoble)

IEP - B.P. 48
Grenoble Cedex 9, 38040
France

Anil Markandya

Basque Centre for Climate Change (BC3)

Gran Vía 35-2
Bilbao, Vizcaya 48009
Spain

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Roberta Pierfederici

Fondazione Eni Enrico Mattei (FEEM), CMCC - Euro Mediterranean Centre for Climate Change ( email )

C.so Magenta 63
Milano, 20123
Italy

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