Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States

24 Pages Posted: 29 Oct 2011 Last revised: 5 Jun 2022

See all articles by Matthew J. Kotchen

Matthew J. Kotchen

Yale University; National Bureau of Economic Research (NBER)

Kevin J Boyle

Virginia Tech

Anthony Leiserowitz

Yale University

Date Written: October 2011

Abstract

This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.

Suggested Citation

Kotchen, Matthew J. and Boyle, Kevin J and Leiserowitz, Anthony, Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States (October 2011). NBER Working Paper No. w17539, Available at SSRN: https://ssrn.com/abstract=1950957

Matthew J. Kotchen (Contact Author)

Yale University ( email )

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National Bureau of Economic Research (NBER) ( email )

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Kevin J Boyle

Virginia Tech ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

Anthony Leiserowitz

Yale University ( email )

493 College St
New Haven, CT CT 06520
United States

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