Transcript A Contingent Valuation Study Comparing Citizen`s WTP for Climate

University of Wisconsin-Eau Claire
Assessing Citizens’ Willingness-to-Pay
for Climate Change Mitigation Policy
Action in China and the United States
Eric Jamelske, Ph.D.
Economics Department
UW-Eau Claire
Matthew Winden, Ph.D.
Economics Department
UW-Whitewater
University of Wisconsin-Eau Claire
Outline
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Introduction/Background
– Climate Change Science, Public Opinion, International Policy
– Contingent Valuation, WTP
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Survey/Sample
Methodology
Results
Conclusion
Discussion
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IPCC Call for Reduced GHG Emissions
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Need to act now, longer delay, more expensive
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50-50 chance of avoiding most dangerous scenarios, cut emissions
by at least 40% from 2010 levels by the 2050
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Effective action requires international cooperation
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Climate Change Mitigation Policy
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Policies required to support the development of a range of lowcarbon and high-efficiency technologies on an urgent timescale
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Establish a carbon price, through tax, trading or regulation is an
essential foundation for climate-change policy.
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WTP estimates for climate stabilization provide means of assessing,
understanding and conveying benefits of action
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Willingness of public to incur substantial costs to prevent/address
CC will be key determinant of success/failure of CC policy
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Contingent Valuation Method
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CV began as intellectual exercise with limited practical relevance
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CV study of loss associated with the Exxon Valdez oil spill in
Alaska (Carson et al. 1992)
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National Oceanic and Atmospheric Administration (NOAA) expert
panel on CV validity
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Guidelines for applying CV method (Arrow et al. 1993)
Survey of Adults and College Students
in China and the US
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Is climate change happening?
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Is it anthropogenic?
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What does science say?
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What is the threat?
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How concerned are you?
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What should be done?
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Willingness to pay?
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Demographics
Our Sample (N = 7,358)
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2,335 US college students
 CA, NE, RI, WI, CO, MD, SC
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1,670 Chinese college students
 Beijing, Chengdu, Guangzhou, Xian, Shanghai
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1,306 US adults
 CA, NE, RI, WI
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2,047 Chinese adults
 Beijing, Chengdu, Guangzhou, Xian
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Survey Results
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Chinese citizens show greater acceptance of CC realities compared
to US citizens
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More likely to believe in anthropogenic CC
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Less likely to see scientific disagreement on anthropogenic CC
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More likely to see threat to humans from CC
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Less likely to be unconcerned about CC
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Survey Results
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Place higher importance on environment compared to the economy
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More likely to support joining international CC agreement
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US political divide over CC, Six Americas
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What about WTP?
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Willingness-to-Pay for Climate Change Policy
Assessing Willingness-to-Pay (WTP)
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Double-bounded dichotomous choice
Randomly assigned starting values (20, 40, 60)
If no, then half (10, 20, 30)
If yes, then double (40, 80, 120)
US Dollars ($) vs Chinese Yuan (CNY)
US Census and China Statistical Yearbook
$20 is two meals, 20 CNY is two meals
Subway/Bus ride
Income in China and the United States
D-B Dichotomous Choice Regression Model
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Use midpoint income
Mean Annual Household WTP
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Approximate average income US > China (6.8X)
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Estimated mean WTP US > China (2.4X)
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Conditional on income, China WTP > US WTP (2-3X)
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US Income = $99,500
China Income = $14,500
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CC WTP Literature
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Review of 27 studies shows range of annual HH WTP $22 - $437,
median of $135 (2008 US $)
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Estimates from America, Asia, Europe samples
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Common explanatory variables include environmental attitudes and
beliefs, income, education and political views
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Nemet, G.F. & Johnson, E. (2010). Willingness to Pay for Climate
Policy: A Review of Estimates.
– La Follette School of Public Affairs, University of Wisconsin, Madison
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CC WTP Literature
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Average annual WTP among American households of $79-$89 to
reduce GHG US emissions by 17% (2010/2011 US $)
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No difference in WTP based on policy of cap and trade, carbon tax
or GHG regulation (assuming equal outcome)
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Republicans WTP less, but no difference after controlling for climate
change beliefs and attitudes
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Kotchen, J. et al. (2013). Willingness-to-Pay and Policy Instrument
Choice for Climate Change Policy in the United States.
– Energy Policy, 55:617-625
Comparison to Other Results
Comparison to Other Results
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Our US Mean WTP = $42.35/month
Share of Annual HH Income = 0.0051
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Our China mean WTP = $17.88/month
Share of Annual HH Income = 0.0148
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Conclusion
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Our WTP estimates are within range found in other research
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Perhaps slightly higher estimates from our results
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Our results are significantly higher than Kotchen et al.
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Our results also differ from Carlsson et al.
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More analysis needs to be done
University of Wisconsin-Eau Claire
Conclusion
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Greater acceptance of CC realities among Chinese citizens
compared to US appears to translate into higher WTP for CC
mitigation policy (adjusted for income differences)
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US respondents are WTP more (unconditional on income)
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Citizens in both countries exhibit a definite WTP for climate policy
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Significantly more variation in WTP across US respondents which
matches other data on US climate change public opinion
– Intercept term and magnitude of coefficient estimates
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Many more US respondents have zero WTP compared to China
What Does the Future Hold?
U.S. and China Reach
Climate Accord After
Months of Talks
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A climate deal between China and the US,
the world’s No. 1 and No. 2 carbon
polluters, is viewed as essential to
concluding a new global accord.
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The US would emit 26% to 28% less
carbon in 2025 than it did in 2005.
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China would stop its emissions from
growing, reaching peak emissions by 2030.
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Mr. Obama could face opposition from a
Republican-controlled Congress.
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The US and China have often been seen as
antagonists in climate negotiations.
http://www.nytimes.com/2014/11/12/world/asia/china-us-xi-obama-apec.html?_r=1
What Does the Future Hold?
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Present/publish our results to stimulate discussion, raise awareness
and advocate for action to address global climate change
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What can you do to be more involved?
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http://citizensclimatelobby.org/
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https://www.facebook.com/#!/groups/CCL.EauClaire/
Questions & Discussion