DC Accepted Papers Paper: Willingness to Pay for Renewable Energy – a Longitudinal Study

*Names in bold indicate Presenter

Leslie M Carter, Virginia Commonwealth University

Willingness to Pay for Renewable Energy – A Longitudinal Study

Leslie M. Carter - carterlm8@vcu.edu

Renewable Energy (RE) is widely accepted as the key path to arrest CO2 emissions from electricity generation, which in turn will help slow global warming and climate change. In the long term, fuel free electricity will be cheaper than current fossil fuel generation; however, in the short and perhaps medium term, there are additional costs in ramping up RE sources, costs that need to be paid somehow. In the current regulatory environment, most of those expenses would be passed on to the consumer, the power company customers. Consumer’s willingness to pay (WTP) depends upon many factors, and some customers are not willing to pay any additional amount. WTP for RE also changes over time, and the factors influencing how that change occurs.

Since 2008 the National Surveys on Energy and Environment (NSEE) has been surveying national opinion on issues directly related to climate change, including a question gauging sentiment on WTP for RE. The NSEE is produced in partnership between the Muhlenberg Institute of Public Opinion at Muhlenberg College and the Center for Local, State, and Urban Policy at the University of Michigan's Gerald R. Ford School of Public Policy. The survey includes information on age, race, educational attainment, income, and gender with the data weighted to reflect national population parameters. One variable from the NSEE that might have an influence on WTP is belief in increasing global temperatures.

Another possible factor on WTP for RE might be consumer sentiment. One could theorize that higher consumer sentiment might increase the propensity for a populous to pay higher utility bills to encourage RE. The Index of Consumer Sentiment (ICS), is derived from five individual questions included in the Survey of Consumer Attitudes and Behavior produced by the Survey Research Center at the University of Michigan. This monthly survey polls persons living in US households on questions designed to gauge the level of consumer sentiment, both current and future viewpoints, plus personal and national perspectives. The beauty of the NSEE and the ICS is the history that has been built up over at least ten years. The consistency of question structure and sampling allows a longitudinal study to examine the WTP for RE, and the impact of the following independent variables, over time.

Longitudinal studies look at long term trends and have an advantage over cross sectional research in that changes over time can be detected, analyzed and associated with other data points. In this instance, it is not enough to merely observe and comment upon the shift in WTP for RE; getting to the underlying factors behind those changes will provide insight needed to interpret and perhaps predict WTP going forward.

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