Willingness-to-pay for reducing greenhouse gas emissions: Differences between urban and rural areas

Abstract

Willingness-to-pay (WTP) for reducing greenhouse gas emissions (GHG) likely depends on the socio-economics of respondents in valuation studies. The location of respondents and their housing situation are rarely taken into account. Based on a representative household survey in Austria, mean WTP to reduce GHGs in a choice experiment (CE) amounts to EUR 186 per ton. The results of this paper indicate that – ceteris paribus – respondents in rural areas exhibit a lower WTP of about EUR 164 per ton while urban respondents state a WTP of roughly EUR 204 per ton. The results suggest that differences have their origin in the different housing conditions of respondents. Single-family homes in rural areas exhibit a higher energy consumption (kWh per m²), compared to multi-unit residential dwellings in urban and densely populated areas. Furthermore, socio-economics (e.g. level of education, age) of urban and rural populations explain different WTP bids. The individual concern about effects of climate change, such as urban heat islands (UHI) and heat stress, is different between urban and rural households. In addition, respondents strongly preferred information campaigns, incentives and energy consumption standards as climate change mitigation policy instruments compared to environmental taxation. This paper is in the state of a working paper; the authors plan to revise the paper and re-estimate marginal WTP with more advanced statistical methods and approaches.