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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 Introduction/Background – Climate Change Science, Public Opinion, International Policy – Contingent Valuation, WTP Survey/Sample Methodology Results Conclusion Discussion University of Wisconsin-Eau Claire IPCC Call for Reduced GHG Emissions Need to act now, longer delay, more expensive 50-50 chance of avoiding most dangerous scenarios, cut emissions by at least 40% from 2010 levels by the 2050 Effective action requires international cooperation University of Wisconsin-Eau Claire Climate Change Mitigation Policy Policies required to support the development of a range of lowcarbon and high-efficiency technologies on an urgent timescale Establish a carbon price, through tax, trading or regulation is an essential foundation for climate-change policy. WTP estimates for climate stabilization provide means of assessing, understanding and conveying benefits of action Willingness of public to incur substantial costs to prevent/address CC will be key determinant of success/failure of CC policy University of Wisconsin-Eau Claire Contingent Valuation Method CV began as intellectual exercise with limited practical relevance CV study of loss associated with the Exxon Valdez oil spill in Alaska (Carson et al. 1992) National Oceanic and Atmospheric Administration (NOAA) expert panel on CV validity Guidelines for applying CV method (Arrow et al. 1993) Survey of Adults and College Students in China and the US Is climate change happening? Is it anthropogenic? What does science say? What is the threat? How concerned are you? What should be done? Willingness to pay? Demographics Our Sample (N = 7,358) 2,335 US college students CA, NE, RI, WI, CO, MD, SC 1,670 Chinese college students Beijing, Chengdu, Guangzhou, Xian, Shanghai 1,306 US adults CA, NE, RI, WI 2,047 Chinese adults Beijing, Chengdu, Guangzhou, Xian University of Wisconsin-Eau Claire Survey Results Chinese citizens show greater acceptance of CC realities compared to US citizens More likely to believe in anthropogenic CC Less likely to see scientific disagreement on anthropogenic CC More likely to see threat to humans from CC Less likely to be unconcerned about CC University of Wisconsin-Eau Claire Survey Results Place higher importance on environment compared to the economy More likely to support joining international CC agreement US political divide over CC, Six Americas What about WTP? University of Wisconsin-Eau Claire Willingness-to-Pay for Climate Change Policy Assessing Willingness-to-Pay (WTP) 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 Use midpoint income Mean Annual Household WTP Approximate average income US > China (6.8X) Estimated mean WTP US > China (2.4X) Conditional on income, China WTP > US WTP (2-3X) US Income = $99,500 China Income = $14,500 University of Wisconsin-Eau Claire CC WTP Literature Review of 27 studies shows range of annual HH WTP $22 - $437, median of $135 (2008 US $) Estimates from America, Asia, Europe samples Common explanatory variables include environmental attitudes and beliefs, income, education and political views 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 University of Wisconsin-Eau Claire CC WTP Literature Average annual WTP among American households of $79-$89 to reduce GHG US emissions by 17% (2010/2011 US $) No difference in WTP based on policy of cap and trade, carbon tax or GHG regulation (assuming equal outcome) Republicans WTP less, but no difference after controlling for climate change beliefs and attitudes 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 Our US Mean WTP = $42.35/month Share of Annual HH Income = 0.0051 Our China mean WTP = $17.88/month Share of Annual HH Income = 0.0148 University of Wisconsin-Eau Claire Conclusion Our WTP estimates are within range found in other research Perhaps slightly higher estimates from our results Our results are significantly higher than Kotchen et al. Our results also differ from Carlsson et al. More analysis needs to be done University of Wisconsin-Eau Claire Conclusion 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) US respondents are WTP more (unconditional on income) Citizens in both countries exhibit a definite WTP for climate policy 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 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 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. The US would emit 26% to 28% less carbon in 2025 than it did in 2005. China would stop its emissions from growing, reaching peak emissions by 2030. Mr. Obama could face opposition from a Republican-controlled Congress. 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? Present/publish our results to stimulate discussion, raise awareness and advocate for action to address global climate change What can you do to be more involved? http://citizensclimatelobby.org/ https://www.facebook.com/#!/groups/CCL.EauClaire/ Questions & Discussion