Public's willingness to pay a premium for bioethanol in Korea: A contingent valuation study

Seul-Ye Lim, Hyo-Jin Kim and Seung-Hoon Yoo ()

Energy Policy, 2017, vol. 101, issue C, 20-27

Abstract: Bioethanol (BE), a renewable energy, is well-known to mitigate the greenhouse gas emissions compared with conventional gasoline. Thus, the Korean government is considering the introduction of a BE mandate in which the legal blend is 5% BE and 95% gasoline (E5) until 2020 in order to expand BE use. We should examine the public acceptability of the introduction, which incurs a rise in the fuel price. This study attempts to assess the public's willingness to pay (WTP) a premium for introducing the E5 program in Korea. To this end, a contingent valuation (CV) survey of 1000 randomly selected consumers was conducted in 2014 across the nation. We used a one-and-one-half-bound dichotomous choice question in the CV survey and applied the spike model to handle the WTP data with zeros. The mean WTP, a premium for the E5 per liter, is estimated to be KRW 290 (USD 0.27), which is statistically meaningful at the 1% level. This value amounts to 15.6% of the gasoline retail price in 2014 (KRW 1856 or USD 1.70) and can be interpreted as the external benefit of BE. We can conclude that gasoline consumers in Korea are ready to pay a significant premium for the E5.

Keywords: Bioethanol; Public acceptability; Willingness to pay; Premium; Contingent valuation (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421516306103
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:101:y:2017:i:c:p:20-27

DOI: 10.1016/j.enpol.2016.11.010

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().