The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households

Hyo-Jin Kim, Seul-Ye Lim and Seung-Hoon Yoo ()
Additional contact information
Hyo-Jin Kim: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea
Seul-Ye Lim: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea

Sustainability, 2017, vol. 9, issue 8, 1-12

Abstract: Koreans usually prefer the district heating system (DHS) to the individual heating system (IHS) because DHS can give them convenience and safety within their living environment. The Korean government thus plans to expand the DHS and requires information about the value that consumers place on the DHS over the IHS, which has not been dealt with in academic literature. This paper attempts to investigate Korean households’ willingness to pay (WTP) for DHS over IHS, for residential heat (RH). To this end, the authors apply the dichotomous choice contingent valuation to assessing additional WTP for DHS using a survey of 1000 randomly selected households living in buildings with IHS. A mixture model is applied to deal with the zero WTP responses. The WTP distribution is specified as a mixture of two distributions, one with a point mass at zero and the other with full support on the positive half of the real line. The results show that the mean additional WTP for DHS-based RH over IHS-based RH is estimated to be KRW 5775 (USD 5.4) per Gcal. This value can be interpreted as the consumer’s convenience benefits of DHS over IHS, and amounts to approximately 6.0% of the average price: KRW 96,510 (USD 90.4) per Gcal in 2013, for IHS-based RH. This information is useful for evaluating changes to the method used for supplying RH from IHS to DHS.

Keywords: district heating system; individual heating system; contingent valuation; willingness to pay; convenience benefit (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mdpi.com/2071-1050/9/8/1348/pdf (application/pdf)
https://www.mdpi.com/2071-1050/9/8/1348/ (text/html)

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:gam:jsusta:v:9:y:2017:i:8:p:1348-:d:106640

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().