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A preference for power: Willingness to pay for energy reliability versus fuel type in Vietnam

Laura Bakkensen and Paul Schuler

Energy Policy, 2020, vol. 144, issue C

Abstract: Developing countries are projected to experience the greatest increases in per capita energy use, motivating enormous investment in government-led energy projects. As energy fuel choices have large implications for pollution, a critical question surrounds citizens' preferences for renewable energy versus coal. While a robust literature suggests that citizens are willing to pay for renewables, the applicability of these findings to developing countries remains limited as many studies do not benchmark findings against preferences for increased capacity with dirtier fuels. We estimate citizens’ willingness to pay for improved electricity reliability from coal versus renewable technologies using a contingent valuation experiment embedded in a nationally-representative survey of 14,000 respondents across Vietnam, the country with the greatest recent increase in coal consumption. We find that while households are willing to pay 95% more in their monthly electricity bill for renewables (USD 7.5 billion per year in aggregate), they are also willing to pay 62% more for coal plants (USD 4 billion per year). Additionally, income and satisfaction with governance drive support both for renewables and coal, suggesting that agenda setting by policymakers is critical. If citizens are not offered alternatives, a majority will support coal even as governance improves or citizens become wealthier.

Keywords: Willingness to pay; Contingent valuation; Energy preferences; Pollution; Climate change; Energy transition (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.enpol.2020.111696

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