Warm glow from green power: Evidence from Australian electricity consumers

Chunbo Ma () and Michael Burton

Journal of Environmental Economics and Management, 2016, vol. 78, issue C, 106-120

Abstract: Green electricity products are increasingly made available to consumers in many countries in order to address a number of environmental and social concerns. Most of the literature on this green electricity market focuses on consumers’ characteristics and product attributes that could affect participation. However, the contribution of this environmental consumerism to the overall environmental good does not depend on participation alone. The real impact relies on market participation for green consumers (the proportion of green consumers) combined with the level of green consumption intensity – the commitment levels, or proportion of consumption that is green. We design an online interface that closely mimics the real market decision environment for electricity consumers in Western Australia and use an error component model to analyze consumers’ choice of green electricity products and their commitment levels. We show that product attributes have limited impact on the choice of green products; however, there is still great potential for better participation by improving the design of green electricity programs. When green products are selected, most respondents select the minimum commitment possible, and this is insensitive to the premium being charged on green power, suggesting that we are largely observing a buy-in ‘warm glow’ for carbon mitigation.

Keywords: Green electricity; Choice modeling; Error Components Model; Warm glow (search for similar items in EconPapers)
JEL-codes: Q42 Q48 Q51 Q58 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:78:y:2016:i:c:p:106-120

DOI: 10.1016/j.jeem.2016.03.003

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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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