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Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error

Leon A.G. Oerlemans, Kai-Ying Chan and Jako Volschenk

Renewable and Sustainable Energy Reviews, 2016, vol. 66, issue C, 875-885

Abstract: Contingent valuation is widely used due to its flexibility in valuing a wide variety of non-market goods. Although this method has important benefits, its validity and reliability are often criticised. This paper reviews the literature on the use of contingent valuation for measuring willingness to pay (WTP) for electricity generated from renewable energy sources (green electricity). A literature review, conducted on a sample of 57 peer-reviewed studies, shows that the vast majority of contingent evaluation studies stems from developed economies. Furthermore, most frequently used WTP elicitation techniques are open-ended and dichotomous choice approaches, which tend to produce varying levels of WTP. Studies dealing with the antecedents of WTP are predominantly inspired by the theory of reasoned action or by its extension, the theory of planned behaviour. This paper identifies six common errors in contingent valuation methods and discusses a number of remedies to deal with these errors in WTP research.

Keywords: Valuation methods; Literature review; Willingness to pay; Renewable energy; Elicitation techniques (search for similar items in EconPapers)
Date: 2016
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