Households’ Willingness to Pay for Substituting Natural Gas with Renewable Methane: A Contingent Valuation Experiment in South Korea

Sung-Min Kim, Ju-Hee Kim and Seung-Hoon Yoo ()
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Sung-Min Kim: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea
Ju-Hee Kim: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea

Energies, 2020, vol. 13, issue 12, 1-13

Abstract: South Korea is planning to substitute some residential natural gas (NG), a fossil fuel that relies on imports, with renewable methane (RM) from bio-gas, a renewable energy source. Thus, information about households’ willingness to pay (WTP) for implementing the plan is widely needed. This article, therefore, examines the WTP using an economic approach of contingent valuation (CV). More specifically, 1000 households were asked about the additional WTP for RM over NG through in-person face-to-face surveys across the country, adopting a dichotomous choice question format, during August 2018. As a few interviewees responded zero WTP for various reasons, a spike model that could reflect zero WTP observations was utilized. The household additional WTP for RM over NG was estimated, with statistical significance, as 191.46 Korean won (USD 0.17) per m 3 and worth 31.9% of the average price of residential NG. This value means a price premium for RM compared to NG. In other words, this study found that South Korean consumers value residential RM about 1.32 times as much as residential NG. These results from the CV experiment could be a useful reference in establishing and implementing RM-related policies.

Keywords: natural gas; bio-gas; renewable methane; contingent valuation; price premium; willingness to pay (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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