The Internalization of Externalities in The Production of Electricity: Willingness to Pay for the Attributes of a Policy for Renewable Energy

Alberto Longo, Anil Markandya and Marta Petrucci

No 12111, International Energy Markets Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: This paper investigates the willingness to pay of a sample of residents of Bath, England, for a hypothetical program that promotes the production of renewable energy. Using choice experiments, we assess the preferences of respondents for a policy for the promotion of renewable energy that (i) contributes to the internalization of the external costs caused by fossil fuel technologies; (ii) affects the security of energy supply; (iii) has an impact on the employment in the energy sector; (iv) and leads to an increase in the electricity bill. Responses to the choice questions show that our respondents are in favour of a policy for renewable energy and that they attach a high value to a policy that brings private and public benefits in terms of climate change and energy security benefits. Our results therefore suggest that consumers are willing to pay a higher price for electricity in order to internalize the external costs in terms of energy security, climate change and air pollution caused by the production of electricity.

Keywords: Consumer/Household Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 43
Date: 2006
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy (2008)
Working Paper: The Internalization of Externalities in The Production of Electricity: Willingness to Pay for the Attributes of a Policy for Renewable Energy (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemie:12111

DOI: 10.22004/ag.econ.12111

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