IMPLEMENTATION PLAN:

1
University of Wisconsin-Eau Claire
Assessing Citizens Willingness-to-Pay for
Climate Change Mitigation Policy Action in China
and the United States
Eric Jamelske, Ph.D. Economics Department UW-Eau
Claire
Matthew Winden, Ph.D. Economics Department
UW-Whitewater
2
Outline

• Introduction/Background
• Climate Change Science, Public Opinion,
  International Policy
• Contingent Valuation, WTP
• Survey/Sample
• Methodology
• Results
• Conclusion
• Discussion

3
IPCC Call for Reduced GHG Emissions

• Need to act now, longer delay, more expensive
• 50-50 chance of avoiding most dangerous
  scenarios, cut emissions by at least 40 from
  2010 levels by the 2050
• Effective action requires international
  cooperation

4
Climate Change Mitigation Policy

• Policies required to support the development of a
  range of low-carbon and high-efficiency
  technologies on an urgent timescale
• Establish a carbon price, through tax, trading or
  regulation is an essential foundation for
  climate-change policy.
• WTP estimates for climate stabilization provide
  means of assessing, understanding and conveying
  benefits of action
• Willingness of public to incur substantial costs
  to prevent/address CC will be key determinant of
  success/failure of CC policy

5
Contingent Valuation Method

• CV began as intellectual exercise with limited
  practical relevance
• CV study of loss associated with the Exxon Valdez
  oil spill in Alaska (Carson et al. 1992)
• National Oceanic and Atmospheric Administration
  (NOAA) expert panel on CV validity
• Guidelines for applying CV method (Arrow et al.
  1993)

6
Survey of Adults and College Students in China
and the US

• Is climate change happening?
• Is it anthropogenic?
• What does science say?
• What is the threat?
• How concerned are you?
• What should be done?
• Willingness to pay?
• Demographics

7
Our Sample (N 7,358)

• 2,335 US college students
• CA, NE, RI, WI, CO, MD, SC
• 1,670 Chinese college students
• Beijing, Chengdu, Guangzhou, Xian, Shanghai
• 1,306 US adults
• CA, NE, RI, WI
• 2,047 Chinese adults
• Beijing, Chengdu, Guangzhou, Xian

8
Survey Results

• Chinese citizens show greater acceptance of CC
  realities compared to US citizens
• More likely to believe in anthropogenic CC
• Less likely to see scientific disagreement on
  anthropogenic CC
• More likely to see threat to humans from CC
• Less likely to be unconcerned about CC

9
Survey Results

• Place higher importance on environment compared
  to the economy
• More likely to support joining international CC
  agreement
• US political divide over CC, Six Americas
• What about WTP?

10
Willingness-to-Pay for Climate Change Policy
11
Assessing Willingness-to-Pay (WTP)

• Double-bounded dichotomous choice
• Randomly assigned starting values (20, 40, 60)
• If no, then half (10, 20, 30)
• If yes, then double (40, 80, 120)
• US Dollars () vs Chinese Yuan (CNY)
• US Census and China Statistical Yearbook
• 20 is two meals, 20 CNY is two meals
• Subway/Bus ride

12
Income in China and the United States
13
(No Transcript)
14
(No Transcript)
15
D-B Dichotomous Choice Regression Model

• Use midpoint income

16
(No Transcript)
17
Mean Annual Household WTP

• Approximate average income US gt China (6.8X)
• Estimated mean WTP US gt China (2.4X)
• Conditional on income, China WTP gt US WTP (2-3X)
• US Income 99,500 China Income
  14,500

18
CC WTP Literature

• Review of 27 studies shows range of annual HH WTP
  22 - 437, median of 135 (2008 US )
• Estimates from America, Asia, Europe samples
• Common explanatory variables include
  environmental attitudes and beliefs, income,
  education and political views
• Nemet, G.F. Johnson, E. (2010). Willingness to
  Pay for Climate Policy A Review of Estimates.
• La Follette School of Public Affairs, University
  of Wisconsin, Madison

19
CC WTP Literature

• Average annual WTP among American households of
  79-89 to reduce GHG US emissions by 17
  (2010/2011 US )
• No difference in WTP based on policy of cap and
  trade, carbon tax or GHG regulation (assuming
  equal outcome)
• Republicans WTP less, but no difference after
  controlling for climate change beliefs and
  attitudes
• Kotchen, J. et al. (2013). Willingness-to-Pay and
  Policy Instrument Choice for Climate Change
  Policy in the United States.
• Energy Policy, 55617-625

20
Comparison to Other Results
21
Comparison to Other Results

• Our US Mean WTP 42.35/month Share of
  Annual HH Income 0.0051
• Our China mean WTP 17.88/month Share of
  Annual HH Income 0.0148

22
Conclusion

• Our WTP estimates are within range found in other
  research
• Perhaps slightly higher estimates from our
  results
• Our results are significantly higher than Kotchen
  et al.
• Our results also differ from Carlsson et al.
• More analysis needs to be done

23
Conclusion

• Greater acceptance of CC realities among Chinese
  citizens compared to US appears to translate into
  higher WTP for CC mitigation policy (adjusted for
  income differences)
• US respondents are WTP more (unconditional on
  income)
• Citizens in both countries exhibit a definite WTP
  for climate policy
• Significantly more variation in WTP across US
  respondents which matches other data on US
  climate change public opinion
• Intercept term and magnitude of coefficient
  estimates
• Many more US respondents have zero WTP compared
  to China

24
What Does the Future Hold?
U.S. and China Reach Climate Accord After Months
of Talks

• A climate deal between China and the US, the
  worlds No. 1 and No. 2 carbon polluters, is
  viewed as essential to concluding a new global
  accord.
• The US would emit 26 to 28 less carbon in 2025
  than it did in 2005.
• China would stop its emissions from growing,
  reaching peak emissions by 2030.
• Mr. Obama could face opposition from a
  Republican-controlled Congress.
• The US and China have often been seen as
  antagonists in climate negotiations.

http//www.nytimes.com/2014/11/12/world/asia/china
-us-xi-obama-apec.html?_r1
25
What Does the Future Hold?

• Present/publish our results to stimulate
  discussion, raise awareness and advocate for
  action to address global climate change
• What can you do to be more involved?
• http//citizensclimatelobby.org/
• https//www.facebook.com/!/groups/CCL.EauClaire/

26
Questions Discussion