Are air travelers willing to pay for mandatory carbon emission policies? Evidence from China

Abstract

The aviation industry is one of the fastest-growing sectors in terms of CO2 emissions and also one of the most challenging to decarbonize. China has become the world's second-largest aviation market. While a nationwide mandatory carbon reduction policy has yet to be introduced in China's aviation sector, it may be implemented in the coming years. The implementation of mandatory carbon reduction policies will inevitably raise questions about the distribution of additional costs. Therefore, air travelers' willingness to pay (WTP) and the factors influencing it are critical considerations for policymakers and airlines. However, there is a lack of research on the WTP of Chinese air travelers under mandatory carbon reduction policies. No studies have specifically focused on the regional differences in WTP among air travelers in China. Moreover, existing research on air travelers' WTP for carbon offsets rarely captures the impact of rational, emotional, and social interaction factors. Therefore, this study investigates the WTP of 3424 air travelers across 31 provincial-level administrative regions in China within the context of a carbon tax policy. Using the Heckman two-step model, the study analyzes the impact of rational, emotional, and social interactions on air travelers' WTP. The results indicate that, after removing biased samples, the average WTP among Chinese air travelers is 311.04 CNY ($44.14) per ton of CO2. The highest WTP is observed in the East China region at 341.20 CNY ($48.42) per ton of CO2, while the lowest is in the Northeast region at 263.19 CNY ($37.35) per ton of CO2. Epistemic performance expectancy, social performance expectancy, function performance expectancy, and anticipated pride positively influence WTP. In contrast, effort expectancy negatively impacts WTP. Additionally, social interaction can moderate the effects of certain rational and emotional factors on WTP. It is noteworthy that although anticipated guilt does not directly influence WTP, its positive impact on WTP can be moderated through social interactions. The results of this study can assist governments in formulating effective carbon emission reduction policies for the aviation industry. Moreover, these findings can provide valuable insights for airlines to adjust pricing strategies under mandatory carbon reduction policies, thus holding practical significance.