Are the affluent prepared to pay for the planet? Explaining willingness to pay for public and quasi-private environmental goods in Switzerland

Abstract

A large number of ‘environmental justice’ studies show that wealthier people are less affected by environmental burdens and also consume more resources than poorer people. Given this double inequity, we ask, to what extent are affluent people prepared to pay to protect the environment? The analyses are couched within the compensation/affluence hypothesis, which states that wealthier persons are able to spend more for environmental protection than their poorer counterparts. Further, we take into account various competing economic, psychological and sociological determinants of individuals’ willingness to pay (WTP) for both public environmental goods (e.g., general environmental protection) and quasi-private environmental goods (e.g., CO2-neutral cars). Such a comprehensive approach contrasts with most other studies in this field that focus on a limited number of determinants and goods. Multivariate analyses are based on a general population survey in Switzerland (N = 3,369). Although income has a positive and significant effect on WTP supporting the compensation hypothesis, determinants such as generalized interpersonal trust that is assumed to be positively associated with civic engagement and environmental concern prove to be equally important. Moreover, we demonstrate for the first time that time preferences can considerably influence survey-based WTP for environmental goods; since investments in the environment typically pay off in the distant future, persons with a high subjective discount rate are less likely to commit.