Consumers’ Willingness to Pay for Net-Zero Energy Apartment in South Korea

Abstract

In South Korea, buildings account for more than 25% of the nation’s total greenhouse gas emissions. Therefore, the government aims to make zero energy buildings mandatory from 2025, onward. For the housing sector, the government has recently built and operated a pilot net-zero energy apartment (NZEA) and plans to expand it to several cities. This article attempts to obtain information about the consumers’ willingness to pay (WTP) for the NZEAs. To this end, households’ additional WTP for the NZEAs over a conventional apartment was investigated, applying the contingent valuation (CV) approach. The data on the WTP were gathered from a CV survey of 1000 interviewees and analyzed, employing a dichotomous choice question and the spike model, respectively. The mean value of the additional WTP is obtained as KRW 0.46 million (USD 424) per m2, which is statistically significant. This value corresponds to 17.0% of the conventional apartment price per m2 (KRW 2.76 million, USD 2436). It can be concluded that the households in South Korea place a significant value on a NZEA over a conventional apartment. In addition, we have investigated the characteristics of consumers which affect the probability that consumers accept additional payment of an amount of money for NZEA over a conventional apartment, finding that higher income earners, higher education, and male consumers have a higher probability.