How much are wood-based cellulosic biofuels worth in the Pacific Northwest? Ex-ante and ex-post analysis of local people's willingness to pay

Abstract

The National Institute of Food and Agriculture (NIFA) provided a grant to establish a wood-based cellulosic biofuels industry in the US Pacific Northwest. Whether the industry will be sustainable depends largely on social acceptability in general and market acceptability of the biofuels among the public in particular. We conducted contingent valuation surveys of general public in the US states of Oregon and Washington to determine people's willingness to pay (WTP) for wood-based cellulosic biofuels and the factors that influence their WTP decisions. Oregon has an existing cellulosic biorefinery, while Washington's biorefineries are only being planned, allowing us to conduct an ex-ante (Washington) versus ex-post (Oregon) WTP comparison. We sent out mail surveys to 2828 valid mailing addresses between May and July of 2015 and received 757 completed surveys. We used the distribution-free Turnbull estimator to estimate the expected WTP and logistic regression to determine the relative strength of predictors on WTP. About one fifth (18.8%) of the respondents were willing to pay some premium for wood-based cellulosic biofuels. The mean WTP amount was $0.19±$0.03/gal. (95% confidence interval: $0.17 to $0.21), which equates to a 6.4% price premium on top of the market price for gasoline. Logistic regression results showed that the offered bid price, knowledge on biofuels, age and religious affiliation of respondents were statistically significant predictors of WTP decisions. No significant differences in ex-ante versus ex-post WTP were observed. We also discussed the policy implications of these results for sustainable management of the wood-based cellulosic biofuels industry.