Is one carbon price enough? Assessing the effects of payment vehicle choice on willingness to pay in Sweden

Abstract

Existing knowledge suggests that people’s willingness to pay (WTP) for climate change mitigation depends not only on personal characteristics but also on the payment vehicle (PV) that is used to elicit WTP. The aim of this research is to investigate policy-relevant differences in WTP between different PVs to support the design of carbon pricing mechanisms. The novelty of this contingent valuation study is the randomized use of four different PVs for the same sample (n = 500), in order to isolate effects of PV choice from effects driven by differences in study context and sampling. The results show that mean WTP differs between PVs. At about EUR 55 per tonne CO2 it is highest for a climate surcharge on short distance flights, followed by the climate surcharge on long distance flights (EUR 36), the climate surcharge on fuels (EUR 32) and voluntary offsetting (EUR 14). Statistical tests show that for almost all pairs of PVs the differential effect of PV choice is significant. Moreover, the results illustrate that WTP means are sensitive to changes in the assumed carbon intensity of the respective energy-consuming activities (in particular for air travel). In all, the differential effects of PV choice suggest that a uniform carbon price is inadequate and prioritisation and differentiation are needed in policymaking.