Methods of Environmental Valuation

Abstract

This paper contrasts alternate methodological approaches of investigating public preferences, the random parameter logit (RPL) where tastes and preferences of respondents are assumed to be heterogeneous and the conditional logit (CL) approach where tastes and preferences remain fixed for individuals. We conducted a choice experiment to assess preferences for woody biomass based electricity in Arkansas, Florida, and Virginia. Reduction of CO2 emissions and improvement of forest habitat by decreasing risk of wildfires and pest outbreaks were presented to respondents as attributes of using green electricity. The results indicate that heterogeneous preferences might be a better fit for assessing preferences for green electricity. All levels of both attributes were positive contributors to welfare but they were no statistically significant. Respondents expressed a positive mean marginal willingness to pay (WTP) for each attribute level. The total WTP for green electricity per kilowatt hour was $0.049 kWh or $40.5 per capita year− 1 when converted into future total annual expenditures.► We assess preferences for woody biomass based electricity in Arkansas, Florida, and Virginia, United States. ► Reduction of CO2 emissions and improvement of forest habitat are chosen as attributes of using green electricity. ► Heterogeneous preferences might be a better fit for assessing preferences for green electricity. ► The total WTP for green electricity per kilowatt hour was $0.049 kWh or $40.5 per capita year− 1.