Regional Differences in Willingness to Pay for Mitigation of Air Pollution from Coal-Fired Power Plants in South Korea

Abstract

This study examined whether people who reside in different regions of South Korea exhibit different WTP for the mitigation of PM2.5 emissions from coal-fired power plants by restricting their operation during the winter and spring when air pollution becomes severe. The eastern portions of the country are relatively insulated from the harmful effects of PM2.5 emissions due to northwest winds which cause air pollutants generated from coal-fired power plants to be carried out to the East Sea (Sea of Japan). Consequently, our sample group was divided into central, western, eastern, and southern regions, and a contingent valuation method, combined with a double-bounded dichotomous choice, was used to derive people’s WTP for the mitigation of PM2.5 emissions. Our estimation results indicated that respondents who live in eastern regions showed a significantly lower WTP (about KRW 1280/month) than the mean WTP of other regions (above KRW 1337/month). Thus, we suggest that the current Seasonal Management System of PM2.5 emissions should be modified to consider regional differences. Statistical results from this study reinforce our suggestions—almost 78 percent of survey respondents support a revision of the current SMS policy and are in favor of a revised SMS policy—one that exempts eastern regions from a nationwide shutdown of coal-fired generation from December to March. Exempting coal-fired power plants in eastern regions from the Seasonal Management System might result in significant fiscal savings without a corresponding increase in nationwide PM2.5 concentrations.