Willingness to pay for a second-generation bioethanol: A case study of Korea

Abstract

This article examines Korean consumer responses towards second-generation lignocellulosic bioethanol. Consumer surveys were conducted in the Korean cities of Seoul, Incheon, Bucheon, Gwangju, Seongnam and Suwon with three information treatments for the purpose of this study. The survey collected data on consumers’ willingness to pay (WTP) for this product, their driving patterns, knowledge about renewable energy, acceptance of relevant government policies, and demographic characteristics. A dichotomous-choice contingent valuation methodology is used to estimate WTP for this product and investigate factors that affect consumer choice. The findings include that the average respondent in the sample is willing to pay a 4.3% premium over second-generation bioethanol compared to conventional fuel. The mean premium is highest (6% premium) for respondents who received information about positive environmental effects of the advanced fuel. Being female and higher income positively affect WTP. Also higher self-reported knowledge about renewable energy sources and higher valuation of environmental friendliness positively affect WTP for advanced bioethanol.