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Referendums in Switzerland and Willingness-To-Pay (WTP) ( Work Package 3)

Referendums in Switzerland and Willingness-To-Pay (WTP) ( Work Package 3). T. Heck Paul Scherrer Institute, Switzerland. EESD Energy Project NewExt: progress meeting PSI , 26 and 27 May 200 3. Disadvantages of surveys.

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Referendums in Switzerland and Willingness-To-Pay (WTP) ( Work Package 3)

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  1. Referendums in Switzerland andWillingness-To-Pay (WTP)(Work Package 3) T. Heck Paul Scherrer Institute, Switzerland EESD Energy Project NewExt: progress meeting PSI, 26 and 27May 2003

  2. Disadvantages of surveys • Stated versus revealed preferences: The Willingness-To-Pay expressed in the fictitious situation of a survey may differ from the WTP when the money has to be paid really. • Surveys may be not representative. • An individual’s Willingness-To-Pay may depend on the willingness and obligations of others as well (c.f. Prisoner’s Dilemma).

  3. Advantages of referendum method • The decision is not fictitious but “serious” i.e. if the population would decide to introduce a certain tax it would have to be paid really. • Huge number of people (Referendums year 2000: more than 2 Million voters). • It is clear to the individual that he or she is not the only one who has to pay. Instead, in case the decision would be accepted, the whole population would be involved.

  4. Limitations of referendum method • Surveys are more flexible • It is practically impossible for researchers to initiate a referendum and to determine the “questions”; the existing formulation of the initiative has to be taken as it is. • Only Yes-No decision!

  5. Method: WTP from %Yes votes

  6. Calculation of WTP distribution function from referendum results Yiis the share of yes-votes in referendum i related to price pi. Consistency condition:

  7. Assumption: Lognormal Distribution Yiis the share of yes-votes in referendum i related to price pi.

  8. Overall Results of Selected Referendums

  9. Distribution of Canton Results Distribution of yes-votes for Solar-Initiative in the different Swiss cantons (y-axis normalized to 1)

  10. Check: Correlation between acceptance and number of voters in the cantons

  11. Result: Calculated Distribution Result for estimated Willingness-To-Pay in Switzerland based on referendums:

  12. Conversion to CHF/ton CO2 Arguments for accounting to CO2 only: • The change from fossil fuels to renewable energy affects mainly direct CO2 emissions but not necessarily other pollutant emissions. • Other emissions than CO2 are relatively low in Switzerland.  Apply average CO2 emission factors per kWh

  13. Result: Willingness-To-Pay (WTP) 8 to 20 Euro per ton CO2

  14. Compare: Abatement Costs

  15. Abatement Costs for Transport

  16. Conclusions • WTP (8 - 20 Euro/ton CO2) significantly lower than abatement costs in Switzerland (>70 Euro/ton CO2) • Lower than Swiss CO2-Gesetz (140 Euro/ton CO2) • Close to low abatement costs in other countries • Agrees well with Global Warming damage costs estimated by Tol et al. 2000 (max. 16 Euro/ton CO2)

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