A CLIMATE POLICY GAP Swedes are willing to pay more for their air - PowerPoint PPT Presentation

A CLIMATE POLICY GAP Swedes are willing to pay more for their air travel emissions than they have to Jonas Sonnenschein, IIIEE, Lund University, jonas.sonnenschein@iiiee.lu.se BEHAVE 2018, September 7 iiiee THE INTERNATIONAL INSTITUTE FOR INDUSTRIAL ENVIRONMENTAL ECONOMICS 1

Background NASA Earth Observatory picture of the day for July 21, 2018 https://earthobservatory.nasa.gov/images/92454/scarcely-seen-scandinavian-fires 2

Background II. What people ate willing to pay for their CO 2 emissions, varies: – Viscusi & Zeckhauser (2006): 67 EUR/t (petrol, SP) – Brouwer et al. (2008): 41 EUR/t (air travel, SP) – Choi & Ritchie (2014): 14 EUR/t (air travel, SP) – Löschel et al. (2013): 12 EUR/t (EUA offset, RP) – Diederich & Göschel (2014): 6 EUR/t (EUA offset, RP) 3

Background III. – The low cost hypothesis, i.e. higher WTP for env’l goods in a low cost context (Blasch & Farsi, 2014) – Higher WTP for coercive as opposed to voluntary payment mechanisms (Wiser, 2007) – General (non-)WTP is potentially driven by other factors than specific WTP (Krishnamurthy & Kriström, 2017) 4

Guiding questions – What is (approximately) Swedes’ WTP for the mitigation of their air travel emission? – Is there a difference in WTP between voluntary offsets and coercive carbon pricing instruments? – Is there a difference in WTP between a low-cost and a high-cost context? – What are the factors influencing general and specific WTP? 5

Methods – contingent valuation online survey (n = 500) in January 2017 – from a representative, random sample of 1 507 Swedish adults 6

Table 1: Socio-demographic overview of population and study respondents Population (age 25-74) Respondents Number 6 200 688 500 Share of women 0.49 0.49 Age (mean) 48.48 50.54 Age (median) 48 51 People per household (mean) 2.2* 2.45 Median income per month (before tax) 29 100** 28 500 * mean for the whole Swedish population ** assuming a tax rate of 30%; for the age group 25 to 64 7

Methods – contingent valuation online survey (n = 500) in January 2017 – from a representative, random sample of 1 507 Swedish adults – repeated elicitation of WTP with different payment vehicles (in random order) – same bids levels were used for different PVs 8

PV EUA Flight surcharge Flight surcharge Bid # (SEK/ ton) (SEK/ 1750km) (SEK/ 9000km) 1 100 30 120 2 200 60 240 3 400 120 480 4 600 180 720 5 800 240 960 6 1000 300 1200 9

10

11

12

Methods – contingent valuation online survey (n = 500) in January 2017 – from a representative, random sample of 1 507 Swedish adults – repeated elicitation of WTP with different payment vehicles (in random order) – same bids levels were used for different PVs – sensitivity analysis for conversion factors (i.e. from pkm to tCO 2 ) 13

This study (short distance) ICAO (ARN - BCN) ICAO (MMX - ARN - KRN) Ottelin et al., 2014 (short distance) Andersen Resare, 2015 (average for SAS) Åkerman, 2012 (average for Sweden in CO2e) This study (long distance) ICAO (ARN - HKT) ICAO (ARN - LAX) Ottelin et al., 2014 (long distance) 0 50 100 150 200 250 in gCO 2 per pkm 14

Methods – contingent valuation online survey (n = 500) in January 2017 – from a representative, random sample of 1 507 Swedish adults – repeated elicitation of WTP with different payment vehicles (in random order) – same bids levels were used for different PVs – sensitivity analysis for conversion factors (i.e. from pkm to tCO 2 ) – (small opinion poll about policy preferences) 15

Regression – Independent variables » socio-demographic characteristics ( female, income, education ), » flight frequency ( frequentfly ) » political view ( leftpolview ) » sense of responsibility for one’s emissions ( responsible ) » preference for earmarking ( earmark ) – Logit (general WTP) – Heckman selection model (general & specific WTP) 16

Results 17

18

19

(1) Logit (2) Heckman Probit (a+b) a) OLS b) OLS WTP surcharge WTP surcharge WTP air short WTP air long female 0.451 * 0.250 * -133.09 ** -135.30 ** (0.237) (0.137) (64.01) (54.43) income 0.109 0.066 25.09 17.75 (0.094) (0.054) (23.68) (20.07) education 0.042 0.028 30.61 24.01 (0.111) (0.064) (28.28) (23.91) frequentfly -0.759 *** -0.470 *** 96.61 130.63 * (0.244) (0.143) (85.67) (72.12) 0.916 *** 0.509 *** leftpolview (0.267) (0.147) responsible 0.840 *** 0.481 *** -9.64 -7.98 (0.299) (0.166) (81.81) (69.51) earmark 1.162 *** 0.696 *** -145.28 -114.27 (0.241) (0.144) (116.16) (97.78) -0.627 -0.359 815.12 *** 575.50 *** constant (0.464) (0.275) (254.86) (215.39) λ -454.26 * -495.01 ** (268.92) (225.49) Wald χ 2 (6) 12.95 ** 16.51 ** Pseudo R 2 0.12 χ 2 (7) 67.51 *** 20

Policy priorities? Air ticket surcharge 53% 10% EUA offset 30% 41% Fuel surcharge 17% 48% best option worst option 21

Who is responsible for reducing emissions? Airlines 19% 38% 19% 4% Manufacturers of air planes 36% 19% 13% 12% International organizations 22% 17% 22% 15% Air travelers 15% 10% 11% 45% Government 8% 16% 35% 23% highest responsibility lowest responsibility 22

Preferred revenue use? Environmentally friendly transport alternatives 38% 54% 1% 7% Mitigate climate change 49% 38% 4% 9% Revenue neutral recycling 12% 44% 39% 5% General budget 1% 40% 56% 3% best use worst use 23

Methodological implications – absolute WTP levels are highly context-specific – the use of multiple payment vehicles/ framings can help to make WTP values more robust – in the field of air travel emissions, assumptions about carbon intensity heavily influence WTP results 24

Policy Implications – an air ticket tax promises to be a feasible tool to generate revenues – its potential steering effect is lower for low cost contexts (e.g. short-distance flights) – consistency regarding the tax base and its revenue use increases public acceptability of air ticket taxes – insights about the personal drivers behind WTP for emissions reductions from air travel can inform targeting of policy interventions 25

Thank you! Questions and constructive criticism are welcome Jonas Sonnenschein, IIIEE, Lund University, jonas.sonnenschein@iiiee.lu.se BEHAVE 2018, September 7 iiiee THE INTERNATIONAL INSTITUTE FOR INDUSTRIAL ENVIRONMENTAL ECONOMICS 26

Variable (name) Codes and explanation Mean SD Age 25-74 (number in years) 50.54 14.11 (age) Gender 0 (male or other), 1 (female) 0.49 0.50 (female) Education 1 (elementary school) to 5 (licentiate or PhD) 3.05 1.05 (education) Household size 1 (1 person lives in household) to 6 (more than 5 people) 2.45 1.22 (hhsize) Monthly income before tax 1 (< 10 000 SEK), 2 (10 000 to 19 999 SEK) to 8 (> 70 000 SEK) 3.45 1.34 (income) Political view 1 (clearly to the left) to 5 (clearly to the right); 38 respondents did not 3.08 1.23 (polview) answer this question n = 462) Left political view 1 (clearly to the left or left), 0 (right-leaning, neither left nor right, not 0.34 0.47 (leftpolview) shared) Carbon footprint 1 (below average), 2 (average), 3 (above average) 1.91 0.67 (footprint) High carbon footprint 1 (footprint above average), 0 (footprint below average or average) 0.18 0.39 (highfootprint) Flight frequency 1 (never), 2 (up to one return-trip per year), 3 (several trips per year) 2.10 0.70 (fly) Frequent flier 1 (fly several times per year), 0 (fly 1 or less times per year) 0.30 0.46 (frequentfly) 1 (ranked oneself 1 st or 2 nd among five actors potentially responsible for Responsible 0.25 0.43 reducing emissions), 0 (ranked oneself 3 rd , 4 th or 5 th ) (responsible) Earmark 1 (preferred revenue use is for climate mitigation or sustainable 0.77 0.42 (earmark) transport), 0 (preferred use is for general budget or revenue recycling) Dependent variables General WTP for surcharge 1 (positive WTP in principle), 0 (no WTP) 0.75 0.43 (WTP surcharge ) General WTP for EUA 1 (positive WTP in principle), 0 (no WTP) 0.29 0.45 offsets (WTP offset ) Max. WTP short-distance 0 (WTP surcharge = 0 or lowest bid was rejected), 10 – 417 (the respective 52 54 air surcharge (WTP air short ) WTP value in EUR/t CO 2 ) Max. WTP long-distance 0 (WTP surcharge = 0 or lowest bid was rejected), 10 – 417 (the respective 31 39 air surcharge (WTP air long ) WTP value in EUR/t CO 2 ) Max. WTP offsetting with 0 (WTP offset = 0 or lowest bid was rejected), 10 – 417 (the respective 12 30 27 EUAs (WTP eua ) WTP value in EUR/t CO 2 )

28

29

30

31

32