Determinants of Willingness-to-Pay For Internal Carbon Pricing Programs

Non-governmental entities such as businesses and a small number of universities have adopted voluntary internal carbon-pricing to reduce greenhouse gas emissions, to finance carbon reduction programs, to signal sustainability and to prepare for future mandatory carbon reductions. Little is known, however, about individual preferences for the introduction of these programs, or how preferences for these programs vary across potential program designs. We conduct a stated preference survey in the form of an advisory referendum on potential internal carbonpricing programs at a large public university. Over 1,000 individuals each consider unique sets of several hypothetical programs which vary in their costs, emission reductions, types of fees charged, and uses of revenue. We use these data to estimate a structural random-utility model to explain program preferences. This model permits us to infer, for different types of consumers, willingness-to-pay for internal carbon pricing programs that vary in their attributes. Our model is flexible enough to allow for benefit transfer exercises to campuses with populations that differ in their political attitudes, income levels and other characteristics. Individual administrative data on both respondents and non-respondents, plus neighborhood data at the zip code level, allow us to adjust our estimates for systematic differences in response-rates that may be correlated with willingness-to-pay. JEL classification: