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Wakuma, Samuel Tafesse, 2018. Willingness to pay for renewable energy among Indian small and medium-sized enterprises : a contingent valuation experiment. Second cycle, A2E. Uppsala: SLU, Dept. of Economics

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Abstract

To limit climatic change, humans must achieve a reduction in greenhouse gas emissions. India, as a large emerging economy, could substantially contribute towards this goal by transforming its energy system. Based on a double-bounded dichotomous choice contingent valuation survey of 260 enterprises in and around Hyderabad, India, this paper provides willingness to pay (WTP) estimates of small and medium-sized firms for electricity generated from renewable sources. The estimated average additional willingness to pay was 1.08 Indian Rupees per kilowatt hour which constituted approximately 23% of the average tariff rate paid by the sector at the time of the study. The findings further suggest that WTP is driven by not only pure economic considerations but also managers’ attitudes – implying altruistic motives which might particularly be important in small firms. As a robustness check, the Heckman model was used to control for selection bias and protest responses. Additionally, the single-bounded probit model was employed to assess statistical efficiency gains from the second equation in the bivariate probit model. The estimated WTP suggests a market potential for additional private investments in renewable energy sources which, in combination with an effective tariff, could increase voluntary adoption rates of green energy tariffs.

Main title:Willingness to pay for renewable energy among Indian small and medium-sized enterprises
Subtitle:a contingent valuation experiment
Authors:Wakuma, Samuel Tafesse
Supervisor:Rommel, Jens
Examiner:Hart, Robert
Series:Examensarbete / SLU, Institutionen för ekonomi
Volume/Sequential designation:1183
Year of Publication:2018
Level and depth descriptor:Second cycle, A2E
Student's programme affiliation:NM005 Environmental Economics and Management - Master's Programme 120 HEC
Supervising department:(NL, NJ) > Dept. of Economics
Keywords:contingent valuation, small-scale firms, WTP, double-bounded dichotomous choice, bivariate probit, India
URN:NBN:urn:nbn:se:slu:epsilon-s-10011
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-s-10011
Subjects:Economics and management
Language:English
Deposited On:07 Dec 2018 12:29
Metadata Last Modified:25 Feb 2019 13:23

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