NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States

Matthew J. Kotchen, Kevin J. Boyle, Anthony A. Leiserowitz

NBER Working Paper No. 17539
Issued in October 2011
NBER Program(s):   EEE

This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.

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Document Object Identifier (DOI): 10.3386/w17539

Kotchen, M., K. Boyle, and A. Leiserowitz, “Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States,” Energy Policy, forthcoming.

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