Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study

Abstract

Biogas (BG), a renewable form of energy, can mitigate greenhouse gas emissions, unlike conventional gas. Thus, the Korean Government is considering the introduction of a BG mandate, in which the legal blend is 2% BG and 98% conventional gas (BG2), by 2020 to expand BG use. We should examine the public acceptability of the introduction, which will incur a rise in the gas price. This study attempts to assess the public's willingness to pay (WTP) for introducing the BG2 program in Korea. The WTP data were obtained from a one-and-one-half-bounded dichotomous choice contingent valuation survey of 1000 households. Because a considerable number of the respondents (63.4%) gave a zero WTP response, we applied a spike model to treat the WTP data with zero observations. The yearly mean WTP was computed as 2539 Korean won (KRW) (USD 2.5) per household for the next 10 years, which is also statistically meaningful at the 1% level. Expanding the value to the national population gives us KRW 50.7 billion (USD 49.5 million) per year. The present value of the total public WTP amounts to KRW 372.7 billion (USD 368.4 million) using a social discount rate of 5.5%. We can conclude that gas consumers in Korea are ready to shoulder some of the financial burden of expanding the use of BG.