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Do you think it costs the earth? Willingness to pay for climate policies—results from our multi-country poll

Andrea Liverani's picture

According to some media reports, Copenhagen is turning into the ultimate ‘numbers game’. Negotiators are scrambling over the pieces of text that remain in parenthesis because they have not yet been agreed upon. Most of these are numbers—medium-term targets for cutting GHG emissions (17%, 20% or 40%), target dates (2020 or 2030), baselines (1990 or 2005) and, of course, money.

Now, the climate change debate has long been about money. A whole body of literature blossomed by trying to assign a cost to mitigation and adaptation actions, usually coming up with guesstimates often expressed in percent of global GDP. For instance, in his Review on the Economics of Climate Change, Nicholas Stern, former chief economist of the World Bank, estimated that the requirement for additional annual investments equals 2 percent of GDP.

There’s a lot less work, though, on how much we are willing to pay. This gap is striking, given that the consumers and tax payers are those that will ultimately bear the cost of climate mitigation. Climate policy (and climate agreements) will be decided on the basis of what is needed in terms of investments and what is available, which at least in part depends on what the public is willing to contribute. To fill this gap we decided to go ahead and ask people directly, and here are the results.

First, people are aware that tackling climate change is going to come with a cost. Asked whether it will or will not “be necessary to increase the cost of energy, to encourage individuals and businesses to conserve more or to use alternative forms of energy” across 14 countries polled, eight majorities and one plurality think this will be necessary.  In three countries, the majorities think cost increases will not be necessary, and two countries are divided.  On average across the 14 countries, 56 percent think this will be necessary and 38 percent do not.

Interestingly, the countries where more people think it will be necessary to increase the cost of energy include several less-developed countries, while countries where more disagree with this proposition are two of the three middle-income nations (Russia and Mexico), plus a high-income country, France (53 percent).  Two countries are divided: Iran (45 percent will, 46 percent will not) and the USA (50 percent will, 47 percent will not).  Notably, among the countries opposed or divided, all but France are oil producers.

Second, people are willing to pay to pay for climate policy. In each country, respondents were asked to “Imagine that taking steps against climate change would increase costs to the average person for energy and other products by [defined amount in local currency] per month.”  This defined amount was set to equal one percent of the respondent’s country’s GDP per capita, prorated to a month. Respondents were then asked, “Would you be willing or not willing to pay this cost as part of taking steps against climate change?” Those who said they were not willing were then asked about half of the amount (0.5% of GDP per capita, prorated to a month). 

By far the most common pattern across countries was that roughly half the public is willing to pay the higher amount, and about 10-25 percent more are willing to pay the lower amount.  This pattern repeated in countries as economically disparate as the United States on the one hand and India on the other.  One might expect those with higher income (in accordance with their national scale) to be more willing to pay an amount to take steps against climate change than those with lower income.  This assumption is borne out, but it is not as strong as might have been thought.  In the aggregate of all countries polled, 41-45 percent of those with very low or low incomes are willing to pay the higher amount, while 53-54 percent of those with middle incomes or above are willing to do so.  After the lower amount has been offered as well, 56 percent of those with very low incomes and 63 percent of those with low incomes are willing to pay some amount.  This rises to 67-69percent of those with medium and high incomes.  Among those with very high incomes, 66percent are willing.

To check whether these aggregate figures disguised some national anomalies, five countries were examined in detail—China (the second most willing to pay among 13 countries), France and Turkey (countries near the average in willingness to pay), and Russia (the least willing).  Lower and higher-income respondents in all five countries answered in accord with the patterns shown in the aggregate results I just described.     

Third, virtually all countries expressed majority support for a range of costly climate policies. Though each policy was described as having a cost, and no corresponding benefit was mentioned, support for each was quite widespread. Majorities in 13 countries and a 50 percent plurality in Russia supported “limiting the rate of constructing coal-fired power plants, even if this increases the cost of energy.” Majorities in 13 countries and a plurality in one supported “gradually increasing the requirements for fuel efficiency in automobiles, even if this raises the cost of cars and bus fares.” Eleven out of 14 countries also supported “gradually reducing government subsidies that favor private transportation, even if this raises its cost” and majorities in all countries supported environmental policies that could help to deal with climate change: “preserving or expanding forested areas, even if this means less land for agriculture or construction.” 
 

Finally, people in all countries (whatever their level of income) were asked about helping poor countries adapt to the effects of climate change.  Of 14 countries, 13 majorities and one plurality were positive about doing so. Respondents were asked this question: "Climate change will probably harm some countries more than others.  For example, poor countries with low-lying coastal areas will likely have widespread flooding and will not have the resources needed to assist their people.  Do you think [our country] should or should not contribute to international efforts to help poor countries deal with these climate-induced changes?" Most countries had very large majorities supportive of contributing to international efforts to aid poor countries’ adaptation processes, including many developing countries which might well have seen themselves in the description supplied by the question supplied.

These are just the results of a poll, but their message can hardly be ignored. Majorities across the world are aware of the costs of dealing with climate change, and show willingness to bear it. The Copenhagen numbers game should take note.

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