The Economic Valuation of Green Electricity

The aim of the book is to analyze the relationship between renewable electricity and citizens, focusing on both the demand side and the supply side. Today the conse quences of the use of fossil energy are seen from a different perspective because issues related to climate change are evident worldwide. Thus, climate change and resource depletion are real problems to be addressed for the welfare of society. Renewable energy sources are essential to reduce polluting emissions, but they can produce a range of environmental effects, which might be detrimental to human activities, as attested to by several types of “ Not in My Back Yard” (NIMBY) reactions. This is because renewable energy infrastructure siting usually implies several pros and cons to the local stakeholders involved in the projects. For example, in Italy, according to the last report available in 2016 (Nimbyforum 2017), there are 359 contested facility projects and, among these, 45% involve renewable energy. Nevertheless, empirical evidence (from the Eurobarometer survey, among other sources) shows that in Italy, as in several European countries, citizens are willing to pay a signifi cant amount to produce renewable electricity. Renewable electricity production involves citizens from two opposite points of view. Indeed, they are involved both as end users and as stakeholders in the construction of the facilities and in the local production process. In this book we analyze this dual role played by citizens in order to evaluate the actual and global public acceptance of renewable electricity generation in Italy. We address a specifi c and important area of the economic analysis— the stated preferences method— focusing on two welfare measures: willingness to pay and willingness to accept. Consequently, the research evaluates the attitudes of citizens toward the end use of renewable electricity and the likelihood of acceptance of new infrastructure related to renewable electricity generation. Our aim is not to consider all technologies; we focus only on site-specifi c cases that involve siting controversies. To do this we focus on empirical results in Europe, including Italian case studies, comparing them with our contingent valuation field experiments. Furthermore, in our empirical analysis we explicitly take into account the uncertainty associated with the respondents in order to obtain more robust results. The book, therefore, is not about how to reconcile consumers’ and citizens’ behavior regarding renewable electricity consumption and production; rather, it explores the main determinants of people’ s behavior, on the two sides of the market, for better understanding of this phenomenon, to obtain useful information for public and private decision makers.