Using Stated Preference to Explore Design Options for a Personal Carbon Trading Scheme



Using Stated Preference to Explore Design Options for a Personal Carbon Trading Scheme

Authors

A Bristow, A Zanni, Loughborough University, UK; M Wardman, P Chintakayala, ITS, University of Leeds, UK

Description

A novel application of stated choice to the context of the design attributes of a personal carbon trading scheme.

Abstract

The concept of personal carbon trading is attracting interest at national policy levels in the UK with the Department for the Environment, Food and Rural Affairs commissioning a scoping study in 2006.

Most studies examining carbon permits at the level of individual allocations and trading have focused on the feasibility of such systems in terms of effectiveness, efficiency, acceptability and technical feasibility largely from a theoretical perspective. This paper aims to explore individuals/households? preferences for Personal Carbon Trading (PCT) scheme design attributes and their influence on scheme acceptability. The research was supported by the RSA carbonlimited initiative and commenced in December 2007.

This research is based on the hypothesis that there exists a set of characteristics and variants that a PCT may take that are likely to have a significant influence in determining the public preference and acceptability for such a scheme. In order to test this hypothesis, we have applied a stated preference experiment in which multi- attribute PCT scheme alternatives were compared. The price for the sale and purchase of carbon permits was set as the monetary attribute and is employed to calculate implicit prices for the remaining attributes. The application of discrete stated preference methods in this novel context represents the main contribution of this paper.

The following scheme characteristics were hypothesised to have a significant influence on public preference and acceptability and were employed as attributes in the stated choice experiment:

Permit allocation: the basis of allocation is likely to influence perceptions of fairness. An equal per capita allowance implies an equal right to pollute (or equal responsibility not to) and also lies behind the case for contraction and convergence. Permit allocation to industry has reflected historic emissions (grandfather rights) and such an approach may be attractive to higher emitters and is therefore included to see if selfish preferences emerge. A per household allocation is also used ? reflecting experience with Council Tax payments ? again this form of allocation will benefit some and this may be reflected in preferences. Similarly higher allocations to those with greater need may also be seen as (un)fair.

Transactions: some indication of the level of effort required from individuals to manage their carbon and the hassle factor in transactions.

Management of carbon accounts: to explore issues of trust. Would a Government administered scheme be more or less acceptable than one provided by the private sector or local organisations?

Permit sale and purchase: Indicative prices for the sale and purchase of permits. It is as yet unclear how such a scheme would influence the market price of carbon ? this would depend on whether carbon permits could be traded in any way into or out of the ETS.

Sale of permits: Attempts to address engagement with the market and an issue that has emerged from qualitative research that some low emitters would rather keep or retire permits than let high emitters have them.

Lifetime of permits: If individuals are risk averse they may wish to bank permits against future needs (or plans such as a trip to Australia that would require additional permits).

Purchase limits: This attribute explores both the idea of limits on purchases ? which some would favour as avoiding excess use of carbon at the high end of the distribution and possibly protecting against speculation, whilst others might see limits as an excessive constraint on their quality of life or freedom.

Market operation: Price setting by Government or market, with or without cap.

Scope of the scheme: coverage could include domestic energy, car use, air travel and public transport.

The initial design and piloting of a paper based stated preference exercise examining design attributes of a PCT scheme was completed rapidly to allow the experiment to be included in a ?Citizens Forum? event organised by the RSA in Cardiff on 26th January involving 80 participants from Cardiff and the surrounding hinterland. All participants had completed a ?carbon footprint? exercise and were informed as to how far they were above or below an initial allocation of 4 tonnes CO2.The attributes were split between two SP designs to avoid an overload of information, with two common attributes: allocation and price. The Citizens Forum was a highly informative event which together with the formal analysis of the data informed a revised computer based survey of 200 respondents to be implemented in Spring 2008 in England. Evidence from the two surveys will allow us to draw conclusions on the relative importance of different design attributes and their acceptability.

Publisher

Association for European Transport