Environmental Economics and Policy Studies

, Volume 15, Issue 3, pp 309–328 | Cite as

Residential preferences for stable electricity supply and a reduction in air pollution risk: a benefit transfer study using choice modeling in China

  • Taro OhdokoEmail author
  • Satoru Komatsu
  • Shinji Kaneko
Research Article


This paper uses choice modeling surveys from the Chinese cities of Jiujiang, Jiangxi Province, and Changsha, Hunan Province, to identify residential preferences for simultaneously increasing the stability of the electricity supply and decreasing the health risks from air pollution. Air pollution in China is mainly attributable to externalities associated with the electricity supply. We employ a contingent ranking approach as our choice modeling method and test for the transfer of benefits for these preferences between the two sites. The original benefit estimates indicate that the implicit price for reducing the number of power breakdowns is about RMB 83 per times × year × household in Jiujiang and RMB 78 per times × year × household in Changsha, while the implicit price for reducing the duration of power breakdowns is statistically zero in Jiujiang and RMB 71 per times × year × household in Changsha. From the alternative perspective, we estimate that the annualized value of the statistical lifetime risk of cancer caused by air pollution over a 70-year period is RMB 50,844 per year in Jiujiang and RMB 67,146 per year in Changsha. This suggests that we do not reject benefit transferability based on the implicit price of the number of power breakdowns, but do reject it based on the number of deaths from cancer caused by air pollution.


Power plants Power breakdowns Air pollution Choice modeling Benefit transfer 

JEL Classification

Q410 Q530 



This paper is part of an ex post evaluation of the 2007 ODA yen loan projects granted by the Japanese Bank for International Cooperation. This research was supported by a Ministry of Education, Culture, Sports, Science, and Technology Grant-in-Aid for Scientific Research (No. 22310030 and 23710057). The authors gratefully acknowledge the comments of Dr. Yohei Mitani as a discussant at the 2008 meeting of the Society for Environmental Economics and Policy Studies, along with those of a number of other participants, including Dr. Kenji Takeuchi of the Graduate School of Economics at Kobe University and Dr. Takahiro Tsuge of the Faculty of Economics at Konan University. The authors also greatly appreciate the comments of two anonymous reviewers and the cooperation of the survey respondents in Jiujiang and Changsha.


  1. Andrews-Speed P, Dow S, Wang A, Mao J, Wei B (1999) Do the power sector reforms in China reflect the interest of consumers? China Quart 158:430–446CrossRefGoogle Scholar
  2. Aunan K, Pátzay G, Aaheim HA, Seip HM (1998) Health and environmental benefits from air pollution reductions in Hungary. Sci Total Environ 212(2–3):245–268CrossRefGoogle Scholar
  3. Baskaran R, Cullen R, Colombo S (2010) Testing different types of benefit transfer in valuation of ecosystem services: New Zealand winegrowing case studies. Ecol Econ 69:1010–1022CrossRefGoogle Scholar
  4. Beggs S, Cardell S, Hausman J (1981) Assessing the potential demand for electric cars. J Econom 16:1–19CrossRefGoogle Scholar
  5. Bollen J, van der Zwaan B, Brink C, Eerens H (2009) Local air pollution and global climate change: a combined cost-benefit analysis. Res Energy Econ 31:161–181CrossRefGoogle Scholar
  6. California Environmental Protection Agency (1998) The report on diesel exhaust URL: (retrieved on June 5, 2010)
  7. Carlsson F, Martinsson P (2007) Willingness to pay among Swedish households to avoid power outages: a random parameter Tobit model approach. Energy J 28(1):75–89Google Scholar
  8. Carlsson F, Martinsson P (2008) Does it matter when a power outage occurs? A choice experiment study on the willingness to pay. Energy Econ 30(3):1232–1245CrossRefGoogle Scholar
  9. Carlsson F, Frykblom P, Lagerkvist CJ (2007) Consumer willingness to pay for farm animal welfare: mobile abattoirs versus transportation to slaughter. Eur Rev Agric Econ 34(3):321–344CrossRefGoogle Scholar
  10. Chapman RG, Staelin R (1982) Exploiting rank ordered choice set data within the stochastic utility model. J Mark Res 19:288–301CrossRefGoogle Scholar
  11. Chrzan K (1994) Three kinds of order effects in choice-based conjoint analysis. Mark Lett 5(2):165–172CrossRefGoogle Scholar
  12. Colombo S, Calatrava–Requena J, Hanley N (2007) Testing choice experiment for benefit transfer with preference heterogeneity. Am J Agric Econ 89(1):135–151CrossRefGoogle Scholar
  13. de Blaeij AT, Nunes PALD, van den Bergh JCJM (2007) ‘No-choice’ options within a nested logit model: one model is insufficient. Appl Econ 39(10):1245–1252CrossRefGoogle Scholar
  14. Desvousges W, Naughton M, Parsons G (1992) Benefit transfer: conceptual problems in estimating water quality benefits using existing studies. Water Resour Res 28(3):675–683CrossRefGoogle Scholar
  15. Dziegielewska DAP, Mendelshon R (2005) Valuing air quality in Poland. Environ Resour Econ 30:131–163CrossRefGoogle Scholar
  16. Fenichel EP, Lupi F, Hoehn JP, Kaplowitz MD (2009) Split-sample tests of “no-opinion” responses in an attribute-based choice model. Land Econ 85(2):348–362Google Scholar
  17. Greene WH, Hensher DA (2003) A latent class model for discrete choice analysis: contrasts with mixed logit. Transp Res Part B 37:681–698CrossRefGoogle Scholar
  18. Hammitt JK, Zhou Y (2006) The economic value of air-pollution-related health risks in China: a contingent valuation study. Environ Resour Econ 33:399–423CrossRefGoogle Scholar
  19. Horii N (2008) Air pollution issues and the installation of desulphurization facilities. In: Horii N (ed) Sustainable development of Chinese economy: can the environmental and resource constraint be controlled? Institute of developing economies, JETRO, Chiba, pp 127–148 (In Japanese)Google Scholar
  20. Ito K, Thurston GD (1996) Daily PM10/Mortality associations: an investigations of at-risk subpopulations. J Expo Anal Environ Epidemiol 6(1):79–95Google Scholar
  21. Iwai K, Uchiyama I (2000) Diesel Sha Haishutsu Ryushi niyoru Hito Haigan Risk Shisan (Yosoku) (In Japanese), Risk Estimation for Human Lung Cancer Due to Diesel Exhaust Particles (Prediction). Taiki Kankyo Gakkaishi (J Jpn Soc Atmos Environ) 35(4):229–241Google Scholar
  22. Japan Electric Power Information Center Inc. (2006) Power industry in China: the power situation of emerging great power country, Ohmsha Ltd (in Japanese)Google Scholar
  23. Johnston RJ, Duke JM (2008) Benefit transfer equivalence tests with non-normal distributions. Environ Resour Econ 41:1–23CrossRefGoogle Scholar
  24. Johnston RJ, Duke JM (2010) Socioeconomic adjustments and choice experiment benefit function transfer: evaluating the common wisdom. Resour Energy Econ 32(3):421–438CrossRefGoogle Scholar
  25. Krinsky I, Robb AL (1986) On approximating the statistical properties of elasticities. Rev Econ Statist 68:715–719CrossRefGoogle Scholar
  26. Lee WJ, Teschke K, Kauppinen T, Andersen A, Jäppinen P, Szadkowska-Stanczyk I, Pearce N, Persson B, Bergeret A, Augusto Facchini L, Kishi R, Kielkowski D, Rix BA, Henneberger P, Sunyer J, Colin D, Kogevinas M, Boffetta P (2002) Mortality from lung cancer in workers exposed to sulfur dioxide in the pulp and paper industry. Environ Health Perspect 110(10):991–995CrossRefGoogle Scholar
  27. Liu D, Wang Y, Zhou A, Zhang S (1997) Cost-benefit analysis on IRP/DSM application: a case study in Shanghai. Energy Pol 25(10):837–843CrossRefGoogle Scholar
  28. Louviere JJ, Hensher DA, Swait JD (2000) Stated choice methods: analysis and application. Cambridge University Press, United KingdomCrossRefGoogle Scholar
  29. Matsukawa I, Fujii Y (1994) Customer preferences for reliable power supply: using data on actual choices of back-up equipment. Rev Econ Statist 76(3):434–446CrossRefGoogle Scholar
  30. McFadden D (1978) Conditional logit analysis of qualitative choice behaviour. In: Zarembka P (ed) Frontiers in econometrics. Academic Press, New York, pp 105–142Google Scholar
  31. Morrison M, Bergland O (2006) Prospects for the use of choice modelling for benefit transfer. Ecol Econ 60:420–428CrossRefGoogle Scholar
  32. Morrison M, Bennett JW, Blamey R, Louviere JJ (2002) Choice modeling and tests of benefit transfer. Am J Agric Econ 84(1):161–170CrossRefGoogle Scholar
  33. Navrud S, Ready R (2007) Environmental value transfer: issues and methods. Springer, DordrechtCrossRefGoogle Scholar
  34. Poe GL, Giraud KL, Loomis JB (2005) Computational methods for measuring the difference of empirical distributions. Am J Agric Econ 87(2):353–365CrossRefGoogle Scholar
  35. Rafaj P, Kypreos S (2007) Internalisation of external cost in the power generation sector: analysis with global multi-regional MARKAL model. Energy Pol 35:828–843CrossRefGoogle Scholar
  36. Revelt D, Train K (1998) Mixed logit with repeated choice: households’ choices of appliance efficiency level. Rev Econ Statist 80(4):647–657CrossRefGoogle Scholar
  37. Rolfe JC, Bennett JW (2006) Choice modelling and the transfer of environmental values. Edward Elgar, MassachusettsGoogle Scholar
  38. Ryan M, Skåtun D (2004) Modelling non-demanders in choice experiment. Health Econ 13:397–402CrossRefGoogle Scholar
  39. Söderberg M (2008) A choice modelling analysis on the similarity between distribution utilities’ and industrial customers’ price and quality preferences. Energy Econ 30(3):1246–1262CrossRefGoogle Scholar
  40. State Environmental Protection Agency (2006) China environmental year book 2006. China Statistical Publishing House, BeijingGoogle Scholar
  41. Statistical Bureau of Hunan Province (2007) Hunan statistical yearbook. China Statistical Publishing House, BeijingGoogle Scholar
  42. Statistical Bureau of Jiangxi Province (2007) Jiangxi statistical yearbook. China Statistical Publishing House, BeijingGoogle Scholar
  43. Steenhof PA, Fulton F (2007) Factors affecting electricity generation in China: current situation and prospects. Technol Forecast Soc 74(5):663–681CrossRefGoogle Scholar
  44. Su CL, Teng JH (2007) Outage costs quantification for benefit-cost analysis of distribution automation systems. Elect Power Energy Sys 29:767–774CrossRefGoogle Scholar
  45. Sun T, Wang X, Ma X (2009) Relationship between the economic cost and the reliability of the electric power supply system in City: a case in Shanghai of China. Appl Energy 86:2262–2267CrossRefGoogle Scholar
  46. Train KE (2009) Discrete choice methods with simulation, 2nd edn. Cambridge University Press, New YorkGoogle Scholar
  47. Tuan T, Seenprachawong U, Navrud S (2009) Comparing cultural heritage values in South East Asia: possibilities and difficulties in cross-country transfers of economic values. J Cult Herit 10:9–21CrossRefGoogle Scholar
  48. Vassanadumrongdee S, Matsuoka S (2005) Risk perceptions and value of a statistical life for air pollution and traffic accidents: evidence from Bangkok, Thailand. J Risk Uncertain 30(3):261–287CrossRefGoogle Scholar
  49. Wang B (2007) An imbalanced development of coal and electricity industries in China. Energy Pol 35(10):4959–4986CrossRefGoogle Scholar
  50. Wang X, Mauzerall DL (2006) Evaluating impacts of air pollution in china on public health: implications for future air pollution and energy policies. Atmos Environ 40:1706–1721CrossRefGoogle Scholar
  51. Wang H, Mullahy J (2006) Willingness to pay for reducing fatal risk by improving air quality: a contingent valuation study in Chongqing, China. Sci Total Environ 367(1):50–57CrossRefGoogle Scholar
  52. Xue Z, Hao J, Chai F, Duan N, Chen Y, Li J, Chen F, Liu S, Pu W (2005) Air quality impact of the coal–fired power plants in the northern passageway of the China west–east power transmission project. J Air Waste Manage Assoc 55:1816–1826CrossRefGoogle Scholar
  53. Yang M, Yu X (1996) China’s power management. Energy Pol 24(8):735–757CrossRefGoogle Scholar
  54. Yuan J, Zhao C, Yu S, Hu Z (2007) Electricity consumption and economic growth in China: cointegration and co-feature analysis. Energy Econ 29:1179–1191CrossRefGoogle Scholar
  55. Zhai G, Suzuki T (2008) Public willingness to pay for environmental management, risk reduction and economic development: evidence from Tianjin, China. China Econ Rev 19:551–566CrossRefGoogle Scholar
  56. Zhai G, Suzuki T (2009) International benefit transfer related to coastal zones: evidence from Northeast Asia. Marine Resour Econ 24(2):171–186Google Scholar
  57. Zhu F, Zheng Y, Guo X, Wang S (2005) Environmental impacts and benefits of regional power grid interconnections for China. Energy Pol 33:1797–1805CrossRefGoogle Scholar

Copyright information

© Springer Japan 2013

Authors and Affiliations

  1. 1.Faculty of Economics, Department of Economics on SustainabilityDokkyo UniversitySokaJapan
  2. 2.Graduate School for International Development and CooperationHiroshima UniversityHiroshimaJapan

Personalised recommendations