Skip to main content

Advertisement

SpringerLink
Log in

Metro Manila households’ willingness to pay for renewable energy as a climate change mitigation measure: a CVM study

  • Special Feature: Original Article
  • Citizens’ Attitudes, Preferences, Willingness-to-pay for Climate Change Mitigation Options in Asia
  • Published:
Sustainability Science Aims and scope Submit manuscript

Abstract

This study used the contingent valuation method (CVM) to investigate households’ preferences and willingness to pay (WTP) for renewable energy sources of electricity supply in Metro Manila, Philippines. Through a face-to-face survey of 250 households in December 2021, respondents were asked to state their WTP for an increase in the share of renewable energy (RE) in electricity supply. The over-all proportion of “yes” answers to the WTP question was only 49.6%. Mean WTP for an additional 20% share of RE in electricity supply was estimated to be 7.4–10.6% of monthly electricity bill, equivalent to about PhP197-283 (US$4.00–5.74) per month per household. Results of the binary probit regressions indicate that people would be more likely to pay for RE if the additional cost was lower and household income was higher, in accordance with economic theory. Other factors that significantly influenced WTP are education, electricity bill and awareness about RE and climate change (positive effects), and household size and delays in electricity bill payment (negative effects). The study also found that while Metro Manila residents were concerned about climate change (CC) and its harmful consequences, they had less knowledge and a lower appreciation of RE as a CC mitigation measure, which negatively affected WTP. These findings suggest that extensive information campaigns are needed to raise awareness about the link between RE and CC to gain more support for the RE transition program. Further, the low WTP derived in the study highlights the urgency of measures to overcome market size, technical and financing constraints, and to address regulatory hurdles that raise transaction costs (such as the long permitting process for RE projects), to achieve cost competitiveness in RE systems.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Data availability

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Notes

  1. The electricity pricing of the Manila Electric Company (Meralco), as regulated by the Energy Regulatory Commission of the Philippine government, is highly complex. The rate per kilowatt-hour (kWh) consists of the distribution charge (the cost of power purchased by Meralco from their suppliers, namely, the independent power producers, power producers with power supply agreements, power producers using renewable energy, and the Wholesale Electricity Spot Market; this component makes-up the bulk 55% of total electricity price), transmission charge (the cost of delivery of electricity from the power suppliers to Meralco’s distribution system; 10% of electricity price), system loss charge (cost of power lost due to technical and non-technical system losses), distribution charge (cost of delivery of power from the transmission grids to residential and business end-users; 10% of electricity price), metering charge (the cost of reading, operating and maintaining power metering facilities), supply charge (billing, collection, and customer service costs), and taxes and subsidies. The price per kWh of electricity is adjusted every month largely due to changing generation and transmission costs; while other components are adjusted only slightly to meet the allocation and other pricing constraints imposed by the regulatory body. Except for the distribution charge, the rates for all the components are flat, that is, they do not change with the volume of consumption. Only the distribution charge (about 10% of the price of electricity) changes with the volume of consumption. For instance, at the time the survey was conducted in December 2021 when the electricity rate was about PhP9.773 per kWh, the distribution charge rate structure was as follows: PhP1.0012 per kWh for consumption of 200 kWh and below, PhP1.3183 per kWh for 201–300 kWh, PhP1.6175 per kWh for 301–400 kWh, and PhP2.1387 per kWh for 400 kWh and more (Meralco online, Meralco Rates Archive, Summary Schedule of Rates, December 2021. Retrieved on 28 March 2023 from https://meralcomain.s3.ap-southeast-1.amazonaws.com/2021-12/12-2021_rate_schedule.pdf). Since the additional cost of the increase in the share of RE goes into generation and transmission costs which are set at fixed rates per kWh for any consumption volume, a specified increase in electricity bill shall apply to all, regardless of differences in consumption.

  2. The survey required that the respondent be the household head or spouse of the household head or a household member responsible for expenditure decisions. The survey was conducted during the daytime on weekdays during which the mostly male household head is out of the house at work, a common scenario in the Philippines.

References

  • Abansi CL (2012) Willingness to pay for recreational benefits in Sagada, Philippines: a contingent valuation study. Cordill Rev J Philipp Cult Soc 4(1):69–99

    Google Scholar 

  • Aravena C, Hutchinson WG, Longo A (2012) Environmental pricing of externalities from different sources of electricity generation in Chile. Energy Econ 34:1214–1225

    Article  Google Scholar 

  • Ayodelea TR, Ogunjuyigbea ASO, Ajayia OD, Yusuff AA, Mosetlheb TC (2021) Willingness to pay for green electricity derived from renewable energy sources in Nigeria. Renew Sustain Energy Rev. https://doi.org/10.1016/j.rser.2021.111279

    Article  Google Scholar 

  • Bateman IJ, Carson RT, Day B et al (2002) Economic valuation with stated preference techniques. Edward Elgar Publishing, Cheltenham

    Book  Google Scholar 

  • Beavers K (2018) Geothermal development in the Philippines. In: Proceedings of the 2018 geothermal resources council annual meeting. Available at https://geothermal.org/Annual_Meeting/PDFs/Geothermal_Development_in_The_Philippines-Paper.pdf. Accessed 27 May 2023

  • Bigerna S, Polinori P (2014) Italian households’ willingness to pay for green electricity. Renew Sustain Energy Rev 34:110–121

    Article  Google Scholar 

  • Bollino CA (2009) The willingness to pay for renewable energy sources: the case of Italy with socio-demographic determinants. Energy J 30:81–96

    Google Scholar 

  • Boyle KJ (2003) Contingent valuation in practice. In: Champ PA, Boyle KJ, Brown TC (eds) A primer on nonmarket valuation. Kluwer Academic Publishers, Dordrecht, pp 111–170

    Chapter  Google Scholar 

  • Calderon MM, Camacho LD, Carandang MG, Dizon JT, Rebugio LL, Tolentino NL (2006) Willingness to pay for improved watershed management: evidence from Metro Manila, Philippines. For Sci Technol 2(1):42–50. https://doi.org/10.1080/21580103.2006.9656298

    Article  Google Scholar 

  • Caplis RMP, Lopez DS (2020) Contingent valuation of automated guideway transit in Baguio, Philippines. Case Stud Transp Policy 8(3):1096–1108. https://doi.org/10.1016/j.cstp.2020.07.011

    Article  Google Scholar 

  • Carson RT (2011) Contingent valuation: a comprehensive bibliography and history. Edward Elgar, Cheltenham

    Book  Google Scholar 

  • Claudy MC, Michelsen C, O’Driscoll A (2011) The diffusion of micro generation technologies—assessing the influence of perceived product characteristics on homeowners’ willingness to pay. Energy Policy 39:1459–1469

    Article  Google Scholar 

  • [DOE] Department of Energy, Republic of the Philippines (2011) National renewable energy plan: renewable energy plans and programs 2011–2030. DOE, Taguig City

  • [DOE-EPIMB] Department of Energy-Electric Power Industry Management Bureau (2020) 2019 Power situation report. DOE, Taguig City

  • [DOE-REMB and NREB] Department of Energy-Renewable Energy Management Bureau and National Renewable Energy Board (2022) National Renewable Energy Program 2020–2040. DOE, Taguig City

  • Eckstein D, Kunzel V, Schafer L (2021) Global Climate Risk Index 2021—who suffers most from extreme weather events? Weather-related loss events in 2019 and 2000 to 2019. Germanwatch, Bonn

  • Guo X, Liu H, Mao X, Jin J, Chen D, Cheng S (2014) Willingness to pay for renewable electricity: a contingent valuation study in Beijing, China. Energy Policy 68:340–347

    Article  Google Scholar 

  • Haab TC, McConnell KE (2002) Valuing environmental and natural resources: the econometrics of non-market valuation. Edward Elgar Publishing Ltd, Cheltenham

    Book  Google Scholar 

  • Han MS, Biying Y, Cudjoe D, Yuan Q (2020) Investigating willingness-to-pay to support solar energy research and development in Myanmar. Energy Policy 146:111820

    Article  Google Scholar 

  • Hanemann M (1984) Welfare evaluations in contingent valuation experiments with discrete responses. Am J Agric Econ 66(3):332–341

    Article  Google Scholar 

  • Hanley N, Nevin C (1999) Appraising renewable energy developments in remote communities: the case of the North Assynt estate, Scotland. Energy Policy 27:527–547

    Article  Google Scholar 

  • [IPCC] Intergovernmental Panel on Climate Change (2021) Summary for policymakers. In: Masson-Delmotte V, Zhai P, Pirani A, Connors SL, Péan C, Berger S, Caud N, Chen Y, Goldfarb L, Gomis MI, Huang M, Leitzell K, Lonnoy E, Matthews JBR, Maycock TK, Waterfield T, Yelekçi O, Yu R, Zhou B (eds) Climate Change 2021: the physical science basis. Contribution of Working Group I to the sixth assessment report of the intergovernmental panel on climate change. Cambridge University Press, Cambridge, pp 3−32. https://doi.org/10.1017/9781009157896.001

  • IPCC (2022) Summary for policymakers. In: Pörtner H-O, Roberts DC, Poloczanska ES, Mintenbeck K, Tignor M, Alegría A, Craig M, Langsdorf S, Löschke S, Möller V, Okem A (eds) Climate change 2022: impacts, adaptation and vulnerability. Contribution of Working Group II to the sixth assessment report of the intergovernmental panel on climate change. Cambridge University Press, Cambridge, pp 3–33

  • International Renewable Energy Agency (IRENA) (2020) Global renewables outlook: energy transformation 2050. Available at https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Apr/IRENA_Global_Renewables_Outlook_2020.pdf. Accessed 27 May 2023

  • Kowalska-Pyzalska A (2019) Do consumers want to pay for green electricity? A case study from Poland. Sustainability 11:1310. https://doi.org/10.3390/su11051310

    Article  Google Scholar 

  • Lee M-K, Kim J-H, Yoo S-H (2018) Public willingness to pay for increasing photovoltaic power generation: the case of Korea. Sustainability 10(4):1196

    Article  Google Scholar 

  • Malahayati M (2020) Achieving renewable energies utilization target in South-East Asia: progress, challenges, and recommendations. Electr J 33(5):106736. https://doi.org/10.1016/j.tej.2020.106736

    Article  Google Scholar 

  • Merdekawati M, Suryadi B, Suwanto, Ienanto G (2021) ASEAN climate action: a review of nationally determined contributions towards COP26. ASEAN Centre for Energy Policy Brief No. 7, Jakarta

  • Mozumder P, Vasquez WF, Marathe A (2011) Consumers’ preference for renewable energy in the southwest USA. Energy Econ 33(6):1119–1126

    Article  Google Scholar 

  • Muhammad-Jawad I, Abdul-Rahim AS (2020) Economic valuation of green electricity sources in Pakistan. Bus Econ Res 10(3):47–64. https://doi.org/10.5296/ber.v10i3.17051

    Article  Google Scholar 

  • National Association of Regulatory Utility Commissioners (NARUC) (2011) Encouraging renewable energy development: a handbook for international energy regulators. USAID. Available at https://www.naruc.org/international/what-we-do/clean-energy/regulating-clean-energy-handbook/. Accessed 27 May 2023

  • Nomura N, Akai M (2004) Willingness to pay for green electricity in Japan as estimated through contingent valuation method. Appl Energy 78:453–463

    Article  Google Scholar 

  • Oerlemans LA, Chan KY, Volschenk J (2016) Willingness to pay for green electricity: a review of the contingent valuation literature and its sources of error. Renew Sustain Energy Rev 66:875–885

    Article  Google Scholar 

  • Pacudan R (2014) Electricity price impacts of Feed-in Tariff policies: the cases of Malaysia, the Philippines, and Thailand. In: Han P, Kimura F (eds) Energy market integration in East Asia: energy trade, cross border electricity, and price mechanism. ERIA Research Project Report FY2013, No. 29. ERIA, Jakarta, pp 283–319

  • Palanca-Tan R (2008) The demand for a dengue vaccine: a contingent valuation survey in Metro Manila. Vaccine 26:914–923

    Article  Google Scholar 

  • Palanca-Tan R (2015) Knowledge, attitudes, and willingness to pay for sewerage and sanitation services: a contingent valuation survey in Metro Manila, Philippines. J Environ Sci Manag 18(2):44–52

    Article  Google Scholar 

  • Palanca-Tan R (2016) Estimating households’ benefits from domestic wastewater treatment in Cagayan De Oro, Philippines: a contingent valuation approach. Int J Ecol Conserv 17(1):1–21

    Google Scholar 

  • Palanca-Tan R (2020) Willingness to pay of urban households for the conservation of natural resources and cultural heritage in a neighboring rural area: a CVM study. Philipp J Sci 149:393–403

    Article  Google Scholar 

  • Palanca-Tan R, Chico-Almaden CR, Navarro MK, Rubio-Serenas L (2018) Total economic value of the Cagayan de Oro River Basin. In: Hymel et al (eds) Innovation addressing climate change challenges: market-based perspectives, Chap 12. Edward Elgar, Cheltenham, pp 169–183

  • Philippine Statistics Authority (PSA) (2021) Highlights of the Philippine Population 2020 Census of Population and Housing

  • [PSA] Philippine Statistics Authority (2022) Highlights of the preliminary results of the 2021 annual family income and expenditure survey, release date: Aug 15, 2022, Table 1.1 number of families and total annual family income and expenditure (current prices) with measures of precision, by region, province and HUC 2021P.xlsx. https://psa.gov.ph/content/highlights-preliminary-results-2021-annual-family-income-and-expenditure-survey. Retrieved on 28 May 2023

  • Rosellon MAD (2017) The renewable energy policy debate in the Philippines. PIDS Discussion Paper Series No. 2017-17, Philippine Institute for Development Studies, Quezon City

  • Stigka EK, Paravantis JA, Mihalakakou GK (2014) Social acceptance of renewable energy sources: a review of contingent valuation applications. Renew Sustain Energy Rev 32(2014):100–106

    Article  Google Scholar 

  • Subade R (2007) Mechanisms to capture economic values of marine biodiversity: the case of Tubbataha Reefs UNESCO World Heritage Site, Philippines. Mar Policy 31(2):135–142

    Article  Google Scholar 

  • Taylor M (2020) Accelerating Southeast Asia’s energy transformation. Webinar, 13 August. ASEAN Centre for Energy and IRENA

  • [UNESCAP] United Nations Economic and Social Commission for Asia and the Pacific (2020) Regional energy trends report 2020: tracking SDG 7 in the ASEAN region. ESCAP, Bangkok

    Google Scholar 

  • Watson Farley & Williams (2018) The Philippines: key issues for developing renewable energy project, August 2018 briefing. https://www.wfw.com/articles/the-philippines-key-issues-for-developing-renewable-energy-projects/. Accessed 27 May 2023

  • Yoshikawa H (2020) Public attitudes towards energy policy and sustainable development in ASEAN. Economic Research Institute for ASEAN and East Asia

  • Zhang L, Wu Y (2012) Market segmentation and willingness to pay for green electricity among urban residents in China: the case of Jiangsu Province. Energy Policy 51:514–523. https://doi.org/10.1016/j.enpol.2012.08.053

    Article  Google Scholar 

  • Zografakis N, Sifaki E, Pagalou M, Nikitaki G, Psarakis V, Tsagarakis KP (2010) Assessment of public acceptance and willingness to pay for renewable energy sources in Crete. Renew Sustain Energy Rev 14:1088–1095

    Article  Google Scholar 

Download references

Funding

The conduct of the survey for this study was funded by the Economic Research Institute for ASEAN and East Asia. Writing of the manuscript was undertaken through the Research and Creative Work Faculty Program of the University Research Council of the Ateneo de Manila University.

Author information

Authors and Affiliations

  1. Department of Economics, Ateneo de Manila University, Loyola Heights, 1108, Quezon City, Philippines

    Rosalina Palanca-Tan

  2. Tokyo University, Tokyo, Japan

    Masahiro Sugiyama & Daniel del Barrio Alvarez

  3. Resource and Environmental Economics Foundation of the Philippines, Quezon City, Philippines

    Gem B. Castillo

  4. Harvard University, Cambridge, USA

    Nelson Matthew P. Tan

Authors
  1. Rosalina Palanca-Tan
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Masahiro Sugiyama
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Daniel del Barrio Alvarez
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Gem B. Castillo
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Nelson Matthew P. Tan
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rosalina Palanca-Tan.

Ethics declarations

Conflict of interest

The authors have no relevant financial or financial interests to disclose. There are no conflicts of interest/competing interests to declare.

Additional information

Handled by Anbumozhi Venkatachalam, Economic Research Institute for ASEAN and East Asia, Indonesia.

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Palanca-Tan, R., Sugiyama, M., del Barrio Alvarez, D. et al. Metro Manila households’ willingness to pay for renewable energy as a climate change mitigation measure: a CVM study. Sustain Sci (2023). https://doi.org/10.1007/s11625-023-01403-3

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s11625-023-01403-3

Keywords

Search

Navigation