1. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Referendums in Switzerland and Willingness-To-Pay (WTP) (Work Package 3) T. Heck Paul Scherrer Institute, Switzerland EESD Energy Project NewExt: progress meeting PSI, 26 and 27 May 2003

2. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Disadvantages of surveys Stated versus revealed preferences: The Willingness-To-Pay expressed in the fictitious situation of a survey may differ from the WTP when the money has to be paid really. Surveys may be not representative. An individual’s Willingness-To-Pay may depend on the willingness and obligations of others as well (c.f. Prisoner’s Dilemma).

3. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Advantages of referendum method The decision is not fictitious but “serious” i.e. if the population would decide to introduce a certain tax it would have to be paid really. Huge number of people (Referendums year 2000: more than 2 Million voters). It is clear to the individual that he or she is not the only one who has to pay. Instead, in case the decision would be accepted, the whole population would be involved.

4. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Limitations of referendum method Surveys are more flexible It is practically impossible for researchers to initiate a referendum and to determine the “questions”; the existing formulation of the initiative has to be taken as it is. Only Yes-No decision!

5. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Method: WTP from %Yes votes

6. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Calculation of WTP distribution function from referendum results Y i is the share of yes-votes in referendum i related to price p i. Consistency condition:

7. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Assumption: Lognormal Distribution Y i is the share of yes-votes in referendum i related to price p i.

8. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Overall Results of Selected Referendums Year 2000Price [CHF/kWh] % Yes Solar-Initiative0.00532% Förderabgabe (Gegenentwurf zu Solar-Initiative) 0.00347%

9. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Distribution of Canton Results Distribution of yes- votes for Solar- Initiative in the different Swiss cantons (y-axis normalized to 1)

10. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Check: Correlation between acceptance and number of voters in the cantons

11. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Result: Calculated Distribution Geometric mean/Median:0.00272 CHF/kWh Arithmetic mean0.0064 CHF/kWh Geometric standard deviation:3.7 Result for estimated Willingness-To-Pay in Switzerland based on referendums:

12. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Conversion to CHF/ton CO2 The change from fossil fuels to renewable energy affects mainly direct CO2 emissions but not necessarily other pollutant emissions. Other emissions than CO2 are relatively low in Switzerland. Arguments for accounting to CO2 only:  Apply average CO2 emission factors per kWh

13. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Result: Willingness-To-Pay (WTP) Geometric mean/Median:12 CHF/ton CO2 Arithmetic mean:28 CHF/ton CO2 8 to 20 Euro per ton CO2

14. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Compare: Abatement Costs

15. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Abatement Costs for Transport

16. Paul Scherrer Institut 5232 Villigen PSI NewExt-Project, 26 May 2003 HT40 Conclusions WTP (8 - 20 Euro/ton CO2) significantly lower than abatement costs in Switzerland (>70 Euro/ton CO2) Lower than Swiss CO2-Gesetz (140 Euro/ton CO2) Close to low abatement costs in other countries Agrees well with Global Warming damage costs estimated by Tol et al. 2000 (max. 16 Euro/ton CO2)