2011 International Conference on Alternative Energy in Developing Countries and Emerging Economies
- 187 -
Abstract
--Biodiesel fuel is one alternative fuel which can
be substituted for petroleum diesel in condition the limited
capacity of fossil energy reserves. The purpose of this study
is to quantify consumer’s willingness to pay (WTP) for
biodiesel fuel by paired comparison (PC) approaches. The
PC approach suggested that Bangkok residents were willing
to pay £0.0068 per litre more for biodiesel per 1% reduction
in other vehicle operating costs (OC) and £0.0052 per litre
per unit (%) reduction in pollution emissions (PE), but
£0.0067 per litre per unit (%) increase in cetane number
(CN), Of course, the results application of all study finding
will apply to use for decisions on the efficient management
of the biodiesel fuel.
Index
Terms
--Bangkok,
Biodiesel
fuel,
Paired
Comparison, Willingness to Pay
I. I
NTRODUCTION
Energy consumption has increased extraordinarily. On
the other hand, nowadays the total reserves of fossil
sources are limited which are global environmental
awareness [
1
]. Sustainable development is, therefore, a
potential way of increasing alternative and renewable
energy supply. To be sustainable, development must
satisfy human needs and improve quality of life [2, 3].
This is due to the constant increasing price of
petroleum,
uncertainties
concerning
petroleum
availability and the environmental concerns about
pollution coming from vehicle emissions. Among the
proposed alternative fuels, biodiesel fuel has received
much attention in recent years for diesel engines [4].
This paper presents an available range of economic
value of the biodiesel fuel characteristics: fuel cost,
operation costs, cetane number and pollution emissions
that are needed for the effective biodiesel fuel in order for
them to be sustainable energy developments in Thailand.
Using paired comparison (PC) model use the value of
environmental goods to assess the willingness to pay
(WTP) for non-market goods.
II. M
ATERIAL AND
M
ETHOD
Choice modeling (CM) one of stated preference can
reveal individual preferences by asking respondents to
choose their most preferred, to rate them and to rank that
the options presented to them [5]. The paired comparison
model uses the value of environmental goods to assess
the economic efficiency of the use of biodiesel fuel. This
design has comparative qualities, as each relies on a
different cognitive process for eliciting preferences.
Huber et al. [6] cite that the PC approach is better
predictor of longer-market adaptations to new products
with relatively unfamiliar attributes. Moreover, the PC
technique has not been used in environmental economics
to measure in the context of alternative fuels
characteristics for sustainable development in the case of
Thailand according to the current literature.
The main part of this study into measurement of
biodiesel fuel in economic terms uses the PC model. In
PC approach using the 6,340 choices elicited from 634
respondents, the conditional backward method of binary
logistic regression was estimated the procedure utilizing a
maximum likelihood paradigm. In part of attitudes to
biodiesel fuel was analysed using Friedman’s test. All
parts of this study were explored using the SPSS version
14.0.
The choice modelling questionnaire design was to
choose a set of attributes from all the possible sets
expected to affect the preference for the biodiesel fuel in
the question. To accomplish this, not only were focus
groups and one-on-one interviews used but also extensive
literature reviews were conducted to select attributes. The
determination of attribute levels needs to considered with
CM design. This is to avoid imposing linearity on
respondent preferences [7]. Furthermore, it is necessary
to use unequal increments between attribute levels [8].
Five types of attributes were used in the CM survey: fuel
type (FT), fuel cost (FC), operating costs (OC), cetane
number (CN) and pollution emissions (PE). Table I
shows fuel attributes and levels used in the choice
modelling, in the PC exercises. It also provides brief
definitions and expected signs of using the CM method to
estimate willingness to pay for biodiesel fuel.
As 49 choice sets of alternative biodiesel fuel
scenarios were crease, 5 were drawn randomly. Two
alternatives in each choice set were asked to rate by each
respondent for the PC survey as a set of biodiesel fuel
characteristics (alternative fuel) and diesel fuel
characteristics (status quo). It would seem that there is a
tendency to value what one knows and is familiar with
using a different value hypothetical scenarios (Fig. 1).
Estimating Willingness to Pay for the Use of
Biodiesel Fuel from Paired Comparison
Approaches: The Case of Bangkok, Thailand
P. Duangchinda
Southern Economy Research Unit, Faculty of Economics and Business Administration, Thaksin Universitty, (
Thailand
)
