This semester I am teaching environmental economics, a course I haven't taught since 2006 at RPI. Last week we covered environmental valuation. I gave my class an in-class contingent valuation survey. I tried to construct the survey according to the recommendations of the NOAA panel. Here is the text of the survey:
Emissions Reduction Fund Survey
In order to meet Australia’s international commitments under the Paris Treaty, the government is seeking to significantly expand the Emissions Reduction Fund, which pays bidders such as farmers to reduce carbon emissions. To fully meet Australia’s commitment to reduce emissions by 26-28% below 2005 levels by 2030 the government estimates that the fund needs to be expanded to $2 billion per year. The government proposes to fund this by increasing the Medicare Levy.
1. Considering other things you need to spend money, and other things the government can do with taxes do you agree to a 0.125% increase in the Medicare levy, which is equivalent to $100 per year in extra tax for someone on average wages. This is expected to only meet half of Australia’s commitment, reducing emissions to 13-14% below 2005 levels or by a cumulative 370 million tonnes by 2030.
Yes No
2. Considering other things you need to spend money, and other things the government can do with taxes do you agree to a 0.25% increase in the Medicare levy, which is equivalent to $200 per year in extra tax for someone on average wages. This is expected to meet Australia’s commitment, reducing emissions to 26-28% below 2005 levels or by a cumulative 740 million tonnes by 2030.
Yes No
3. If you said yes to either 1 or 2, why? And how did you decide on whether to agree to the 0.125% or 0.25% tax?
4. If you said no to both 1. and 2. why?
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85% voted in favour of the 0.125% Medicare tax option and 54% voted in favour of 0.25% - So both would have passed. A few people voted against 0.125 and for 0.25, so I changed their votes to for 0.125 as well as 0.25.
Reasons for voting for both:
Reasons for voting for 0.125 but against 0.25:
Reasons for voting against both:
Mostly the reasons for voting for both are ones we would want to see if we are really measuring WTP - can afford to pay and it is a big issue. Those thinking it will increase their personal health or reduce health spending were made to think about health by the payment vehicle. I chose the Medicare Levy as the payment vehicle as the Australian government has a track record of increasing the Medicare Levy for all kinds of things, like repairing flood damage in Brisbane! I chose the emissions reduction fund because it actually exists and actually buys emissions reductions.
Most people who voted for 0.125% but against 0.25% have valid reasons - they can't afford the higher tax. However, one person said the government should cover the rest by other means. So that person may really be willing to pay 0.25% if the government won't do that.
When we get to the people who voted against both tax rates, most are against the policy vehicle rather than not being willing to pay for climate change mitigation. So, from the point of view of measuring WTP these votes would result in an under estimate. These "protest votes" are a big problem for CVM. Only one person said they weren't willing to pay anything given the bang for the buck.
Emissions Reduction Fund Survey
In order to meet Australia’s international commitments under the Paris Treaty, the government is seeking to significantly expand the Emissions Reduction Fund, which pays bidders such as farmers to reduce carbon emissions. To fully meet Australia’s commitment to reduce emissions by 26-28% below 2005 levels by 2030 the government estimates that the fund needs to be expanded to $2 billion per year. The government proposes to fund this by increasing the Medicare Levy.
1. Considering other things you need to spend money, and other things the government can do with taxes do you agree to a 0.125% increase in the Medicare levy, which is equivalent to $100 per year in extra tax for someone on average wages. This is expected to only meet half of Australia’s commitment, reducing emissions to 13-14% below 2005 levels or by a cumulative 370 million tonnes by 2030.
Yes No
2. Considering other things you need to spend money, and other things the government can do with taxes do you agree to a 0.25% increase in the Medicare levy, which is equivalent to $200 per year in extra tax for someone on average wages. This is expected to meet Australia’s commitment, reducing emissions to 26-28% below 2005 levels or by a cumulative 740 million tonnes by 2030.
Yes No
3. If you said yes to either 1 or 2, why? And how did you decide on whether to agree to the 0.125% or 0.25% tax?
4. If you said no to both 1. and 2. why?
***********************************************************************************
85% voted in favour of the 0.125% Medicare tax option and 54% voted in favour of 0.25% - So both would have passed. A few people voted against 0.125 and for 0.25, so I changed their votes to for 0.125 as well as 0.25.
Reasons for voting for both:
- $200 not much, willing to do more than just pay that tax
- We should meet the target
- Tax is low compared to other taxes - can reduce government spending on health in future
- Can improve my health
- Benefit is much greater than cost to me
- I pay low tax as I'm retired, so can pay more
- I'm willing to pay so Australia can meet commitment
- Only $17 a month
- Tax is small
- Because reducing emissions is the most important environmental issue
Reasons for voting for 0.125 but against 0.25:
- Can afford 0.125 but not 0.25
- Government can cover the rest with other measures like incentives
Reasons for voting against both:
- There are other ways to reduce emissions - give incentives to firms rather than tax the middle class...
- Government should tax firms
- Don't believe in emissions reduction fund because it is inefficient
- I prefer to spend my money rather than pay tax and reduction in emissions is not very big for tax paid
Mostly the reasons for voting for both are ones we would want to see if we are really measuring WTP - can afford to pay and it is a big issue. Those thinking it will increase their personal health or reduce health spending were made to think about health by the payment vehicle. I chose the Medicare Levy as the payment vehicle as the Australian government has a track record of increasing the Medicare Levy for all kinds of things, like repairing flood damage in Brisbane! I chose the emissions reduction fund because it actually exists and actually buys emissions reductions.
Most people who voted for 0.125% but against 0.25% have valid reasons - they can't afford the higher tax. However, one person said the government should cover the rest by other means. So that person may really be willing to pay 0.25% if the government won't do that.
When we get to the people who voted against both tax rates, most are against the policy vehicle rather than not being willing to pay for climate change mitigation. So, from the point of view of measuring WTP these votes would result in an under estimate. These "protest votes" are a big problem for CVM. Only one person said they weren't willing to pay anything given the bang for the buck.
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