Reforestation & Marine Permaculture: Does the Method Affect the Willingness To Pay for Carbon Offsetting? A Randomised Contingent Valuation Study

Abstract

Failing to limit global mean surface temperature rise to 1.5°C risks leading to irreversible environmental degradation. One measure to mitigate global warming is carbon offsetting through increasing biotic carbon sequestration. This thesis utilises a randomised contingent valuation study to evaluate the willingness to pay for carbon offsetting as a measurement of the reduction in utility that respondents experience from environmental degradation, based on the microeconomic framework of equivalent variation. Specifically, we look at if the method used for offsetting impacts the willingness to pay for the service by investigating reforestation and marine permaculture. We analyse our data through various regression models, postestimation commands and paired t-tests using Stata. Our regressions gave inconclusive results regarding the effect of the offsetting method used in our main test. Furthermore, our paired t-test results showed significant, albeit small differences in means between willingness to pay for offsetting through the respective method, as well as for the familiarity of the two methods. Both mean values were higher when reforestation was the method considered. The literature review supports the idea that the choice of method is important in terms of co-benefits. Lastly, we found evidence that education affects the willingness to pay for carbon offsetting positively.