Willingness to Pay for Environmental Protection

Prior studies have consistently shown that
individuals who are environmentally conscious and concerned are more likely to
be willing to pay higher taxes and willing to pay higher prices to protect the
environment than individuals who are not. None, however, are capable of
examining whether they are more likely to be willing to pay both higher taxes
and higher prices. Additionally, the studies rarely provide estimates of the
probabilities of being willing to pay, and hence offer policymakers no insight
into the actual extent of public support for higher taxes and/or higher prices
to protect the environment. This paper is intended to fill in these gaps. We
assume that an individual’s willingness to pay higher taxes and willingness to
pay higher prices are jointly determined by a common set of exogenous factors
and are statistically formulated as a bivariate ordered probit model, the
estimation of which allows us to examine not only marginal probabilities but
also joint probabilities which, up to this point, has not been possible. Reported
results indicate that for the United States there is currently little chance
that a majority of the public will support higher prices, a smaller chance of a
majority supporting higher taxes, and a still smaller chance that a majority
will support both higher taxes and higher prices to protect the environment.
This is true even for individuals who are most concerned about the environment,
adhere to pro-environmental beliefs and views, purposely engage in
pro-environmental behavior, and are affected directly by environmental
problems.