Our study is based on the contingent valuation method. Within the framework of our analysis, it consists of making the citizens of Haute-Normandie reason about their preferences in terms of renewable energies and, more precisely, concerning photovoltaic panels, wind turbines and biogas. More specifically, it is a question of proposing an empirical framework that makes it possible to justify the merits or otherwise the use of biogas as a public good in the energy transition.
3.1. Contingent valuation method
Our investigation is based on the implementation of a contingent evaluation method (CEM). It is based on a cost-benefit analysis (CBA), which measures, according to utilitarian criteria, the monetary value of a non-market public good. The method was developed by economists with the main objective of a CBA of natural resources. The US government[3] has strongly developed environmental assessment methods, especially the CEM. The first application of contingent valuation can be attributed to Siegfried Von Ciriacy-Wantrup (1947), who investigated the measurement of the benefits of soil protection against erosion. The first real contingent valuation study is attributed to Robert Davis (1963), which concerned the recreational value of forests in Maine (USA). As Sébastien Terra (2005) pointed out, the method was first developed ‘to measure the recreational benefits of using a natural area’ (p. 3). As early as the 1960s, environmental activists applied the CEM and gave it visibility and even credibility (Claeys-Mekdade et al., 1995). Later, it was used to assess environmental risks and damages (Venkatachalam, 2004; Kim et al., 2016; Koto and Yiridoe, 2019). It also led to its use in the 1980s in the US courts in the context of the Comprehensive Environmental Response, Compensation and Liability Act.
Through it, we seek to calculate how much individual citizens are prepared to pay ex ante (the WTP[4] ) for a given (hypothetical) modification of a public good under income constraints. The approach adopts the Hicksian concept of constant utility: the reference utility levels are defined on the basis of (U0 ) and (U1 ).
This gives the case of an environmental quality improvement:
- the (compensatory) WTP is the monetary equivalent that makes the individual indifferent (to his initial situation) to the idea of accepting the improvement of Z0 in Z1 : U0 (R - WTP, Z1) = U0 (R, Z0);
- the consent to receive (CtR) (equivalent) is the monetary equivalent that makes the individual indifferent (in his final situation) to the idea of not benefiting from the improvement Z0 in Z1: U0 (R + CtR, Z0) = U1 (R, Z1).
This gives the case of a deterioration of an environmental quality:
- the (compensatory) WTP is the monetary equivalent that makes the individual indifferent (to his initial situation) to the idea of accepting the deterioration of Z1 in Z0: U0 (R - WTP, Z1) = U0 (R, Z0);
- the CAR (equivalent) is the monetary equivalent that makes the individual indifferent (in his final situation) to the idea of not benefiting from the deterioration of Z1 in Z0 : U0 (R + CtR, Z0) = U1 (R, Z1).
The correct measures of the change in utility are the compensating WTP or CtR, whether for improvement or deterioration. The advantage of this interpretation is that it shows that WTP is based on the analysis of substitution relationships between income and the quality of a non-market good. Thus, in the CEM, the utility (U) of an individual depends on two types of goods, market goods represented by X = (x1 ,x2 ,x3 ...xk) and Z, which represents the quality of an environmental good.
The method is described as ‘contingent’ since it proposes a hypothetical scenario, ‘a fictitious market’. The latter must correctly describe the good to be evaluated in order to gather the respondents’ preferences. Using a questionnaire, a sample of individuals is asked a hypothetical question that allows them to decide whether or not to accept paying for the good being valued. The success of a contingent survey depends on respect for certain rules. The relevance of the questionnaire and its quality are essential. It is essential to define the context of the study so that the monetary measures of the contingent survey are valid: the characteristics of the good being valued, the scope chosen and the type of population surveyed.
Despite the recommendations of the National Oceanic and Atmospheric Administration (NOAA) Panel,[5] the method suffers from numerous biases and methodological limitations that reduce the reliability of the results. The main criticisms relate to the collection and interpretation of the data and, in particular, the difficulty of placing individuals in a hypothetical situation that accurately reflects what the individual is thinking (Venkatachalam, 2004). Despite the criticism, proponents of the CEM recommend its use as a tool to support public decision-making (Cuccia, 2020). The hypothetical situation requires methodological devices that allow people to express themselves in a market context. Moreover, each step must be conducted rigorously to ensure the validity of the results. This method relies on the quality of the questionnaire. The construction of this survey instrument is the central stage of the approach. It must formulate, around a series of clearly defined questions, all the information on the public good whose monetary value is to be defined (Chassy, 2015). The estimation of the value is based on a survey of opinions (or preferences) using a representative sample of the population (individuals or households) who are asked to answer the questionnaire. After explaining and valuing the changes that would affect the good, the scope of the study and the reference population must be determined.
Next, a questionnaire should be developed, first setting out the context and objectives of the study. Next, it should describe the hypothetical scenarios and payment conditions that constitute preference revelation. The preference-revealing technique can then vary: tax surcharge, local tax surcharge, entrance fee, parking fee, water bill (electricity, ...), transport cost surcharge and donation to a specific fund (Adamowicz et al., 1994).
3.2 Study area, survey data and proposed scenarios
For our study, we focused on the former Haute-Normandie region. The assessment of the Regional Observatory of Energy, Climate and Air in Normandy (ORECAN, 2016)[6] carried out in 2016 enables us to evaluate the areas where the different sources of renewable energy production are installed. There is a very high concentration of photovoltaic panel installations in Upper Normandy, particularly in the Rouen conurbation. The Seine-Maritime and Eure departments account for almost half of the photovoltaic solar installations in Normandy. The installation of wind turbines in Haute-Normandie has been mainly in the north of the department, due to several large unused and very windy areas.
The Seine-Maritime represents 48% and the Eure represents only 6% of the total location of wind turbines in Normandy. As far as biogas is concerned, there are five industrial/territorial scale installations in Haute-Normandie, with four installations in Seine-Maritime and one in Eure.
From this study area, the aim is to evaluate the influence of renewable energy installations on citizen consumers in Upper Normandy. The questionnaire was administered online using the LimeSurvey software to 396 households. The response time was between 20 and 45 minutes. The sampling method is non-probability since the survey is conducted online and not in a random format. However, our sample is very close to the parent population determined by the National Institute of Statistics and Economic Studies (INSEE) 2019 by applying the quota method to the following three variables: gender, age and professions and socio-professional categories. The calculation method is based on the representativeness rate (T) = (1 + Survey rate)/(1 + INSEE rate) and states that if T > 1.10, there is over-representation in the sample, and if T < 0.95, there is under-representation. This method has traditionally been used to analyse the characteristics of respondents in relation to a parent population.
The INSEE provides two parent populations: Seine-Maritime and Eure. We decided to merge these two parent populations, as well as the two populations of our sample, in view of our study perimeter. Thus, the sample was corrected so that the structure of the parent population and the study sample were exactly the same.
The representativeness rates of our sample are as follows: Female 1 and Male 1.01; Age: 20–64 and 1.10; 65 and over 1.03. For the socio-professional category: Employee, 1,05; Middle management, 0.93; Worker, 0.93; Craftsman, 1; Retired, 0.98). The rate for farmers could not be calculated, as no farmers responded to the survey.
Table 1.3: Representativeness of the two samples in reference to the total population
Seine Maritime and Eure - 2019 - Sample of 396 people
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|
|
|
2019
|
2019
|
Mean
|
|
|
|
Fusion SM and Eure
|
INSEE SM
|
INSEE Eure
|
Fusion
|
RESULTS
|
Gender
|
Woman
|
51,26%
|
51,90%
|
51,40%
|
52%
|
1,00
|
|
Man
|
48,74%
|
48,10%
|
48,6%
|
48%
|
1,01
|
|
|
|
|
|
|
|
CSP
|
|
|
|
|
|
|
Farmer
|
CSPA
|
0,00%
|
0,8%
|
0,6%
|
0,7%
|
0,00
|
Employee
|
CSPB
|
22,2%
|
16,5%
|
16,9%
|
16%
|
1,05
|
Middle management
|
CSPC
|
15,90%
|
20,3%
|
20,3%
|
20%
|
0,97
|
Worker
|
CSPD
|
7,30%
|
18,3%
|
14,70%
|
16%
|
0,93
|
Craftsman
|
CSPE
|
2,53%
|
3,4%
|
2,60%
|
3%
|
1,00
|
Retired
|
CSPF
|
24,24%
|
26,10%
|
27,60%
|
27%
|
0,98
|
Age
|
|
|
|
|
|
|
|
20-64 yo
|
74,24%
|
58,6%
|
57,8%
|
58,0%
|
1,10
|
|
+65 yo
|
25,76%
|
22,9%
|
21,8%
|
22,0%
|
1,03
|
>1,10 Over-representation - <0,95 Under-representation
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The population sample collected in our survey has socio-economic and demographic characteristics that allow the contingent valuation questionnaire to be administered as the first step. The questionnaire consists of 81 questions and is divided into four parts: the individual's living conditions and geographical environment, the individual's level of knowledge of the energy transition, the choice of scenarios and finally the individual's socio-economic characteristics. The questionnaire must specify the "payment vector" which specifies in which form the payment will be made; here the payment vector is the increase of a few euros on the electricity bill depending on the amount of the bill. It indicates whether or not the citizen–consumers surveyed would be willing to increase the amount of their electricity bill in order to increase the share of renewable energy in the four hypothetical scenarios: three non-monetary and one monetary. The individual is asked to choose which of the four proposed scenarios best suits them. Thus, in our study, the following hypothetical question was asked: Choose the scenario that best suits you. Each is composed as follows: % share of wind power in electricity, % share of photovoltaics, % share of biogas and increase in kWh (in euro cents):
Box: Energy transition scenarios
For a better understanding, these scenarios are defined according to four attributes or characteristics regarding an energy mix in France. An attribute corresponds to the additional cost associated with each proposed scenario; this additional cost corresponds to an increase in the price of the kWh charged monthly. This increase in the price per kWh that was virtually charged to the interviewee corresponded to an automatically calculated increase in the price per kWh supplied by Edf (Électricité de France is a French electricity generating and supply company, more than 80% owned by the state). At the time of the interviews, the price of the kWh was 17.65 euro cents at peak hours. This automatic calculation of the bill increase regarding the several scenarios proposed was based on the bill the interviewees were paying.
The different energy transition scenarios presented to the interviewees are derived from projections made by the Réseau de transport d'électricité in 2050 (French transmission system operator responsible for the public high-voltage electricity transmission network in France).
The first scenario corresponds to the status quo, i.e. the current situation, without any increase in the price of the kWh: with a share of biogas in the energy mix of 1,1%*.
The second scenario corresponds to an increase from 1,1% to 4% in the energy mix;
The third scenario corresponds to an increase from 1,1% to 10% in the energy mix;
The fourth scenario corresponds to an increase from 1,1% to 12% in the energy mix.
The last two scenarios are those that are the most favorable to biogas. Among the four choices proposed, what we call
*The French energy mix consists of nuclear power (= 68%); fossil fuel power plants (natural gas, oil or coal = 8.5%); hydro (=13%); wind (7.9%); solar (=2.5%); biogas (1.1%).
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The final stage consists of identifying these preferences through an econometric analysis of the results. This data processing makes it possible to highlight the determining role of the responses made, particularly in the citizens’ concerns regarding energy matters. More specifically, we focused on scenarios relating to the use of biogas as a renewable energy source in the production of energy consumption.
The econometric treatment was based on a probit model[7] using closed questions. The model explains the probability (see Table 1.1) of an event (qualitative dependent variable) based on a binary choice with two modalities (in real numbers)—yes or rather yes = 1 if agent i accepts and 0 in the case of refusal—as a function of explanatory variables. Non-responses were treated as missing data. This gives Pr (choice ij = 1) = f (Xij βj). It should be noted that function f(.), known as the “link function” in the context of generalised linear models, is the distribution function of a standard normal distribution (i.e. with mean zero and variance 1); its formula is as follows:
The variables were grouped into three distinct blocks. These variables are traditionally used in the literature in the analysis of people’s WTP for renewable energies (see the literature review above). We thus distinguish (i) socio-demographic variables (gender, age, socio-professional category, income and level of education[8]), (ii) living conditions and location (house, flat, homeowner, urban, peri-urban and rural) and (iii) cognitive variables (energy transition and gas production through biogas).
The coding consisted, within the framework of a probit-type methodology, of classifying the modalities of explanatory variables by choosing an omitted reference modality (ref). If we have a qualitative variable in two or three classes, one of its modalities must be omitted and the interpretation is always made in relation to this modality (table 2.3).
Table 2.3: Coding of explanatory variables
Variables
|
Meaning
|
Socio-economic data of households
|
Gender
|
1 if individual i is female; 0 otherwise – Man (Ref)
|
Urban
|
1 if individual i lives in an urban area; 0 otherwise – Rural (Ref)
|
Aged 18–30
Aged 45–60
Aged 60 and over
Aged 30–45
|
1 if individual i is aged between 18 and 30; 0 otherwise
1 if individual i is aged between 45 and 60; 0 otherwise
1 if individual i is aged between 60 and +; 0 otherwise
(ref)
|
KnowlTransition
|
1 if individual has a good knowledge of energy transition i says Yes; 0 otherwise
|
KnowlBiogas
|
1 if individual has a good knowledge of biogas energy i says Yes; 0 otherwise
|
Owner
Commercial
Employee
Intermediate
Worker
Framework
Other
No Activity
|
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
(ref)
|
Degree VIV
Degree III
Degree II and above
|
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
(ref)
|
Low Income
Average Income
High Income
|
1 if individual i says Yes; 0 otherwise
1 if individual i says Yes; 0 otherwise
(ref)
|
To estimate our four probit model equations, we proceeded in three steps (see Table 3.3): the use of the “Stepwise regression” method. In the first step, we integrated all the explanatory variables (x1, x2...,xk) (column 1) and in the second step, we eliminated one by one the least relevant explanatory variables (i.e. those whose significance was greater than 10% and the least significant of all). The stopping criterion is that the variables retained are all significant at the 10% threshold (column 2). To validate the models selected, we carried out an additional test for each dependent variable in the model. We then used the following two criteria: the Akaike information criterion (AIC) (Akaike, 1973) and the Bayesian information criterion (BIC) (Schwarz, 1978). The ‘best’ model is the one with the lowest AIC and BIC.
When the addition of variables test was not significant at the 10% level, we kept the reduced model, as the eliminated explanatory variables were not significant overall at the 10% level. Finally, the marginal effects (ME - column 1 & 2) calculations of our global/initial and final probit models measure the effect of a change in one of the ‘regressors’ on the conditional mean of the variable to be explained (y).
This indicates whether the explanatory variables influence the probability of the event yi = 1 upwards or downwards. This gives a good approximation of the amount of change in the probability following this change. When the explanatory variables are qualitative, the marginal effect is calculated as follows:
We find that, for the four scenarios, the different global/initial models (column [1]) the final models (column [2]) are globally significant, and can be effectively retained following the elimination of the explanatory variables by “stepwise regression”.
In our study, we were unable to address the methodological biases debated in the literature, particularly hypothetical biases. This is a limitation. In this case, we followed Hensher’s (2010) recommendations: the results should be compared with previous studies that used a similar theoretical framework.
[3] The federal Environment Protection Agency was involved in the development of the CEM.
[4] Equivalently, we can also speak of the Consent to Receive (CAR): “Willingness to accept”, how much would the individual have to give to compensate for the decrease of a good?
[5] The Report of the NOAA Panel on Contingent Valuation was published in January 1993 in Federal Register 4601 (15 January 1993). The experts in charge of this expert work on the validity of the CME are: Kenneth Arrow, Robert Solow, Paul Portney, Edward Leamer, Roy Radner (economists) and Howard Schuman (sociologist) (all advocates of the method).
[6] ORECAN, 2016: “Bilan 2016 production d’énergie renouvelable” available at: http:// www.orecan.fr/wp-content/uploads/2018/02/Bilan-2016-production-d%C3%A9nergierenouvelable-v1.0.pdf
[7] For the Probit: P (Y=1 | X) = F(X’b), F(.) is the distribution function of a standard normal distribution. In the regression calculation, we voluntarily omitted the following two variables due to lack of observations: CSP (Farmer), (Suburban).
[8] For the level of education, see: https://publication.enseignementsup-recherche.gouv.fr/eesr/10EN/EESR10EN_Annexe_8-levels_of_educational_attainment.php