Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129619
Authors: 
Baumgärtner, Stefan
Drupp, Moritz A.
Meya, Jasper N.
Munz, Jan M.
Quaas, Martin F.
Year of Publication: 
2016
Series/Report no.: 
Economics Working Paper, Christian-Albrechts-Universität Kiel, Department of Economics 2016-04
Abstract: 
We study how the distribution of income among members of society, and income inequality in particular, affects social willingness to pay (WTP) for environmental public goods. We find that social WTP for environmental goods increases with mean income, and decreases (increases) with income inequality if and only if environmental goods and manufactured goods are substitutes (complements). Furthermore, social WTP for environmental normally changes more elastically with mean income than with income inequality. We derive adjustment factors for benefit transfer to control for differences in income distributions between a study site and a policy site. For illustration, we quantify how social WTP for environmental public goods depends on the respective income distribution for empirical case studies in Sweden, China and the World. We find that the effects of adjusting for income inequality can be substantial.
Subjects: 
environmental goods
public goods
income distribution
inequality
willingness to pay
benefit transfer
sustainability policy
JEL: 
Q51
D63
H23
H43
Document Type: 
Working Paper

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