Offsetting Carbon Dioxide Emission: Willingness and Motives to Pay - Research Paper Example

 Offsetting Carbon Dioxide Emissions Offsetting Carbon Dioxide Emission: Willingness and Motives to Pay CO2, the chemical formula for the gas Carbon Dioxide, is a natural chemical compound. It is composed of two oxygen atoms covalently bonded to one carbon atom and it is present in the earth’s atmosphere at a standard pressure and temperature. There are various processes by which this gas is produced. Burning of coals, the fermentation of sugars, and animal respiration are some of these processes. Other than this, it is released from volcanoes, hot springs, and geysers. It is found in large concentrations in places where the earth’s crust is thin. It is also freed from carbonate rocks by the process of dissolution The uses of carbon dioxide are wide and numerous in the areas of chemicals, medicine, food and beverages. There is a great utility of the gas in commercial areas. In the beverage industry, carbon dioxide is used for the carbonation of fizzing drinks, such as sodas, mineral water. In the food industry, it is used in the packaging, it is used as dry ice for controlling temperature of foodstuff, and it is used as a cryogenic fluid in the process of chilling or freezing. Carbon dioxide is also used in chemical industries for the purpose of neutralizing chemicals, for controlling reactor temperatures, and for purifying or dying polymer, animal or vegetal fibres. In the field of medicine, carbon dioxide is used in producing the needed atmosphere for the operation of artificial organs. Carbon dioxide is used as a component in a mixture of oxygen or air as respiratory stimulant to promote deep breathing. It is also used for the surgical dilation by intra-abdominal insufflations. Carbon dioxide is also used for process control in various industries. For example, it is used for red fume suppression during scrap and carbon charging, for nitrogen pick-up reduction during electric arc furnace tapping and for bottom stirring. Carbon dioxide is used to improve the recovery of oil from wells where primary and secondary methods are no longer cost-effective on their own. Carbon dioxide is also used as a fire extinguisher and as ‘dry ice’ for storage and other effects. Due to various human activities, the amount of CO2 released into the atmosphere has been rising extensively during the last 150 years. There has been a drastic increase in the carbon dioxide concentrations in the atmosphere of about 280 ppm in 1850 to 364 ppm in 1998. As a result, it has exceeded the amount found in biomass, the oceans, and other sinks. The human activities causing an increase in the amount of carbon dioxide in air include the burning of fossil fuels, by producing cement and by deforestation and forest combustion. About 22% of the current atmospheric CO2 concentrations are present due to such activities. Ever since the industrial revolution started, human processes have been causing emissions of greenhouse gasses, such as CFC's and carbon dioxide. This has had a drastic effect on the environment. Due to the increased amount of greenhouse gases, the earth's climate is changing because the gases are causing the temperatures to rise. This abnormal addition to the greenhouse effect is known as global warming. Global warming is causing increases in storm activity, melting of ice caps on the poles, which will cause flooding of the inhabited continents, and other environmental problems. Increased carbon dioxide levels causing increased temperatures have an effect on the growth of crops as well. In a study by R.A. Warrick, it was found that, for the core mid-latitude cereal regions, an average warming of 2oC may decrease potential yield by 3-17 percent. Carbon dioxide also has adverse effects on human health. An increase in the intake of carbon dioxide leads to an increase in the acidity of the blood. If the amount of carbon dioxide in the blood increases, the frequency of breathing may increase as the respiratory system mechanisms react to stabilize this difference. If the person is in a high carbon dioxide atmosphere an increase in the depth or rate of breathing will only cause the situation to become as the individual takes in more and more carbon dioxide. If the concentration of carbon dioxide in the atmosphere rises above 30,000 ppm (parts per million), people in the vicinity may start to suffer from various symptoms such heavy nausea, dizziness, or vomiting. At such high levels of carbon dioxide in the atmosphere, asphyxiation or a loss of consciousness can also occur. It is evident that the emission of carbon dioxide has various ill effects and it is necessary to take action against these. With such a wide commercial use of the gas, it is necessary for the consumers to take action against the hazards brought about by carbon dioxide. Consumers have to monitor their consumption and offset carbon dioxide emissions of consumed products and services. However, how willing consumers are to do so is what this research paper is about. Methodology and Results: One study by Gary Merchant set out to study appropriate policy responses at both the domestic and international levels for the reduction and offsetting of carbon dioxide emissions. CO2 offsets are a special type of emissions trading program - that allocates emission rights to existing sources and requires all incremental emissions to be offset either by the purchase of the equivalent number of rights or by increasing emission sinks. Another study by Brouwer et al. focused on the willingness of air travel passengers to pay to offset their CO2 emissions. Air travel is a major source of greenhouse emissions; therefore, it makes sense for the customers utilizing the services to pay for what they contribute to the release of carbon dioxide in the air. The major focus of the study was to see if there is demand for action against negative changes in the climate and what motives are there behind this demand. Their focus was on air travel because Aviation traffic has increased dramatically over the past 40 years, with passenger traffic growing at approximately 9% per year since the 1960s. Aviation uses fossil fuels for functioning and this releases carbon dioxide (CO2) and other greenhouse gases including methane and nitrous oxide. Given the rise in greenhouse gas emissions from aviation, there is a need to control and compensate for these emissions through different mitigation policies. Carbon offsetting activities may include reforestation, renewable energy, and energy efficiency projects. The problem is coming up with revenues for these projects, and this study sets out to research whether people are willing to pay for the offsetting of these emissions. Brouwer et al. conducted a survey air travel passengers at Amsterdam Schiphol airport, which is one of the biggest airports present in Europe. The contingent valuation method was used in the survey. In this method, individuals are given information about specific environmental changes, the values of which are not accounted for in economic markets. The survey was carried out for over two days. More than 400 air travel passengers from around the world were interviewed personally about their travel pattern, their attitude towards environmental issues, awareness of the environmental impacts of their travel behaviour and whether or not they were willing to pay for a carbon travel tax to offset their contribution to the emission of carbon dioxide. Interviewees were chosen at random. Majority of the passengers were male, aging between 18 and 83 years. Majority of the questions asked were close ended, with a total of 35 questions. When asked about the travelling patterns of the passengers, forty percent of the passengers made trips for business purposes, while the rest for pleasure or for both. It was found that passengers from UK and Denmark held the greatestknowledge about the negative impact of air travel on the environment. On the other hand, passengers from Asia had the least knowledge about the connection between the two factors. When researching the level of concern for changes in the climate, passengers from the UK showed the greatest level of concern while those from Asia, Latin America and Africa showed the least. UK nationals also placed environmental issues at a higher place, compared to other economic and social issues. Coming to the willingness to pay for carbon emissions, 75% of all travelers were willing to pay a price above that of their ticket price, to offset carbon dioxide emissions. The Europeans willing to pay an increased ticket price were more in number, compared to the North Americans. Passengers seemed motivated to pay as they felt it to be their moral obligation to pay for any adverse contributions they may be making to the environment. They also realized that climatic change was a real issue that would affect generations to come. Asian travelers were least willing to pay a carbon travel tax. There was almost 14% protest to the imposition of a carbon travel tax, due to the lack of belief that any such programs against carbon emissions would have an impact. Passengers who showed their willingness to pay were also asked if they were willing a certain amount of money. If they responded positively, they were asked for their willingness to pay a higher price. If they responded negatively, the next price given to them was lower. Through statistical analyses, it was found that Europeans were willing to pay higher prices than Asians. On average, willingness to pay ranged between 20 eurocents per 100 km for air travelers from Asia and 1 euro per 100 km for air travellers from Europe. Overall, the respondents were willing to pay on average 60 eurocents per 100 km they traveled. (Brouwer et al. 2008) Another similar study was carried out by Viscusi and Zeckhauser in which over 250 respondents took part in a survey and gave their opinion on the problem of climate change, how realistic it is, and how much they would be willing to pay for climate-change mitigation policies. It was found that those respondents who gave higher estimates for the potential increase in temperature due to emission of carbon dioxide and other greenhouse gases were also the ones willing to pay a higher price to offset these emissions. On average, the willingness to pay was $0.50 per gallon, or 3% of their income. (Viscusi and Zeckhauser 2006) Another multi-country study was carried out in China, Sweden and United States to estimate the willingness to pay to offset carbon dioxide emissions. The majority of the respondents from all the countries were aware of the increases in temperature around the globe over the past few years. They also believed that it was human activities that had led to this increase. The percentage of Americans who believed these situations were smaller, compared to respondents from other countries, and they were also one who did not believe that any mitigation policies could have a positive impact. Overall, respondents from Sweden showed the highest willingness to pay while those from China showed the lowest. (Carlsson et al. 2012) One similar study was carried out in Australia to gauge their perceptions about climate change, and whether or not they are willing to take action against it. A total of 600 households took part in the survey. Again, in this survey the contingent valuation (CV) method was used. Results showed that households were well aware of the adverse climatic changes and wanted mitigation policies designed against it. However, the willingness to pay seemed quite low, mostly due to uncertainties about how effective any mitigation policies could be. (Akter and Bennet 2011) In 1998, another study on the willingness to pay for the offset of carbon dioxide emissions was carried out in Lon Angeles. It was a cross-sectional study with two samples. There were 300 participants in each sample. The median age of the participants was around 35 years. Participants were presented with different climatic scenarios and based on those, their willingness to pay was judged. It was found that increase in temperature was of a greater concern to participants, than decreases in temperature. A decrease in rainfall was of a greater concern than an increase in rainfall. It was found that at that time, there was less willingness to pay to fight climate change. Only 40% of the respondents were willing to pay for mitigation policies, while 60% were not. However, those who were not willing to pay the given amount may have been willing to pay a smaller amount. The average sum that people were willing to pay to offset carbon dioxide was $13.70 a month. (Berk and Fovell 1999) One study also set out to prove that the willingness to pay depends upon how bad the respondent believes the climatic change to be, if not action is taken against it. Through the study, it was found that expected future conditions affected the willingness to pay. The greater the graveness of the situation was taken to be, the higher was the willingness to pay. (Cameron 2005) One study by Nemet and Johnson carried out a review of the estimates of the willingness to pay to offset climatic changes. The range of willingness to pay was found to be $22-$437/household annually. Environmental attitudes, beliefs, incomes, education and political views are common factors affecting the willingness to pay. Summary: It is evident that the willingness to pay for mitigation policies against climate change has increased over the years, as the awareness about climatic issues has gone up among the general population. In the recent studies carried out in this area, the willingness to pay has been found to be much greater than it was in older studies. It is also seen that the willingness to pay, as well as the awareness about climatic changes, vary from country to country. In general, European countries are far more aware about adverse affects on the environment of carbon dioxide than Asian countries. American residents seem to show awareness about climatic changes but the level of concern shown by them is far lower than that shown by Europeans. The motives behind willingness to pay for mitigation policies mostly revolve around concern about future generations, and the desire to compensate for any negative contributions individuals may have made through their actions. Factors affecting willingness to pay include the confidence in mitigation policies, concern and awareness about the environmental issues, and household incomes. It is safe to say that the environmental hazards brought about by emissions of carbon dioxide have gotten too serious to be ignored anymore. Any lack of willingness to pay shown by people is largely due to the lack of widespread awareness about the problem. Effective mitigation policies have to be designed and revenues have to be generated, one way or the other, to carry these policies out. Other than that, awareness needs to be created among people about their environment, so that they start to take individual actions to contribute to the betterment of the climate. References Akter, S., & Bennett, J. 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Carbon Dioxide, Climatic Change and Agriculture. The Geographical Journal, 154(2), 221-223. Retrieved from http://www.jstor.org/stable/633848 Read More