This master thesis contains two essays. First essay used contingent valuation (CV) method to estimate additional willingness to pay (WTP) when reducing thermal discharge from nuclear power generation. Second essay analyzed external benefits of expanding facilities manufacturing and utilizing solid refuse fuel using choice experiment (CE).
Thermal discharge emitted from the nuclear power plants located around coastal areas in order to acquire seawater for cooling has a negative impact on the marine environment and causes serious complaints from fishermen in Korea. This essay tries to assess the environmental benefits of reducing thermal discharge through switching from nuclear power generation to combined heat and power (CHP) generation. Using a contingent valuation survey, the author derives the additional WTP of 1,000 households to switch the generation source from nuclear power to natural gas (NG)-based CHP in order to reduce the thermal discharge. The author used the single-bounded dichotomous choice question to elicit WTP responses and employed the spike model to handle the zero WTP observations.
Consequently, the mean additional WTP for the switch is computed as 63.9 won per one kWh of electricity. This value has statistical significance at the 1% level and amounts to about 51% of the average price for electricity 125.1 won. This finding implies that the public are ready to shoulder a significant financial burden to reduce thermal discharge through switching from nuclear power to NG-based CHP. This value can be interpreted as an external cost of nuclear power or an external benefit of the switch in terms of reducing the thermal discharge.
On the other hand, Solid refuse fuel (SRF) made of combustible waste has to pass the government''s rigid standard. Korean government plans to enhance the ratio of biomass energy to total energy use from 3.17% in 2013 to 4.16% in 2020. In particular, Korean government tries to raise the ratio of combustible waste converted into SRF from 16% in 2014 to 100% in 2020 by increasing the number of facilities manufacturing and utilizing SRF.
Therefore, the author attempts to analyze the external benefits of the expansion using the data obtained from a survey of randomly selected 1,000 households. A choice experiment, an economic technique, is employed here. The attributes considered in the study are ''Improvement of energy security'', ''Reduction of greenhouse gases emissions'', ''Extension of landfill life expectancy'', ''Job creation'', and ''Price'' measured as an additional amount of monthly electricity and heating bills per household. The multi-nomial logit model, which requires the assumption of ‘independence of irrelevant alternatives’, is applied, however, the assumption could not be satisfied in our data. Thus, the author finally utilized nested logit model which does not require the assumption.
All the parameter estimates, except for ''Improvement of energy security'', in the utility function are statistically significant at the 5% level. The estimation results show that the marginal willingness to pay (MWTP) for 100 years increase in landfill life expectancy is estimated to be 218.8 won per household per year. MWTP for 100,000 tCO2 decrease in greenhouse gases emission is calculated to be 0.2 won per household per year. MWTP for the creation of 1,000 new jobs is computed to be 10.7 won per household per year.