Date of Award

8-2012

Level of Access

Campus-Only Thesis

Degree Name

Master of Science (MS)

Department

Resource Economics and Policy

Advisor

Mario F. Teisl

Second Committee Member

Caroline L. Noblet

Third Committee Member

Shannon K. McCoy

Abstract

The United States has yet to install any offshore wind turbines, but there are proposals under consideration from many states across the country - including Texas, Massachusetts, New York and Maine (EIA, 2010). While there is growing governmental support for offshore wind turbines, policy-makers and suppliers need to keep in made that an expansion of any market requires an understanding of consumer preferences; the renewable energy market is certainly no exception. When examining consumer preferences, researchers are free to approach their analyses through a variety of theoretical and statistical lenses. Advancements in the fields of econometrics and economic psychology (behavioral economics) in particular point towards a variety of techniques which can be employed. The data is from a mail survey administered to a random sample of Maine citizens (48% response rate). The survey contained questions on consumer's knowledge, perceptions and acceptance of wind energy, and we collected information on various attitudinal and behavioral constructs (e.g. perceived economic flexibility, propensity to buy "green" products). Additionally, we proposed a conjoint scenario where respondents were asked to choose between two electricity packages with varied attributes; including price, energy source (e.g. offshore-wind, hydroelectricity), emissions reductions and percent of energy imported. The objectives of this analysis are trifold; the first objective is to determine the factors which influence the willingness-to-pay for offshore wind power relative to hydroelectricity. The second objective is to determine, through goodness of fit procedures, whether perceived economic flexibility (perceived budget constraint) may serve as a better predictor of behavior than income alone. The third objective is to compare and contrast three different econometric modeling techniques used to incorporate heterogeneity in consumer choice models (interaction terms, random parameters and latent classes). The results provide several important insights across each of these objectives. First, Mainers are willing-to-pay more for a marginal increase in offshore wind power than hydroelectricity, and many of the factors which previously had been shown to affect support of offshore wind (or other renewable energies) were insignificant in our study. Second, there are grounds to further explore how consumer's perceptions of their economic flexibility (perceived budget constraint) affect behavior. Third, the more sophisticated econometric modeling techniques may be better suited for situations in which: a) the researcher is keenly aware of variation in the population which is unable to be captured with the data available, or b) the sample size is larger. While these results are intriguing, it should be noted that limitations were faced due to small sample size and the use of a hypothetical conjoint scenario.

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