TY - JOUR
T1 - A Price Premium for the District Heating System
T2 - An Empirical Investigation on South Korean Residents
AU - Kim, Ju Hee
AU - Lim, Seul Ye
AU - Yoo, Seung Hoon
N1 - Publisher Copyright:
© 2022 by the authors. Licensee MDPI, Basel, Switzerland.
PY - 2022/6/1
Y1 - 2022/6/1
N2 - Representative heating methods in residential buildings in South Korea are the boiler-based individual heating system (IHS) and the district heating system (DHS). When constructing a large-scale new city or redeveloping an old one, the heating method must be determined in advance by reflecting consumers’ preferences. This article intends to explore the price premium that South Korean residents are willing to pay for DHS over IHS. The price premium means the consumer’s additional willingness to pay (AWTP). To obtain this, contingent valuation was employed and the data were gathered by conducting a nationwide survey of 1000 people. The one-and-one-half-bounded model was adopted as the method of inducing the AWTP. Comparison of the results from estimating the model with those from estimating other models revealed that there was no significant difference between the two. Moreover, the former held statistical significance. The price premium or AWTP was estimated as KRW 4353 (USD 3.88) per Gcal. This value corresponds to about 5.9% of the residential heat price, which was KRW 73,587 (USD 65.59) per Gcal in 2020. Heating prices are almost the same, with little difference between DHS and IHS. The results suggest that a large number of residents place a price premium on DHS over IHS.
AB - Representative heating methods in residential buildings in South Korea are the boiler-based individual heating system (IHS) and the district heating system (DHS). When constructing a large-scale new city or redeveloping an old one, the heating method must be determined in advance by reflecting consumers’ preferences. This article intends to explore the price premium that South Korean residents are willing to pay for DHS over IHS. The price premium means the consumer’s additional willingness to pay (AWTP). To obtain this, contingent valuation was employed and the data were gathered by conducting a nationwide survey of 1000 people. The one-and-one-half-bounded model was adopted as the method of inducing the AWTP. Comparison of the results from estimating the model with those from estimating other models revealed that there was no significant difference between the two. Moreover, the former held statistical significance. The price premium or AWTP was estimated as KRW 4353 (USD 3.88) per Gcal. This value corresponds to about 5.9% of the residential heat price, which was KRW 73,587 (USD 65.59) per Gcal in 2020. Heating prices are almost the same, with little difference between DHS and IHS. The results suggest that a large number of residents place a price premium on DHS over IHS.
KW - contingent valuation
KW - district heating system
KW - individual heating system
KW - price premium
UR - http://www.scopus.com/inward/record.url?scp=85132274244&partnerID=8YFLogxK
U2 - 10.3390/su14126972
DO - 10.3390/su14126972
M3 - Article
AN - SCOPUS:85132274244
SN - 2071-1050
VL - 14
JO - Sustainability (Switzerland)
JF - Sustainability (Switzerland)
IS - 12
M1 - 6972
ER -
