South Koreans’ perspective on assisting the power supply to North Korea: Evidence from a contingent valuation

Korea is the only divided country in the world. While power is stably and reliably supplied in South Korea, North Korea (NK) is suffering from a severe power shortage. To improve power supply conditions in NK and ultimately contribute to building peace on the Korean Peninsula, the South Korean Government is considering assisting the construction of power plants and power grids in NK. The Government needs information about households’ willingness to pay (WTP) for assisting the power supply to NK. This article aims to examine the WTP using a contingent valuation based on a nationwide survey of 1000 households. As a WTP elicitation method, the one-and-one-half-bounded question format of asking an interviewee whether she/he has the intention of paying a presented bid through an increase in electricity bills was adopted. The WTP for the assistance was statistically significantly estimated to be KRW 2382 (USD 2.12) per month per household. The estimate of the annual national value amounted to KRW 564.6 billion (USD 503.6 million). This value is by no means small, but it would take a huge amount of effort to elicit public consensus on the assistance considering that a significant proportion of respondents (63.6%) revealed zero WTP.