Adapting to climate change: Are people willing to pay or change?

Abstract

Most urban and suburban households in Australia are not particularly vulnerable to climate change (as long as they are not in flood prone areas or are by the beach). When households do not perceive that they are vulnerable, they have less incentive to take any mitigation or adaptation actions against climate change. In reality, everyone will be affected by climate change because pricing of externalities (ie. carbon tax) will make everything more expensive. In light of this, what would households prefer to do? Would they choose to change their behaviours (e.g. drive less, turn off lights) to reduce carbon emissions in order to help the country reach its emission target, or would they prefer to pay the government (e.g. in the form of an income tax) so that they do not have to change their daily behaviours. How do these preferences vary with political preferences? A choice experiment survey was conducted to elicit households' willingness to pay for a number of climate change related policies. Results from a pilot survey of 100 households in Australia suggest that political party preference has a significant impact on household preference for climate change policy. Liberal party voters are averse to the carbon tax while non-Liberal party voters show support for carbon tax over a general income tax.