Households willingness to pay for energy-saving due to climate change: A lesson from electricity consumption in Yogyakarta, Indonesia
Endah Saptutyningsih (a*), Muhammad Bahrul Ulum (b)

a,b) Faculty of Economics and Business, Universitas Muhammadiyah Yogyakarta
Jalan Brawijaya, Tamantirto Kasihan Bantul, Yogyakarta, Indonesia
*endahsaptuty[at]umy.ac.id

Abstract

The fundamental building block of social and economic advancement is energy. However, the high amount of energy consumed poses a severe risk to human health, environmental pollution, and climate change. It is unavoidable that energy consumption would continue to rise in Indonesia due to the country^s fast industrialisation and urbanization. With increasing electricity consumption especially in Yogyakarta, Indonesia then every individual needs to be conscious to make energy savings in everyday life. These savings are aimed at adapting to the global warming that is caused by increased levels of carbon dioxide (CO2) from the combustion of fossil fuels to generate electricity. This study seeks to ascertain people^s willingness to pay in Yogyakarta, Indonesia for reducing electricity use in order to adapt to climate change. The contingent valuation technique (CVM), which is subsequently subjected to binary logistic regression analysis, is utilized in this study to gauge households^ willingness to pay for climate change adaptation through household electricity saving. The findings indicated that 74% of households would be willing to help with climate change adaptation by consuming less electricity. High levels of social capital, which includes trust and community involvement, were positively connected with this participation. According to the results of the logistic model, socio-demographic factors (such as income, education, and the size of the family) significantly and favorably influenced willingness to pay for energy saving. Meanwhile, the willingness to pay was impacted by both knowledge of climate change and the impact that energy consumption had on it. The potential contributions of social capital to the process of climate change adaptation in the domestic energy sector are highlighted in this study^s contribution to the literature. In relation to the effects of climate change, it also highlighted the key elements of and methods for promoting energy-saving behavior.

Keywords: climate change- energy saving- electricity- Willingness to Pay- Contingent Valuation Method

Topic: Natural resources and energy economics