Exploring age and income distribution effects for willingness-to-pay to plant climate forests in Norway

Abstract

There has been an increasing interest in investigating the distributional impacts of climate policies. In the present paper, we are specifically interested in understanding how people’s preferences and priorities for a carbon sequestration programme in Norway differ across age and income distributions. We develop and use local conditional logit models with kernel smoothing to accommodate observed preference heterogeneity within a semi-parametric econometric framework. This framework allows us to capture non-linear preference heterogeneity without making additional assumptions about the pattern or distribution of preferences. This represents a parsimonious way to uncover observed preference heterogeneity in the presence of categorical variables with many categories. The findings reveal that age is a key driver – while younger individuals are more likely to choose the status quo, they assign relatively higher values to mitigation policy attributes as a share of their income, which suggests that those who will receive the benefits of the programme are willing to pay relatively more. We discuss the implications of the results for policy.