Residents’ Willingness to Pay for a Carbon Tax

Abstract

Addressing environmental issues has been a significant challenge. Malaysia is one of the fastest-growing countries in terms of economic, social, and land use development but high in CO2 emission rates. The introduction of a carbon tax is seen to reduce greenhouse gases emission (GHG), but the uncertain extent of implementation, based on economic theory, remains unknown. Hence, the current study’s objectives are to assess residents’ knowledge and attitude towards GHG. It is also to analyse the factors influencing residents’ Willingness to Pay (WTP). Three hundred and eleven (311) residents from Klang were selected using convenience sampling. The result shows that most of the respondents were willing to pay and had medium knowledge and a high level of attitude towards GHG. Poisson regression analysis results showed that gender, age, income, education, number of households, and marital status variables significantly influenced the maximum WTP. Overall, the residents’ WTP for a carbon tax was estimated at RM36.31 per year for open-ended (CVM): RM36.96 and double bound (CVM): RM35.65. A mechanism such as investment in green technology, eco-transportation, and green energy using the tax can be applied. This study is pivotal towards achieving SDG 13: Climate action.