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Abstract
Sri Lanka’s energy policy presumes that the country will be meeting 20%
of its energy requirements by non-conventional renewable energy resources by 2020.
This study attempts to assess diesel vehicle owners’ willingness to pay (WTP) for Jatropha
biodiesel and the factors affecting their decisions. The Contingent valuation
method (CVM) was used to elicit the WTP for the non-marketed biodiesel, which
leads to a hypothetical allocation. For diesel vehicle users, a single bid approach was
used at Rs.121/= per litre (€ 0.83). The study was carried out in Kandy region among
diesel vehicle users. The factors affecting WTP were estimated using probit regression
and WTP was estimated using nonparametric estimation techniques. The mean WTP
for biodiesel by the diesel vehicle users was Rs.109 per litre (€ 0.74) for lower bound
levels. The median WTP was Rs.124/= per litre (€ 0.85). Elderly respondents with
higher education are less likely to pay for biodiesel in both samples. Married respondents
with higher income are more likely to pay higher prices for biodiesel.