Waiting or acting now? The effects on willingness-to-pay of delivering inherent uncertainty information in choice experiments

Catalina M. Torres Figuerola, Michela Faccioli and Antoni Riera ()
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Antoni Riera: Universitat de les Illes Balears, Postal: Edifici Jovellanos, Crta Valldemossa, km 7,5 07122 Palma de Mallorca (Spain)

No 74, DEA Working Papers from Universitat de les Illes Balears, Departament d'Economía Aplicada

Abstract: With a focus on expected climate change (CC) risks, this paper analyzes the effects of inherent uncertainty on the willingness-to-pay for a preservation policy. To do this, it relates outcome uncertainty to the probability of occurrence of an expected CC impact within a given time horizon. Thus, unlike the existing studies, this paper links outcome uncertainty to the uncontrollable component of environmental uncertainty derived from the stochastic nature of ecosystems’ behavior. Results show the support for the preservation policy is stronger in the presence of inherent uncertainty, this indicating risk aversion. In contrast, findings are not conclusive with respect to individuals’ sensitivity to the probability of impact occurrence. These results are policy relevant since they can serve to stimulate rather than discourage environmental action when it comes to contexts characterized by many uncertainties.

Keywords: preference analysis; inherent uncertainty; choice experiment; adaptation; climate change. (search for similar items in EconPapers)
JEL-codes: D6 D81 Q51 Q54 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-agr, nep-dcm, nep-env and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Waiting or acting now? The effect on willingness-to-pay of delivering inherent uncertainty information in choice experiments (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ubi:deawps:74

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