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The Effect of Risk Characteristics on the Willingness to Pay for Mortality Risk Reductions from Electric Power Generation

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Author Info

  • Kenshi Itaoka
  • Aya Saito
  • Alan Krupnick
  • Wiktor Adamowicz

    ()

  • Taketoshi Taniguchi

Abstract

The objective of this study is to estimate willingness to pay (WTP) for the reduction of mortality risks caused by fossil fuel (natural gas, coal and oil) versus nuclear electric power generation systems and to examine the influence of risk characteristics involved with electric power generation on WTP. A choice experiment was conducted to achieve these objectives. The attributes for nuclear risks in the experiment included the probability of disasters and the expected losses if a disaster occurs. We find evidence of (i) a baseline effect (where WTP is sensitive to hypothetical versus actual baseline expected mortality); (ii) a ‘labeling effect,’ where, surprisingly, the term ‘nuclear’ has no effect on WTP, but the term ‘fossil-fueled power generation’ results in lower WTP; and (iii) disaster aversion, meaning that people focus on the conditional loss from a nuclear disaster, not the probability. We also find that the WTP for reducing deaths from a nuclear disaster is about 60 times the WTP for routine reducing fossil-fuel generation-related deaths. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s10640-005-3605-1
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

Volume (Year): 33 (2006)
Issue (Month): 3 (03)
Pages: 371-398

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Handle: RePEc:kap:enreec:v:33:y:2006:i:3:p:371-398

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: choice experiment; coal-fired generation; mortality; nuclear power; risk characteristics; willingness to pay;

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Cited by:
  1. Anna Alberini & Stefania Tonin & Margherita Turvani & Aline Chiabai, 2007. "Paying for permanence: Public preferences for contaminated site cleanup," Journal of Risk and Uncertainty, Springer, vol. 34(2), pages 155-178, April.
  2. Alistair Munro, 2012. "Fukushima Dai-Ichi and the Economics of Nuclear Decontamination," GRIPS Discussion Papers 12-01, National Graduate Institute for Policy Studies.
  3. Carlsson, Fredrik & Daruvala, Dinky & Jaldell, Henrik, 2013. "Do administrators have the same priorities for risk reductions as the general public?," Karlstad University Working Papers in Economics 7, Department of Economics, Karlstad University.
  4. Nerhagen, Lena & LI, Chuan-Zhong, 2010. "Valuing Statistical Lives Or Life Years? A Choice Experimental Study," Working Papers 2010:11, Swedish National Road & Transport Research Institute (VTI).
  5. Alberini, Anna & Ščasný, Milan, 2013. "Exploring heterogeneity in the value of a statistical life: Cause of death v. risk perceptions," Ecological Economics, Elsevier, vol. 94(C), pages 143-155.
  6. Heinzel, Christoph, 2008. "Implications of diverging social and private discount rates for investments in the German power industry: a new case for nuclear energy?," Dresden Discussion Paper Series in Economics 03/08, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  7. Liao, Shu-Yi & Tseng, Wei-Chun & Chen, Chi-Chung, 2010. "Eliciting public preference for nuclear energy against the backdrop of global warming," Energy Policy, Elsevier, vol. 38(11), pages 7054-7069, November.

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