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Estimating non-market values under scenario and policy ambiguity: the case of climate change mitigation in Australia

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  • Sonia Akter

    () (Crawford School of Public Policy, The Australian National University, Australia)

  • Jeff Bennett

    () (Crawford School of Public Policy, The Australian National University, Australia)

Abstract

This paper proposes an extension to existing models of non-expected utility (NEU) in the stated preference (SP) literature. The extension incorporates the impact of multiple sources of ambiguity in individual decision making behavior. Empirical testing of the proposed decision model was carried out in Australia using a dichotomous choice contingent valuation study of a national ‘Carbon Pollution Reduction Scheme (CPRS)’. The results of the study demonstrate that subjective expectations of the context scenario and subjective policy expectations are important determinants of individual decision making in a SP framework. Furthermore, the results of the study demonstrate that decision weight functions are non-linear (quadratic) in subjective scenario expectations and subjective policy expectation. Although evidence was found to link willingness to pay to scenario ambiguity, policy ambiguity was found to have no statistically significant influence on individual decision making

Suggested Citation

  • Sonia Akter & Jeff Bennett, 2009. "Estimating non-market values under scenario and policy ambiguity: the case of climate change mitigation in Australia," Environmental Economics Research Hub Research Reports 0932, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:eenhrr:0932
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    File URL: https://crawford.anu.edu.au/research_units/eerh/pdf/EERH_RR32.pdf
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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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