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

Author

Listed:
  • Cati Torres

    () (Universitat de les Illes Balears)

  • Michela Faccioli

    () (Universitat de les Illes Balears)

  • Antoni Riera

    () (Universitat de les Illes Balears)

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.

Suggested Citation

  • Cati Torres & Michela Faccioli & Antoni Riera, 2015. "Waiting or acting now? The effects on willingness-to-pay of delivering inherent uncertainty information in choice experiments," DEA Working Papers 74, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  • Handle: RePEc:ubi:deawps:74
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    1. repec:eee:ecoser:v:24:y:2017:i:c:p:50-57 is not listed on IDEAS
    2. repec:eee:ecolec:v:148:y:2018:i:c:p:36-42 is not listed on IDEAS

    More about this item

    Keywords

    preference analysis; inherent uncertainty; choice experiment; adaptation; climate change.;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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