The outcome of a conservation policy is often subject to uncertainty. In stated preference valuation, it is increasingly recognised that uncertainty affects preferences for the outcomes of environmental policies. However, there is also agreement that the effect of uncertainty and people’s attitudes towards risk need to be better understood.
To shed more light on the impact of risk, we designed a discrete choice experiment to compare preferences for environmental outcomes under climate change across two split samples. Each sample was confronted with a scenario where results were presented as certain or uncertain, but were otherwise associated with the same expected values. We found significant differences between the certain and the uncertain treatment, with uncertain outcomes being associated with more extreme utility levels and willingness to pay, in absolute terms. This finding was confirmed irrespective of whether gains or losses were considered and despite sensitivity to uncertainty—specific to the socio-demographic profile. Our results suggest that individuals are not risk neutral in the presence of uncertainty around environmental outcomes. These findings are crucial to better understand stated preferences for conservation policies in risky contexts. Our results reinforce the idea that uncertainty should be explicitly incorporated in the design of stated preference studies to better inform policy.
|Published: 3 September 2018|
Department of Economics, University of Warsaw, Poland
Environmental and Resource Economics
Volume 73, Pages 627-659