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

This paper analyzes the effect of inherent uncertainty on the willingness-to-pay (WTP) for a policy aimed at reducing expected climate change impacts. To do this, it relates outcome uncertainty to the probability of occurrence of one of these impacts within a given time horizon. Unlike the existing studies, this paper links outcome uncertainty to the uncontrollable component of environmental uncertainty derived from the stochastic nature of an ecosystem's behavior. Results show that the WTP for the policy in the presence of uncertainty does not decrease compared to the scenario where climate change impacts are assumed to occur with certainty. This suggests individuals are adopting a precautionary attitude when stating their WTP. Thus, the paper provides economic justification for preventive measures in highly uncertain contexts. However, findings are not conclusive with respect to the influence of the degree of uncertainty on the support for such measures. © 2016 Elsevier B.V. All rights reserved.