Environmental and Resource Economics

, Volume 33, Issue 3, pp 371–398

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

  • Kenshi Itaoka
  • Aya Saito
  • Alan Krupnick
  • Wiktor Adamowicz
  • Taketoshi Taniguchi
Article

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.

Keywords

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

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Copyright information

© Springer 2006

Authors and Affiliations

  • Kenshi Itaoka
    • 1
  • Aya Saito
    • 1
  • Alan Krupnick
    • 2
  • Wiktor Adamowicz
    • 3
  • Taketoshi Taniguchi
    • 4
  1. 1.Mizuho Information & Research InstituteTokyoJapan
  2. 2.Resources for the FutureWashingtonUSA
  3. 3.Department of Rural EconomyUniversity of AlbertaEdmontonCanada
  4. 4.Central Research Institute of the Electric Power IndustryTokyoJapan

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