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Individual option prices for climate change mitigation
Institution:1. Centre for Agri Environmental Research, School of Agriculture, Policy and Development, University of Reading, Reading RG6 6AR, United Kingdom;2. Department of Agriculture, School of Agriculture, Policy and Development, University of Reading, United Kingdom;3. Department of Food Economics and Marketing, School of Agriculture, Policy and Development, University of Reading, United Kingdom;1. Michigan Technological University, United States;2. University of Northern Colorado, United States;3. International Environmental Management Services, Ltd., United States;1. Federal Reserve Bank of Chicago, 230 S LaSalle St., Chicago, IL 60604, United States;2. Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Jacbos Center 548, Evanston, IL 60208, United States;1. Sinagri S.r.l., University of Bari Spin-Off, Via Amendola 165/A, 70126 Bari, Italy;2. Department of Agricultural and Environmental Science, University of Bari, Via Amendola 165/A, 70126 Bari, Italy;1. Department of Environmental Studies, University of California, 1156 High Street, Santa Cruz, CA, 95064, United States;2. Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign and Resources for the Future, United States;3. Department of Biology, Missouri Western State University, United States;4. Department of Aquatic Ecology, Swiss Federal Institute of Aquatic Science and Technology, Switzerland;5. Department of Economics, University of Wyoming, United States
Abstract:Willingness-to-pay for climate change mitigation depends on people's perceptions about just how bad things will get if nothing is done. Individual subjective distributions for future climate conditions are combined with stated choices over alternative climate policies to estimate individual option prices (the appropriate ex ante welfare measure in the face of uncertainty) for climate change mitigation. We find statistically significant sensitivity of estimated option prices to both expected future conditions and uncertainty about future conditions.
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