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

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

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. Copyright Springer 2006

Suggested Citation

  • Kenshi Itaoka & Aya Saito & Alan Krupnick & Wiktor Adamowicz & Taketoshi Taniguchi, 2006. "The Effect of Risk Characteristics on the Willingness to Pay for Mortality Risk Reductions from Electric Power Generation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(3), pages 371-398, March.
    • Handle: RePEc:kap:enreec:v:33:y:2006:i:3:p:371-398
    DOI: 10.1007/s10640-005-3605-1
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    Citations

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    Cited by:

    1. Sun, Chuanwang & Zhu, Xiting, 2014. "Evaluating the public perceptions of nuclear power in China: Evidence from a contingent valuation survey," Energy Policy, Elsevier, vol. 69(C), pages 397-405.
    2. Sungwook Yoon, 2023. "Willingness-to-Pay of Converting a Centralized Power Generation to a Distributed Power Generation: Estimating the Avoidance Benefits from Electric Power Transmission," Sustainability, MDPI, vol. 15(6), pages 1-19, March.
    3. Kenshi Itaoka & Alan Krupnick & Makoto Akai & Anna Alberini & Maureen Cropper & Nathalie Simon, 2007. "Age, health, and the willingness to pay for mortality risk reductions: a contingent valuation survey of Shizuoka, Japan, residents," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 8(3), pages 211-237, September.
    4. Kawata, Yukichika & Watanabe, Masahide, 2012. "Valuing the mortality risk of wildlife reintroduction: Heterogeneous risk preferences," Ecological Economics, Elsevier, vol. 76(C), pages 79-86.
    5. Anna Alberini & Stefania Tonin & Margherita Turvani & Aline Chiabai, 2007. "Paying for permanence: Public preferences for contaminated site cleanup," Journal of Risk and Uncertainty, Springer, vol. 34(2), pages 155-178, April.
    6. Nerhagen, Lena & LI, Chuan-Zhong, 2010. "Valuing Statistical Lives Or Life Years? A Choice Experimental Study," Working Papers 2010:11, Swedish National Road & Transport Research Institute (VTI).
    7. Fredrik Carlsson & Dinky Daruvala & Henrik Jaldell, 2012. "Do administrators have the same priorities for risk reductions as the general public?," Journal of Risk and Uncertainty, Springer, vol. 45(1), pages 79-95, August.
    8. Christoph M. Rheinberger, 2010. "Experimental Evidence Against the Paradigm of Mortality Risk Aversion," Risk Analysis, John Wiley & Sons, vol. 30(4), pages 590-604, April.
    9. Alistair Munro, 2012. "Fukushima Dai-Ichi and the Economics of Nuclear Decontamination," GRIPS Discussion Papers 12-01, National Graduate Institute for Policy Studies.
    10. Rehdanz, Katrin & Schröder, Carsten & Narita, Daiju & Okubo, Toshihiro, 2017. "Public preferences for alternative electricity mixes in post-Fukushima Japan," Energy Economics, Elsevier, vol. 65(C), pages 262-270.
    11. Heinzel, Christoph, 2008. "Implications of diverging social and private discount rates for investments in the German power industry: a new case for nuclear energy?," Dresden Discussion Paper Series in Economics 03/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    12. Dennis Guignet & Anna Alberini, 2015. "Can Property Values Capture Changes in Environmental Health Risks? Evidence from a Stated Preference Study in Italy and the United Kingdom," Risk Analysis, John Wiley & Sons, vol. 35(3), pages 501-517, March.
    13. Lee, Joo Suk & Choi, Eun Chul, 2018. "CO2 leakage environmental damage cost – A CCS project in South Korea," Renewable and Sustainable Energy Reviews, Elsevier, vol. 93(C), pages 753-758.
    14. Alberini, Anna & Ščasný, Milan, 2013. "Exploring heterogeneity in the value of a statistical life: Cause of death v. risk perceptions," Ecological Economics, Elsevier, vol. 94(C), pages 143-155.
    15. Patrick Lloyd-Smith & Craig Schram & Wiktor Adamowicz & Diane Dupont, 2018. "Endogeneity of Risk Perceptions in Averting Behavior Models," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(2), pages 217-246, February.
    16. Contu, Davide & Strazzera, Elisabetta & Mourato, Susana, 2016. "Modeling individual preferences for energy sources: The case of IV generation nuclear energy in Italy," Ecological Economics, Elsevier, vol. 127(C), pages 37-58.
    17. Okubo, Toshihiro & Narita, Daiju & Rehdanz, Katrin & Schröder, Carsten, 2020. "Preferences for Nuclear Power in Post-Fukushima Japan: Evidence from a Large Nationwide Household Survey," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(11).
    18. Seoyong Kim & Seol A. Kwon & Jae Eun Lee & Byeong-Cheol Ahn & Ju Ho Lee & Chen An & Keiko Kitagawa & Dohyeong Kim & Jaesun Wang, 2020. "Analyzing the Role of Resource Factors in Citizens’ Intention to Pay for and Participate in Disaster Management," Sustainability, MDPI, vol. 12(8), pages 1-25, April.
    19. Kenshi Itaoka & Alan Krupnick & Makoto Akai & Anna Alberini & Maureen Cropper & Nathalie Simon, 2007. "Age, health, and the willingness to pay for mortality risk reductions: a contingent valuation survey of Shizuoka, Japan, residents," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 8(3), pages 211-237, September.
    20. Liao, Shu-Yi & Tseng, Wei-Chun & Chen, Chi-Chung, 2010. "Eliciting public preference for nuclear energy against the backdrop of global warming," Energy Policy, Elsevier, vol. 38(11), pages 7054-7069, November.
    21. Christoph M. Rheinberger & Nicolas Treich, 2017. "Attitudes Toward Catastrophe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 609-636, July.
    22. Milan Ščasný & Anna Alberini, 2012. "Valuation of Mortality Risk Attributable to Climate Change: Investigating the Effect of Survey Administration Modes on a VSL," IJERPH, MDPI, vol. 9(12), pages 1-22, December.
    23. Cem Tekeşin & Shihomi Ara, 2014. "Measuring the Value of Mortality Risk Reductions in Turkey," IJERPH, MDPI, vol. 11(7), pages 1-33, July.
    24. Lee, Sang Hun & Kang, Hyun Gook, 2016. "Integrated framework for the external cost assessment of nuclear power plant accident considering risk aversion: The Korean case," Energy Policy, Elsevier, vol. 92(C), pages 111-123.

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