Willingness-to-pay for precautionary control of microplastics; a comparison of hybrid choice models

Peter King
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Peter King: University of Bath

No 82/21, Department of Economics Working Papers from University of Bath, Department of Economics

Abstract: The environmental and health effects of microplastics in the aquatic environment are uncertain. Given inherent uncertainties in the link between microplastics and health, precautionary policies to restricts microplastics release may be followed. This paper estimates Willingness-to-Pay (WTP) for three policy options intended to limit the potential adverse consequences of microplastic pollution. WTP is estimated using two Contingent Valuation (CV) questions. The effect of precautionary concern on WTP is identified by exploiting a novel Integrated Choice and Latent Variable (ICLV) specification. This paper's crucial innovation is an estimation of the precautionary premia – the marginal increase in WTP for precautionary measures. When latent variables are considered, the estimated precautionary premia are amplified. The results suggest that subjective perceptions of microplastics' uncertain effects could be a strong determinant on preferences for precautionary policies.

Date: 2021-12-31
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