Updated Subjective Distributions for Future Climate and Individual Option Prices for Climate Change Mitigation

Willingness to pay for climate change mitigation depends on people's perceptions about just how bad things will get if nothing is done. We first elicit native subjective distributions for future climate conditions. Respondents then see "external" information attributed to different authorities. Their revised subjective distributions are combined with stated preference data 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 heterogeneous responses to external information and significant “scope” effects in the estimated option prices—according to both expected conditions and degree of uncertainty.