Willingness to Pay for Avoiding Nuclear Risks * Yves Schneider (corresponding author) Swiss National Bank, Bundesplatz 1, 3003 Bern, Switzerland Email: yves.schneider@snb.ch, Phone: +41 31 327 06 68, Fax: +41 31 327 07 28 Peter Zweifel University of Zurich, Socioeconomic Institute, Hottingerstrasse 10, 8032 Zurich, Switzerland Email: pzweifel@soi.uzh.ch, Phone: +41 44 634 37 20 December 2009 Abstract How to deal with the risks associated with nuclear energy is a major policy issue. This paper experimentally measures marginal willingness to pay for in- creased insurance coverage against the risk of an accident at the nuclear power plant (MWP C ) as well as willingness to pay for solving the nuclear waste dis- posal problem (WTP W ). Using a stated choice experiment in Switzerland, crucial predictions are tested. First, MWP C values should decrease then increase with distance from plant once attitudes influencing choice of residential location are con- trolled for. Second, however, such an effect should be absent from WTP W values. Both predictions are largely confirmed, lending credence to estimated MWP C of US$1.2/year for 1 percent more coverage and WTP W of US$ 125/year for solving the waste disposal problem. JEL-Classification: R3, L94, C9 Keywords: stated choice experiment, liability insurance, nuclear accident, willingness to pay * We like to thank Michael Breuer, Patrick Eugster, Charles Holt, Harry Telser, Christian Wyss, participants at the 2005 ASTIN conference, seminar participants at the Universities of Virginia and Zurich and at the Curtin Business School (Perth, Australia) for valuable comments. Financial support came from the Swiss Federal Office of Energy and the Swiss Institute of Technology. Yves Schneider acknowledges financial support by the Swiss National Science Foundation via grant PBZH1-117037. The views expressed in this paper do not represent those of the Swiss National Bank. Any errors and omissions are ours. 1