Willingness to pay for product ecological footprint: Organic vs non-organic consumers

Abstract

The problem of environmental degradation is large and widespread, with consumption of food being a major contributor to a households' ecological impact. The Product Ecological Footprint (PEF) is a new information management process of “self-improving” accuracy that enables producers to quantify product environmental impact. This study addresses two key questions; consumer willingness to pay and application readiness for PEF. We use choice experiments to identify the value consumers place on PEF as a label. We then examine data availability, information processing systems and accreditation protocols that would be required to support a market-wide application of PEF. Findings highlight an opportunity to influence the behaviour of the larger market segment of conventional (non-organic) consumers. Further research is required into the interaction between PEF and organics, PEF and origin, marketing and branding of the label, for market wide applications to be considered. A key question emerges as to whether PEF requires a different application platform than a voluntary eco-label scheme to instigate behavioural change.

Highlights

• Organic purchasers have no significant value for PEF information.

• In the presence of PEF, non-organic purchasers are willing to pay for lower PEF.

• The value of PEF is likely to be higher when normalising PEF values.

• Valuations of holistic eco-labels should consider organic halo effects.
...

The marginal WTP [Willingness-To-Pay] value associated with receiving quantitative PEF information relates to valuations that are insignificant for organic purchasers and significant for non-organic purchasers. The latter respondents are estimated at a significance level of 10%, to pay a premium for a decrease in the PEF (premium of 13.3 cents per 0.1 ha/tn decrease). Non-organic purchasers place a positive value on apples that do not display any PEF label. There is a significant value associated with organic apples held by both organic purchasers and, within the nonorganic group, those who are not aware of environmental labels. Organic purchasers are willing to pay over 3 times the premium estimated for the non-organic purchasers, confirming the difference in importance as mentioned earlier. Those who are not regular purchasers of organic apples, and who are aware of environmental labels have a zero WTP for the organic attribute.

http://crowdschool.co/product/ecological-footprint-challenge/

The full paper is currently available free of charge at:  http://tinyurl.com/gqnrus5 via Research Gate www.ResearchGate.net.

http://www.sciencedirect.com/science/article/pii/S0040162516300683

by Elena Mamouni Limnios 1, Steven G.M. Schilizzi 2, Michael Burton 2, Angeline Ong 3, Niki Hynes 4

1. UWA Business School, The University of Western Australia, Australia

2. School of Agricultural and Resource Economics, The University of Western Australia, Australia

3. Department of Finance, Government of Western Australia, Australia

4. Curtin Business School, Curtin University, Australia

Received 29 March 2015, Revised 4 May 2016, Accepted 12 May 2016, Available online 11 June 2016

Technological Forecasting and Social Change http://www.sciencedirect.com/science/journal/00401625 via Elsevier Science Direct www.ScienceDirect.com

Volume 111; October, 2016; Pages 338–348

Keywords: Product ecological footprint; Eco-labels; Choice experiment; WTP; Environmental policy