Can consumers’ willingness to pay incentivize adoption of environmental impact reducing technologies in meat animal production?

Abstract

a b s t r a c tThis study develops a model estimating consumer willingness to pay (WTP) for environmental meat attributes and uses a multi-objective nutritional optimizer to explore the extent to which WTP can offset on-farm costs of reducing water use. Data for the WTP model are sourced from a literature survey of the Agricola and Google Scholar databases yielding 46 studies estimating WTP for pure and impure (organic, grass-fed, natural) environmental meat attributes. Bayesian analysis is used to estimate 3 models varying in independent variables. Models are evaluated by the correlation coefficient (R 2 ), root mean squared error of prediction (RMSPE) and posterior model probability. The most probable model is then used to estimate a confidence range of WTP for pure environmental beef. Impure environmental labels result in higher WTP than pure labels. Non-hypothetical WTP for pure environmental labeling for North American consumers ranges from 6.7% to 32.6%. A case study is conducted to identify the expected reduction in water use that can be funded from capturing WTP through labeling. A multi-objective nutritional optimizer is used to identify ideal management of beef cattle to reduce whole-system water use in three regions of the United States. Cost increases from management are varied over the predicted range in WTP and combined with the probability of a consumer purchasing beef at each WTP value to identify the theoretical effect on expected environmental impact reduction. A 10% premium is the ideal WTP, resulting in water use reductions between 24.4 L and 41.4 L.

Consumer Willingness to Pay Price Premiums for Credence Attributes of Livestock Products – A Meta‐Analysis

“…This produced a list of 138 studies reporting WTP. Some studies were excluded, of which 13 were qualitative and quantitative review (e.g., Anselmsson et al ., ; Cicia and Colantuoni, ; Lagerkvist and Hess, ; Deselnicu et al ., ; Tully and Winer, ; White and Brady, ), 15 were about other food products, such as chicken and fruits, and wood products (e.g., Aguilar and Vlosky, ; Janssen and Hamm, ; Campbell and Doherty, ), and 16 expressed WTP as awareness scores or a probability of WTP rather than monetary measurements. Therefore, 94 studies with 566 observations were produced for our meta‐analysis.…”

“…The percentage premium was measured by the percentage change in WTP from a base price for the CAs, which allows us to quantify the increased monetary value that consumers place on CAs . This method of measurement has been commonly used in WTP meta‐analysis studies (e.g., Cicia and Colantuoni, ; Tully and Winer, ; White and Brady, ; Del Giudice et al ., ). In many cases, studies presented dollar value estimates of WTP premiums and a base price was sourced from the text.…”

“…Specifically, for categorical variables, ‘other products’ was set as the base for the types of livestock products; ‘mixed attributes’ was the base for credence attributes; ‘other regions’ was the base for regional differences; ‘other methods’ was the base for estimation methods; ‘science’ was the base for discipline differences; ‘not specified’ was the base for survey methods; and ‘before 2000’ was the base for time effect. Here, in addition to the study characteristics listed in Table , we also included variables such as ‘Log GDP’ that represents gross domestic product per capita based on data collection year and study location to account for income effect (Smith and Huang, ; White and Brady, ). The variable ‘Negative’ represents whether or not negative WTP estimates were reported in the primary studies, as this should be addressed in the estimation process of WTP (Bohara et al ., ).…”

Consequentiality Beliefs and Consumer Valuation of Extrinsic Attributes in Beef

“…Previous studies also found consumers willing to pay premiums for meat produced with reduced environmental impacts (Hurley, Miller, and Kliebenstein, 2006; Tonsor and Shupp, 2009). In a meta-analysis on estimates of consumer WTP for environmental impact–reducing technologies in meat production, White and Brady (2014) found that consumers would pay a 29% premium for environmental attributes (local, all natural, grass fed, organic) that had both public and egocentric benefits, versus a 14.8% premium for purely public benefits (e.g., GHG reductions).…”

Ammonia Emissions from Industrial Hog Farming: Efficacy of Voluntary Control Strategies

“…The theory of impure public goods views VEPs, particularly eco-labeling, as a way for firms to profit by providing the market with bundles of environmentally friendly goods to satisfy consumers' demands for products and for the health of the environment. Experimental willingness to pay estimates associated with ecolabeling in meat production range from a 5 percent to a 15 percent premium (Dransfield, et al, 2005;White & Brady, 2014;Lusk, et al, 2006).…”