Extension Number

ASL R1675

Topic

Management/Economics

Publication Date

2000

Abstract

Environmental issues such as air and water quality related to livestock production are receiving much attention. Potential methods for environmental improvement range from regulation to market solutions. This study looks at consumer willingness to pay for pork products with embedded environmental attributes. Experimental auctions showed that over one-half of the participants (62%) paid a premium that did not vary significantly between differing regions of the United States. For the entire group, the average premium paid for the most environmental 2-lb package of pork loin chops was $.94; a premium of 22%. When evaluated for the premium payers (the 62%), the premium was $1.60 per package; a premium of 37%.

Results show that participants were willing to pay higher prices for pork products produced in systems with improved environmental attributes. The premium for products with embedded multienvironmental attributes was significantly greater than for those with single environmental attributes. The level of willingness to pay did not vary significantly across regions for the most environmental package. Participants also were willing to pay more for the product with improved surface water, groundwater, and odor emissions than for the product with just two of these attributes. Thus, it appears that the product with the greatest chance of success is one that has all three attributes embedded.

For the most environmental package, bid premiums did not differ significantly between areas studied. Moreover, the percentage of participants paying selected premium levels did not vary between regions. For example, for the triple attribute product, 62% of the participants indicated a willingness to pay a premium. This ranged from 56 to 67% percent across the study area.

This paper shows that there is an opportunity to develop a market for products that embody environmental attributes. Consumers are concerned about the environment and are willing to pay more for products that are produced in a way that reduces environmental impact. This research suggests that as the industry develops methods that help sustain or improve the environment, there is a segment of society that will support a market for such products.

Copyright Owner

Iowa State University

Language

en

Date Available

August 17, 2012

File Format

application/pdf

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