The impact of animal welfare regulations in New Zealand: Estimating welfare for egg consumers as cages are phased out : A thesis submitted in fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Abstract

Scientific research on animal welfare and increased public concern prompted the government of New Zealand to phase out conventional cages over 2012-2022. The shift sought to improve hen welfare through alternative housing systems such as free-range, barn, and colony cages, which provide better living conditions for the hens. This study investigates consumers' willingness to pay (WTP) for the eggs produced under enhanced animal welfare production systems and how information influences their preferences. Many studies have investigated consumers' WTP, preferences, the underlying attribute non-attendance (ANA), and estimated consumer welfare changes due to improved animal welfare outcomes; however, these respective empirical studies generally used a mixed information approach, presenting positive and negative (unbalanced) aspects to the consumers. This is the first study in the New Zealand egg sector to explore the effect of unbalanced information on consumers' WTP and to measure changes in welfare following the phasing out of cages. Understanding how consumers respond when presented with unmixed information, where positives and negatives are separated, is important. The study aims to fill these gaps by investigating: (1) consumers' preferences and WTP when presented with unmixed information, mimicking a scenario of receiving unbalanced information; (2) ANA by consumers for certain attributes; and (3) the consumer welfare changes because of phasing out cages (conventional and colony cages) in the egg industry. A nationwide survey was conducted using a self-sampling approach in June 2022 using three randomised blocks. The first group was a control group (Treatment 1), with no additional information provided. Treatment 2 had positive information about the various housing systems, and Treatment 3 had negative information. The survey resulted in 876 usable responses, which were analysed using a random parameter logit (RPL) model. The Hess and Hensher (HH) method was used to check for ANA for some attributes. The results show a preference for free-range eggs, and that information impacts consumers' purchasing decisions, particularly negative information. Additionally, using the HH approach, this research reveals a level of ANA, especially regarding nesting boxes, perches for roosting, and scratching area (NPRS). Furthermore, estimates of compensating variation (CV) indicate a total national welfare loss of approximately $238.46 million resulting from the phase-out of conventional cages, and a projected annual welfare loss of $297.46 million from the anticipated phase-out of colony cages. These values represent the monetary amounts consumers would require maintaining their original level of utility under the new regulatory conditions, based on a population of 5.0213 million. The findings of this thesis indicate that while consumers were willing to pay a premium for eggs laid under improved animal welfare outcomes, price remains a dominant factor for others. While welfare-improving attributes, such as access to the outdoors, were positively valued, they did not, counterbalance the disutility of higher prices and increased mortality. Therefore, overall consumer welfare declined despite the existence of welfare-focused attributes. The results from the ANA models show that the NPRS attribute was consistently ignored across all treatments, with the highest rate of 38.44% in treatment 1. The cages were more ignored in Treatment 3 (89.93%), the medium mortality rate was 77.30% in Treatment 2, and the other attributes were mostly with less than 13% across all Treatments. However, accounting for ANA using the HH method did not improve model fit, indicating that accounting for ANA does not always improve model fit to data. It also shows that accounting for ANA may add another complexity to the model without any added explanatory power. Finally, this research's findings provide critical insights to policymakers and other New Zealand egg industry stakeholders who seek to improve hen welfare outcomes while balancing consumers' welfare. They show the importance of carefully disseminating balanced information to the public.