Consumer willingness to pay for environmental attributes – Results from AERU research

Abstract

This is a brief report summarising the research undertaken at the AERU on the willingness-to-pay (WTP) for attributes of food by consumers for different products and in different markets. The research here covers the period from 2012 to 2019.

Consumer preference research in the AERU is predominantly focused on estimating preferences for credence attributes. Examples of credence attributes include those relating to food safety, animal welfare, environmental outcomes, country-of-origin, functional (or healthy) foods and the use of organic production methods. As distinct from search attributes such as appearance or weight, and experience attributes such as taste or texture, credence attributes are not directly verifiable by the consumer either before or after purchase. Where available, consumers rely on labelling or certification schemes to signal the presence of credence attributes. Estimating preferences for credence attributes is empirically difficult due to the lack of labelling of attributes of interest, such as environmental outcomes associated with New Zealand agri-food exports. Even when labels are present (such as pasture-raised or grass-fed), the market price data typically confounds these attributes, therefore negating the ability to use this data to identify the role of individual attributes in consumer preferences. In response to this, the AERU has developed expertise in applying the economic valuation method of Choice Experiments (CE).