Environmental Incentives and Willingness to Pay Price Premiums for Environmentally-friendly Plant Attributes

Tuesday, July 23, 2013: 11:00 AM
Desert Salon 13-14 (Desert Springs J.W Marriott Resort )
Hayk Khachatryan, Ph.D , Food & Research Economics Department, University of Florida, Apopka, FL
Ben Campbell , Consumer Insights and Product Innovations, Vineland Research and Innovation Centre, Vineland Station, Ontario, Canada
Bridget K. Behe , Michigan State University, East Lansing, MI
Charles R. Hall, Professor and Ellison Chair , Texas A&M University, College Station, TX
Jennifer Dennis , Purdue University, West Lafayette, IN
The U.S. green industry, which includes businesses such as nursery and greenhouse growers, input suppliers, wholesalers, mass-merchandisers, independent retail operations, and landscape design and maintenance firms, has experienced considerable growth and modernization over the last several decades. With recent economic downturns, however, significant declines in consumer demand for highly discretional goods affected the industry’s financial performance.  As the green industry struggles to cope with declining demand, increased attention on consumer preferences and factors that influence individual choice behavior is needed to operate profitably in the increasingly competitive landscape.  Recently, marketing of products with environmentally-friendly characteristics has become a promising strategy to attract a specific segment comprised of environmentally-conscious consumers.  In this study the effects of individuals’ environmental concerns (ECs) on willingness to pay (WTP) for sustainable plant attributes were investigated using data from a representative panel of U.S. and Canadian consumers.  The study linked consumers’ ECs and three relevant EC orientations (egoistic, altruistic, and biospheric) to WTP premiums for plant attributes such as grown locally, using environmentally-friendly production practices, and nonconventional container types.  Results showed that while some individuals were willing to pay a premium for selected plant attributes that address eco-concerns, not all eco-motivations produce similar WTP.