Consumer Valuation of Environmentally Friendly Production Practices in Wines, considering Asymmetric Information and Sensory Effects

Authors

  • Todd M. Schmit,

  • Bradley J. Rickard,

  • John Taber

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    • Todd M. Schmit is an Associate Professor, Bradley J. Rickard is an Assistant Professor and John Taber is a Graduate Research Assistant at the Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca, New York, USA. E-mail Todd M. Schmidt at: tms1@cornell.edu for correspondence. The authors would like to thank Justine Vanden Heuvel, Anna Katharine Mansfield, Gavin Sacks, Wayne Wilcox and Tim Martinson for their assistance in developing the winegrape production and winemaking information for the laboratory experiments. This material is based upon work supported by USDA Cooperative State Research, Education and Extension Service funds through the Northeast Sustainable Agriculture Research and Education grant programme (NYC-123266) and the Institute for Social Sciences 2010 Small Grant Competition at Cornell University. Although the research described in the article has been funded in part by USDA funds, it has not been subjected to USDA review and therefore does not necessarily reflect the views of the Agency, and no official endorsement should be inferred. Thanks are due to the reviewers who offered helpful comments.


Abstract

Agricultural producers and food marketers are increasingly responding to environmentally friendly cues from consumers, even though privately appropriated values associated with a range of food products commonly rank above their public-good counterparts. Wine can be considered an ideal product to examine these issues given consumers’ highly subjective sensory preferences towards wine, and a winegrape production process that is relatively intensive in the use of chemical inputs for the control of disease and infection. Semi-dry Riesling wines made from field research trials following environmentally friendly canopy management practices were utilised in a lab experiment to better understand preferences for environmental attributes in wine. A combined sensory and monetary evaluation framework explicitly considered asymmetric order effects. Empirical results revealed that sensory effects dominate extrinsic environmental attributes. Once consumer willingness to pay (WTP) was conditioned on a wine’s sensory attributes, the addition of environmentally friendly information did not affect their WTP; however, adding sensory information significantly influenced WTP initially based only on environmental attributes. The results confirm the idea that promoting environmentally friendly winegrape production practices would increase demand and lead to higher premiums for the products, but are only sustainable if consumers’ sensory expectations are met on quality.

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