Consumer willingness-to-pay for restaurant surcharges to reduce carbon emissions: default and information effects

Dede Long,Grant H West,Rodolfo M Nayga

doi:10.1017/age.2021.7

Abstract

Abstract The agriculture and food sectors contribute significantly to greenhouse gas emissions. About 15 percent of food-related carbon emissions are channeled through restaurants. Using a contingent valuation (CV) method with double-bounded dichotomous choice (DBDC) questions, this article investigates U.S. consumers’ willingness to pay (WTP) for an optional restaurant surcharge in support of carbon emission reduction programs. The mean estimated WTP for a surcharge is 6.05 percent of an average restaurant check, while the median WTP is 3.64 percent. Our results show that individuals have a higher WTP when the surcharge is automatically added to restaurant checks. We also find that an information nudge—a short climate change script—significantly increases WTP. Additionally, our results demonstrate that there is heterogeneity in treatment effects across consumers’ age, environmental awareness, and economic views. Our findings suggest that a surcharge program could transfer a meaningful amount of the agricultural carbon reduction burden to consumers that farmers currently shoulder.

Highlights

Agriculture and food production contribute prominently to global warming, accounting for one-third of human-caused greenhouse gas (GHG) emissions worldwide (Gilbert 2012)
Evidence of individuals’ willingness-to-pay (WTP) for a carbon emission reduction program similar to the one implemented by the Restore California program is important, given that approximately 15 percent of food-related carbon emissions pass through restaurants (Kling and Hough 2010)
Unlike previous studies that mostly focused on how individual dietary changes can lower carbon emissions (Weber and Scott Matthews 2008; Heller and Keoleian 2015; Aleksandrowicz et al 2016; Heller et al 2018), our study focuses on surcharges to restaurant transactions, through which approximately 15 percent of food-related carbon emissions are channeled (Kling and Hough 2010) and which could be leveraged to more pass on the costs of agricultural carbon reduction to consumers

Summary

Introduction

Agriculture and food production contribute prominently to global warming, accounting for one-third of human-caused greenhouse gas (GHG) emissions worldwide (Gilbert 2012). Evidence of individuals’ willingness-to-pay (WTP) for a carbon emission reduction program similar to the one implemented by the Restore California program is important, given that approximately 15 percent of food-related carbon emissions pass through restaurants (Kling and Hough 2010) It demonstrates the feasibility of leveraging consumer contribution to provide non-negligible funds in support of sustainable farming and agricultural carbon reduction. We contribute to the literature by testing how “defaults” influence individuals’ participation in a voluntary restaurant surcharge program to reduce agricultural carbon emissions. Altering the presentation of public policies and relevant information is a costeffective strategy to change individual behavior and improve social welfare It is, important to consider how choice and information presentation can influence individual decisions when there is an option to reduce carbon emissions through restaurant surcharges. The minimum NEP value of our sample is 25, while the maximum value is

98. Supplementary

Results and discussion

Conclusions