How Environmental Beliefs Affect Consumer Willingness to Pay for the Greenness Premium of Low-Carbon Agricultural Products in China: Theoretical Model and Survey-based Evidence

Abstract

The increase in the supply of low-carbon agricultural products is crucial to reduce carbon emissions, but the production of such products incurs additional input costs and thus the crux of the low-carbon agricultural products market development lies in how such cost can be shared in a reasonable manner. The increase of consumer willingness to pay and the premium level that consumers would pay for green products hold the key to address this challenge. For that reason, this paper first constructs a behavioral game model to explore how environmental beliefs would affect consumer willingness to pay for the greenness premium. Then, the paper proceeds with empirical analyses on factors influencing consumer willingness to pay for the greenness premium by using micro-survey data of Chinese consumers when facing the choices of low-carbon rice in the cities of central China. The empirical research suggests that, although the average greenness premium that Chinese consumers are willing to pay for low-carbon agricultural products is low, the greenness premium will be stronger when consumers have higher environmental beliefs. We also find the impacts of environmental beliefs on the willingness to pay as well as the greenness premium levels that consumers are willing to pay for low-carbon agricultural products increase with education attainment and family income, but do not change with age. Findings in this study carry several important policy implications. To encourage green consumption that facilitates green production, the government should devote attempts to promote consumers’ environmental beliefs and also apply differentiated public policy that targeting at different types of consumers.