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Risk preference, trust, and willingness-to-accept subsidies for pro-environmental production: an investigation of hog farmers in China

Author

Listed:
  • Jianhua Wang

    (Jiangnan University
    Jiangnan University)

  • Chenchen Yang

    (Jiangnan University)

  • Wanglin Ma

    (Lincoln University)

  • Jianjun Tang

    (Renmin University of China)

Abstract

The objectives of this study are to investigate Chinese hog farmers’ minimum willingness-to-accept (WTA) subsidies for complying pro-environmental (i.e., safe meat) production, and to explore the factors that affect farmers’ WTA, paying a special attention to the role of risk preference and trust. A double-bounded dichotomous choice (DBDC) approach is used to analyze farmers’ WTA for complying three different hypothetical policy scenarios: the first scenario with delayed and uncertain subsidies, the second scenario with delayed but certain subsidies, and the third scenario with certain and immediate subsidies. Within the DBDC maximum-likelihood estimation framework, we further simultaneously explore how these three scenarios and social-demographic characteristics (e.g., risk preference and trust) affect farmers’ WTA. The data for empirical analysis are collected from 712 hog farmers in Henan and Anhui provinces of China. Our findings indicate that the compromised effectiveness of the current subsidy policy targeting harmless treatment of dead hogs is mainly due to the delayed payment, rather than low subsidy levels. Thus, the policy focus should be given to the pathways that help to simplify the miscellaneous procedures causing the delayed subsidy payments. Our estimates also show that farmers’ trust to the local government affects farmers’ WTA significantly, but their risk preferences do not. In particular, we find that hog farmers with higher trust levels require lower subsidies, suggesting that disseminating the subsidy program via personal networks might be more useful than through government propagandas.

Suggested Citation

  • Jianhua Wang & Chenchen Yang & Wanglin Ma & Jianjun Tang, 2020. "Risk preference, trust, and willingness-to-accept subsidies for pro-environmental production: an investigation of hog farmers in China," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(3), pages 405-431, July.
  • Handle: RePEc:spr:envpol:v:22:y:2020:i:3:d:10.1007_s10018-020-00262-x
    DOI: 10.1007/s10018-020-00262-x
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    Cited by:

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    2. Vanessa Bonke & Marius Michels & Oliver Musshoff, 2021. "Will Farmers Accept Lower Gross Margins for the Sustainable Cultivation Method of Mixed Cropping? First Insights from Germany," Sustainability, MDPI, vol. 13(4), pages 1-13, February.
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    More about this item

    Keywords

    Willingness-to-accept; Subsidies; Risk preference; Trust; Safe meat production; China;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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