Willingness to Pay for Low Water Footprint Food Choices During Drought

Hannah Krovetz, Rebecca Taylor, Sofia Villas-Boas

NBER Working Paper No. 23495
Issued in June 2017
NBER Program(s):Environment and Energy Economics, Industrial Organization

In the context of recent California drought years, we investigate empirically whether consumers are willing to pay for more efficient water usage in the production of four California agricultural products. We implement an internet survey choice experiment for avocados, almonds, lettuce, and tomatoes to elicit consumer valuation for water efficiency via revealed choices. We estimate a model of consumer choices where a product is defined as a bundle of three attributes: price, production method (conventional or organic), and water usage (average or efficient). Varying the attribute space presented to consumers in the experimental choice design gives us the data variation to estimate a discrete choice model—both conditional logit specifications and random coefficient mixed logit specifications. We find that on average consumers have a significant positive marginal utility towards water-efficiency and estimate that there is an implied positive willingness to pay (WTP) of about 12 cents per gallon of water saved on average. Moreover, informing consumers about the drought severity increases the WTP for low water footprint options, but not significantly. We find that there is heterogeneity in the WTP along respondents' education, race, and also with respect to stated environmental concern. Our findings have policy implications in that they suggest there to be a market based potential to nudge consumers who want to decrease their water footprint and follow a more sustainable diet, namely, by revealing information on the product's water footprint in a form of a label. Simulations of removing low water footprint labels from the choice set attributes imply significant consumer surplus losses, especially for the more educated, white, and more environmentally concerned respondents.

download in pdf format
   (1197 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23495

Published: Willingness to Pay for Low Water Footprint Foods during Drought, Hannah Krovetz, Rebecca Taylor, Sofia B. Villas-Boas. in Agricultural Productivity and Producer Behavior, Schlenker. 2019

Users who downloaded this paper also downloaded* these:
Bellora, Blanc, Bourgeon, and Strobl w23496 Estimating the Impact of Crop Diversity on Agricultural Productivity in South Africa
Krovetz, Taylor, and Villas-Boas Willingness to Pay for Low Water Footprint Foods during Drought
Ayres, Edwards, and Libecap w23382 How Transaction Costs Obstruct Collective Action: Evidence from California’s Groundwater
Leonard and Libecap w22185 Collective Action by Contract: Prior Appropriation and the Development of Irrigation in the Western United States
Angrist, Lavy, Leder-Luis, and Shany w23486 Maimonides Rule Redux
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us