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.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Price includes VAT for USA
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
This is the net price. Taxes to be calculated in checkout.
¥ is the Chinese currency, and 1$ = ¥6.70 (2017 data).
Harmless disposal of dead hogs refers to having them buried in a disposal pit or incinerated.
This assumption may not hold when a farmer is assumed to be risk-averse, which is not a case in the present study.
A structural model refers to the sub-model of structural equation modelling which specifies the relationship between the endogenous variables and exogenous variables and the relationships among endogenous variables.
For the sake of brevity, the results for the original model in which error terms are assumed to be uncorrelated are not reported but are available upon request.
RMSEA: Root mean square error of approximation; NFI: Normed-fit index; CFI: Comparative fit index; GFI: Goodness-of-fit index; AGFI: Adjusted goodness-of-fit index.
Despite SCENARIO2 having a smaller percentage of “YY” responses compared to SCENARIO2, the percentage of “YN” responses (34.6%) is much higher than that of SCENARIO1 (16.7%).
The shift effect encompasses a battery of potential explanations including yea-saying behavior, strategic behavior, indignation, and cost expectations etc., among other proposed explanations (Alberini et al. 1997; Whiteheads 2002; Watson and Ryan 2007). However, due to data limitation we could not test for these factors individually.
Alberini A, Kanninen B, Carson RT (1997) Modeling response incentive effects in dichotomous choice contingent valuation data. Land Econ 73:309–324
Blais AR, Weber EU (2006) A domain-specific risk-taking (DOSPERT) scale for adult populations. Judgment Decis Mak 1(1):33–47
Bollen K, Lennox R (1991) Conventional wisdom on measurement: a structural equation perspective. Psychol Bull 110(2):305–314
Cai, H., Chen, Y., Fang, H., & Zhou, L. (2009). Microinsurance, trust and economic development: evidence from a randomized natural field experiment. National Bureau of Economic Research Working Paper Series No. 15396
Carson RT (2000) Contingent valuation: a user's guide. Environ Sci Technol 34(8):1413–1418
Chabé-Ferret S, Subervie J (2013) How much green for the buck? Estimating additional and windfall effects of French agro-environmental schemes by DID-matching. J Environ Econ Manag 65(1):12–27
Charness G, Gneezy U, Imas A (2013) Experimental methods: eliciting risk preferences. J Econ Behav Organ 87:43–51
Chen X, Qiu G, Wu L, Xu G, Wang J, Hu W (2017) Influential impacts of combined government policies for safe disposal of dead pigs on farmer behavior. Environ Sci Pollut Res 24(4):3997–4007
Christensen T, Pedersen AB, Nielsen HO, Mørkbak MR, Hasler B, Denver S (2011) Determinants of farmers’ willingness to participate in subsidy schemes for pesticide-free buffer zones—a choice experiment study. Ecol Econ 70(8):1558–1564
Coltman T, Devinney TM, Midgley DF, Venaik S (2008) Formative versus reflective measurement models: two applications of formative measurement. J Bus Res 61(12):1250–1262
Devlieger I, Mayer A, Rosseel Y (2016) Hypothesis testing using factor score regression: a comparison of four methods. Educ Psychol Measur 76(5):741–770
Diamantopoulos A, Riefler P, Roth KP (2008) Advancing formative measurement models. J Bus Res 61(12):1203–1218
García JH, Cherry TL, Kallbekken S, Torvanger A (2016) Willingness to accept local wind energy development: does the compensation mechanism matter? Energy Policy 99:165–173
Hanemann M, Loomis J, Kanninen B (1991) Statistical efficiency of double-bounded dichotomous choice contingent valuation. Am J Agr Econ 73(4):1255–1263
Hennessy DA, Wolf CA (2018) Asymmetric information, externalities and incentives in animal disease prevention and control. J Agric Econ 69(1):226–242
Jaime MM, Coria J, Liu X (2016) Interactions between CAP agricultural and agri-environmental subsidies and their effects on the uptake of organic farming. Am J Agric Econ 98(4):1114–1145
Jin J, Gao Y, Wang X, Nam PK (2015) Farmers’ risk preferences and their climate change adaptation strategies in the Yongqiao District, China. Land Use Policy 47:365–372
Kahneman D, Tversky A (1979) Prospect theory: an analysis of decision under risk. Econometrica 47(2):263–291
Koutsou S, Partalidou M, Ragkos A (2014) Young farmers' social capital in Greece: trust levels and collective actions. J Rural Stud 34:204–211
Laukkanen M, Nauges C (2014) Evaluating greening farm policies: a structural model for assessing agri-environmental subsidies. Land Econ 90(3):458–481
Lienhoop N, Brouwer R (2015) Agri-environmental policy valuation: farmers’ contract design preferences for afforestation schemes. Land Use Policy 42:568–577
Lindhjem H, Mitani Y (2012) Forest owners’ willingness to accept compensation for voluntary conservation: a contingent valuation approach. J Forest Econ 18(4):290–302
Liu C, Jiang H (2013) Dead pigs scandal questions China's public health policy. Lancet 381(9877):1539
Liu EM (2013) Time to change what to sow: risk preferences and technology adoption decisions of cotton farmers in China. Rev Econ Stat 95(4):1386–1403
Liu Y, Chen K, Hill RV, Xiao C (2017) Delayed premium payment, insurance adoption, and household investment in rural China. In: IFPRI Discussion Paper 01306.
Lohr L, Salomonsson L (2000) Conversion subsidies for organic production: results from Sweden and lessons for the United States. Agric Econ 22(2):133–146
Menapace L, Colson G, Raffaelli R (2016) A comparison of hypothetical risk attitude elicitation instruments for explaining farmer crop insurance purchases. Eur Rev Agric Econ 43(1):113–135
Pretty J, Brett C, Gee D, Hine R, Mason C, Morison J, Rayment M, Van Der Bijl G, Dobbs T (2001) Policy challenges and priorities for internalizing the externalities of modern agriculture. J Environ Plan Manag 44(2):263–283
Qiao J, Liu Z (2015) Empirical analysis of harmless treatment of dead pigs in the perspective of the pig industry chain. Issues Agric Econ 2:102–109
Reimer A, Prokopy L (2014) One federal policy, four different policy contexts: an examination of agri-environmental policy implementation in the Midwestern United States. Land Use Policy 38:605–614
Salladarré F, Brécard D, Lucas S, Ollivier P (2016) Are French consumers ready to pay a premium for eco-labeled seafood products? A contingent valuation estimation with heterogeneous anchoring. Agric Econ 47(2):247–258
Seroa da Motta R, Ortiz RA (2018) Costs and perceptions conditioning willingness to accept payments for ecosystem services in a Brazilian case. Ecol Econ 147:333–342
Steinfeld H, Gerber P (2010) Livestock production and the global environment: consume less or produce better? Proc Natl Acad Sci 107(43):18237–18238
Steg L, Vlek C (2009) Encouraging pro-environmental behaviour: an integrative review and research agenda. J Environ Psychol 29(3):309–317
USDA (2017) Livestock and products annual—US beef returns to China. In: (Vol. June 2018).
USDA (2018) Consolidation and modernization continue to shape China's livestock outlook. In: (Vol. June 2018).
Verbeke W, Liu R (2014) The impacts of information about the risks and benefits of pork consumption on Chinese consumers’ perceptions towards, and intention to eat, pork. Meat Sci 98(4):766–772
Watson V, Ryan M (2007) Exploring preference anomalies in double bounded contingent valuation. J Health Econ 26:463–482
Wei X, Lin W, Hennessy DA (2015) Biosecurity and disease management in China’s animal agriculture sector. Food Policy 54:52–64
Whitehead JC (2002) Incentive incompatibility and starting-point bias in iterative valuation questions. Land Econ 78(2):285–297
Wossen T, Berger T, Falco SD (2015) Social capital, risk preference and adoption of improved farm land management practices in Ethiopia. Agric Econ 46(1):81–97
Wu L, Qiu G, Xu G, Chen X (2017a) Effects of the policy of non-harmful disposal of pigs dying of diseases on behaviors of live pig-raising households. Chin Rural Econ 02:56–69
Wu L, Xu G, Li Q, Hou B, Hu W, Wang J (2017b) Investigation of the disposal of dead pigs by pig farmers in mainland China by simulation experiment. Environ Sci Pollut Res 24(2):1469–1483
Wunder S, Engel S, Pagiola S (2008) Taking stock: a comparative analysis of payments for environmental services programs in developed and developing countries. Ecol Econ 65(4):834–852
Yamagishi T, Yamagishi M (1994) Trust and commitment in the United States and Japan. Motivation Emotion 18(2):129–166
Yan H, Xu D, Meng H, Shi L, Li L (2015) Food poisoning by clenbuterol in China. Qual Assur Saf Crops Foods 7(1):27–35
Zhang J, Luo M, Cao S (2018a) How deep is China’s environmental Kuznets curve? An analysis based on ecological restoration under the Grain for Green program. Land Use Policy 70:647–653
Zhang Y, Cao Y, Wang HH (2018b) Cheating? The case of producers’ under-reporting behavior in hog insurance in China. Can J Agric Econ 66(3):489–510
The research is supported by the National Natural Science Foundation of China (Project Approval nos. 71673115 and 71540008).
Conflict of interest
The authors declare that they have no competing interest.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
About this article
Cite this article
Wang, J., Yang, C., Ma, W. et al. Risk preference, trust, and willingness-to-accept subsidies for pro-environmental production: an investigation of hog farmers in China. Environ Econ Policy Stud 22, 405–431 (2020). https://doi.org/10.1007/s10018-020-00262-x
- Risk preference
- Safe meat production