Regional differences in willingness to pay for organic vegetables

Abstract

The concern about vegetable safety, together with a booming population and the rise of the middle class has made Vietnam become a potential market for organic vegetables. This paper investigates the determinants of willingness to pay (WTP) for organic vegetables in Hanoi, Vietnam with a particular attention to regional differences and the effect of risk perception. Using Contingent Valuation Method to analyze the data from a sample of 498 consumers in Hanoi, the paper shows that the perceived use values of organic vegetables, trust in organic labels, and disposable family income increased WTP for organic vegetables in both urban and rural regions.Though risk perception of conventional vegetables was high in both regions, such heightened risk perception just translated into the WTP in the rural region. In addition, the percentage of home-grown vegetables in the total vegetable consumption of the family influenced the WTP in the rural region only. Moreover, being an organic purchaser was positively related to the WTP in the urban region but not in the rural region. The paper also discusses three policy implications for Vietnam to boost the demand for organic food.