3.5. Farmers’ Willingness to Pay and Influencing Factors
shows the percentage of “yes” responses to the WTP questions. It can be seen that the percentage of “yes” responses monotonically decreases as the bid amount goes up, implying that a higher bid would result in a lower probability of accepting the bid amount. This finding is consistent with the economic theory of demand, thus serving as evidence of the validity of this CVM study [16
In order to identify the determinants influencing farmers’ WTP, we run the binary logit regression model. In the model, the dependent variable was the possibility that the respondent would be willing to pay. The explanatory variables included the bid amount, farmers risk perceptions, individual social capital variables and certain demographic and socioeconomic variables.
The estimation results are summarized in Table 4
. Our results suggest that the estimation model has a high predictive power and statistical reliability. The pseudo-R2
in this model is higher than the 20% level suggested by [31
] as indicating a very good fit for this type of data. The chi-square result shows that the likelihood ratio statistics are highly significant (p
< 0.001), suggesting that the regression model has a strong explanatory power.
As shown in Table 4
, most explanatory variables have the expected signs and are statistically significant at 10% or lower. As expected, the bid variable is negative and significant at the 1% level, suggesting that the respondents would have a lower probability to say “yes” to the WTP question if they were presented with a higher bid, in line with earlier findings in the survivor curve.
Considering farmers’ risk perceptions of pesticide use on their health, it comes as no surprise that the variable “risk”, indicating farmers’ risk perceptions, is positive and significant, implying that respondents with a higher risk perception would have a higher probability to be willing to pay for reducing their health risks associated with pesticide use. Khan and Damalas (2015) also argue that farmers who perceive pesticides as a health risk are more willing to pay for a premium relative to those who do not perceive pesticides as a health risk [9
The estimation results show that farmers’ education level and household farming income have positive effects on their willingness to pay. These results are in accordance with empirical findings in earlier literature. The longer time to receive education, the better people understand the consequences of pesticide use on health and the need to reduce the health risks. Therefore, the educated will be more willing to pay the premium than the illiterate. Wohl et al. (1995) reported that the respondent with more years of schooling would have a higher WTP for reduced pesticide residues in food [32
]. Environmental economic theory assumes that the demand for health or environmental benefits should increase with income [33
]. Consequently, high-income farmers are expected to be more willing to pay for the health risk reduction program. The positive sign of income in this study suggests that richer farmers are more likely to pay than lower income farmers, in agreement with the economic theory [34
]. Zheng et al. (2015) also found that farmers’ farming income has a positive effect on their WTP for bio-pesticides [35
The coefficient on respondents’ household size is negative and significant. These results imply that a respondent with a larger family would have a lower WTP because a larger family may have higher running costs and consequently lower WTP for health risk reductions [36
The regression results show that three social capital variables have a statistically significant effect on farmers’ WTP (Table 4
). The coefficients on social trust and social networks are significantly positive, implying that respondents with higher levels of social trust or greater involvement in social networks are more willingness to pay. These results are expected and understandable. Social trust is regarded as one of the most important components of social capital with significant influence on people’s WTP [21
]. Pretty (2003) argue that social trust can influence an individual behavior because she or he expects that fellow citizens in the community will act in a similar way to protect the common good [20
]. Social networks are mainly linked to farmers’ activation in collective activities and they are responsible for the flow of information on the health and environmental issues. People are more interested in collective issues are expected to be more willing to pay compared to individuals who are not active in social networks [22
]. The variable of social reciprocity is negative and significant, indicating that respondents who thought people in their village can help each other would have a lower WTP for reducing the health risks related to pesticide use. One possible reason for this could be that respondents believed that other villagers would help them in case of they get diseases because of pesticide use. The coefficient on institutional trust is positive but insignificant.
Based on the estimation results, the mean WTP of the respondents is estimated to be 451.11 CNY (65.38 USD) per household per year, approximately equivalent to 0.94% of the average household income. Although currently there are no similar studies on pesticide use in China with which to compare this result, the mean WTP result of this study is comparable with other studies in developing countries. For example, farmers in the Philippines are willing to pay 13.5–20.5 USD per cropping season for avoiding health risks of pesticides [37
]. Gallardo and Wang reported that apple growers’ and pear growers’ WTP were USD 26.03 per acre and USD 40.06 per acre, respectively, for reducing the probability of the toxicity of pesticides to natural enemies [38