Consumer Willingness to Pay to Avoid Pesticide Residues

by James K. Hammitt

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The economic value consumers place on reductions in health risks is examined in the context of the choice between conventionally and organically grown fruits and vegetables, where the latter are cultivated without the use of synthetic pesticides. Price differences between organic and conventional versions of 27 produce types are estimated using retail price data. These differences provide a lower bound on the incremental value than consumers who purchase organic produce assign to it. The risk avoided by substituting organic for conventional produce is evaluated to compare the cost-effectiveness of risk reduction across produce types and relative to risk-saving behavior in other contexts.

Originally published in: Statistica Sinica, v. 3, no. 2, July 1993, pp. 351-366.

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