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Welfare Effects of Pfiesteria-Related Fish Kills: A Contingent Behavior Analysis of Seafood Consumers, The

Agricultural and Resource Economics Review, Oct 2006 by Parsons, George R, Morgan, Ash, Whitehead, John C, Haab, Timothy C

We use contingent behavior analysis to study the effects of pfiesteria-related fish kills on the demand for seafood in the Mid-Atlantic region. We estimate a set of demand difference models based on individual responses to questions about seafood consumption in the presence of fish kills and with different amounts of information provided about health risks. We use a random-effects Tobit model to control for correlation across each observation and to account for censoring. We find that (i) pfiesteria-related fish kills have a significant negative effect on the demand for seafood even though the fish kills pose no known threat to consumers through seafood consumption, (ii) seafood consumers are not responsive to expert risk information designed to reassure them that seafood is safe in the presence of a fish kill, and (iii) a mandatory seafood inspection program largely eliminates the welfare loss incurred due to misinformation.

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Key Words: pfiesteria, seafood demand, non-market valuation

(ProQuest Information and Learning: ... denotes formulae omitted.)

Pflesteria piscicida is a single-celled microorganism, a toxic dinoflagellate, found in the sediments of many estuaries in the Mid-Atlantic region of the United States. It has been identified as the cause of many fish kills in this region. Thousands, even millions, of fish can die in a single kill. During periods of warm weather and high nutrient concentrations, pfiesteria becomes a toxic predator to certain species of fish. While the scientific evidence suggests that these outbreaks are lethal to the fish, it also suggests that they pose no health risk to humans in the seafood market.1 Nevertheless, media coverage of pfiesteria-related fish kills has led to rather large reductions in seafood consumption during periods of an outbreak. The associated loss in economic welfare is potentially quite large and is seemingly due to misinformation.

In this paper we measure the welfare effects of a hypothetical pfiesteria outbreak using contingent behavior analysis in a seafood demand model. We also consider the effects of different forms of information provision on attenuating the losses due to misinformation. Identifying the forms of information provision that have the largest positive impact on consumer behavior will provide important policy-based information for related government agencies and industry representatives seeking to reassure consumers of product safety and health concerns. Our research follows a framework developed by Shulstad and Stoevener (1978), who measured the welfare losses incurred by Oregon's pheasant hunters in reaction to news of mercury contamination in pheasants. Since then, researchers have considered the impact of newsinduced health scares on the demand for a variety of goods. see, for example, Swartz and Strand (1981), Smith, van Ravenswaay, and Thompson (1988), Brown and Schrader (1990), Wessells and Andersen (1995), and Wessells, Miller, and Brooks (1995). Ours is the first to consider pfiesteria-related fish kills and the first to use contingent behavior techniques to elicit consumers' stated preferences in this context. We begin with a brief discussion of our survey and study design before turning to the model.

Survey and Study Design

Contingent behavior or stated preference techniques are often used to measure consumer preferences. Individuals are asked to respond to survey questions pertaining to a market or non-market good. The provision of the good is altered in some fashion and the individuals are asked how they might respond to that change. In our case, respondents are asked how their seafood consumption might change in the presence of a pfiesteria-related fish kill.

We conducted a phone-mail-phone survey of seafood consumers over the age of 18 in Delaware, Maryland, Washington, D.C., Virginia, and North Carolina in 2001. The sample frame was stratified based on a split between urban and rural areas and a split between North Carolina and the other four areas. Pfiesteria outbreaks are common in the Mid-Atlantic, and we had a particular interest in North Carolina in our project. The goal was to conduct the survey during the fish kill season: June through November. The first phone survey was conducted from August to October. The second phone survey was conducted from October to November. The mail portion of the survey was mailed out to individuals between the phone surveys and contained information about pfiesteria.

Two focus groups were conducted to develop the pfiesteria information packet for mailing. The first focus group was conducted in Washington, North Carolina, and included five members of a local environmental organization. The second focus group was conducted in Baltimore, Maryland, with ten members of a church group. During each session, the facilitators presented sections of the information mailout and asked participants for their thoughts on what information they thought the text and visual aids conveyed. Overall, participants found the information straightforward. Where appropriate, suggestions received during these sessions were incorporated into the final version of the mailed information.

Food & Beverage Industry

Welfare Effects of Pfiesteria-Related Fish Kills: A Contingent Behavior Analysis of Seafood Consumers, The

Agricultural and Resource Economics Review, Oct 2006 by Parsons, George R, Morgan, Ash, Whitehead, John C, Haab, Timothy C

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