Keywords: double-bounded model, net willingness to pay, willingness to accept, WTA, willingness to pay, WTP, risks, benefits, trade-offs, genetically modified crops, GM crops, agriculture, contingent valuation modelling, consumer preferences
Trading off risks and benefits when valuing new GM technologies: a consumer perspective
While Genetically Modified (GM) crops and foods are in production and on the shelves of supermarkets in many countries, they are still under much criticism and scrutiny around the world. Many studies report that consumers' perceptions towards biotechnology are mixed. The main contribution of this paper is to present a Contingent Valuation (CV) modelling approach that allows for the calculation of a net willingness to pay when both 'lovers' and 'haters' of these GM crops are considered. Willingness To Pay (WTP) is contrasted with Willingness To Accept (WTA) and a net WTP estimate is computed. Results suggest that not properly accounting for the existence of negative preferences may seriously bias the welfare estimates. These findings encourage policymakers to assess new technologies employing a framework of heterogeneous consumer preferences, including both, perceived benefits and perceived risks.