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Heterogeneous demand for ecologically sustainable products on ensuring environmental sustainability in South Africa

Author

Listed:
  • Enoch Owusu-Sekyere

    (University of the Free State
    Swedish University of Agricultural Sciences)

  • Awudu Abdulai

    (University of Kiel)

  • Henry Jordaan

    (University of the Free State)

  • Helena Hansson

    (Swedish University of Agricultural Sciences)

Abstract

There is an urgent need for the development of environmentally sustainable products market in developing economies, particularly in South Africa due to increasing ecological externalities and risk. We use a stated preference method to examine the heterogeneous demand for ecologically sustainable products. A hybrid latent class model was employed to account for the inclusion of attitudinal information, potential endogeneity and measurement errors. The empirical estimates demonstrate that majority of the respondents attach significant monetary values to meat products with minimal environmental impacts in terms of water and carbon footprint values. We found three heterogeneous consumer segments, with distinct utilities and monetary values attached to water and carbon footprint attributes. Furthermore, the findings show that consumers’ choice and valuation of the sustainability attributes significantly relate to their fundamental attitudes towards the environment and sustainable practices, as well as their knowledge towards environmental sustainability. The use of economic incentives as a mechanism to ensure environmental sustainability is feasible in South Africa. The empirical framework used offered a theoretical advantage in terms of endogeneity bias and measurement error, relative to the traditional latent class model.

Suggested Citation

  • Enoch Owusu-Sekyere & Awudu Abdulai & Henry Jordaan & Helena Hansson, 2020. "Heterogeneous demand for ecologically sustainable products on ensuring environmental sustainability in South Africa," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 39-64, January.
  • Handle: RePEc:spr:envpol:v:22:y:2020:i:1:d:10.1007_s10018-019-00246-6
    DOI: 10.1007/s10018-019-00246-6
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    More about this item

    Keywords

    Africa; Ecological footprint; Economic incentives; Environmental sustainability; South Africa; Welfare estimates;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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