Risk and Uncertainty in Environmental Economics: From Theory to Policy

A lack of awareness and understanding of risk and uncertainty can lead to poor decision making and higher costs for policy providers, as not accounting for them may produce policy which is inflexible and with a negative effect on welfare. Further, misunderstanding of and/or failure to account for risk and uncertainty can inhibit research and development for policy to which environmental economics can contribute (for example, in developing effective measures of sustainability). The aim of this project is to develop guidelines for ‘Best Practice’ approaches to risk and uncertainty in environmental economics for guiding policy development and implementation, taking into account key issues such as costs, irreversibility, adaptation and dynamics. These guidelines are developed by examining the frameworks commonly used by environmental economists to account for risk and uncertainty (such as the Precautionary Principle and Cost Benefit Analysis) as well as specifically developed theories (e.g. Quiggin’s Rank Dependent Utility Theory), borrowing from other disciplines (e.g. Prospect Theory) and drawing attention to lesser known ideas (e.g. Shackle’s Model).Environmental Economics and Policy,

A Methodological Review of the Impacts of Risk and Trust on Consumer Behaviour Towards Food Safety

Consumers' attitudes to trust and risk are key issues in food safety research and attention needs to be focused on clearly defining a framework for analysing consumer behaviour in these terms. By creating a platform, or benchmark, it is hoped that more succinct policy programmes may be initiated to better communicate relevant issues to consumers. In order to achieve this, a detailed review of the recent literature surrounding risk, trust and, the relationship between the two must be conducted. This paper aims to collate the literature in the fields of consumer attitudes to trust and risk. It provides an insight into the economic and other modelling procedures available to measure consumers' attitudes to risk and trust in food safety and specifically notes the need for future research to concentrate on examining risk and trust as highly related variables rather than two distinct concepts.trust, risk, consumer attitudes, food safety, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

A Latent-Variable Approach to Modelling Multiple and Resurgent Meat Scares in Italy

This paper aims to measure the time pattern of multiple and resurgent food scares and their direct and cross-product impacts on consumer response. The Almost Ideal Demand System (AIDS) is augmented by a flexible stochastic framework which has no need for additional explanatory variables such as a media index. Italian aggregate household data on meat demand is used to assess the time-varying impact of a resurgent BSE crisis (1996 and 2000) and the 1999 Dioxin crisis. The impact of the first BSE crisis on preferences seems to be reabsorbed after a few months. The second wave of the scare at the end of 2000 had a much stronger effect on preferences and the positive shift in chicken demand continued to persist after the onset of the crisis. Empirical results show little relevance of the Dioxin crisis in terms of preference shift, whilst not excluding the more relevant price effect.meat demand, BSE, shock, Almost Ideal Demand System, Kalman filter, Food Consumption/Nutrition/Food Safety, D12, I12,

Implications of Recent Australian Wheat Industry Developments for Domestic and Overseas Prices

This study is motivated by the proposition that the objectives of the AWB Ltd have changed since semi-privatisation of the Australian Wheat Board under the Wheat Marketing Act, 1989. Conceptualising this change of objectives as a shift from revenue maximization to profit maximization, this study examines the impact of such a change on the pricing policies of a multi-market price-setting firm. More specifically, this paper investigates, using two hypothetical objective functions, a risk averse AWB’s price-setting behaviour in an “overseas” and a “domestic” market in response to recent wheat industry developments. In the analysis these developments manifest themselves as differing price elasticities, differing transport costs and uncertain demand functions, and their implications particularly for the prices paid by domestic consumers are explored.Privatisation, Australian wheat industry, pricing policies., Agricultural and Food Policy, Crop Production/Industries, Demand and Price Analysis,

THE SPARTA Model: An Econometric Analysis of Consumer Behaviour under Risk

This paper explores the role of trust in food safety information in determining consumer choice in relation to socio-demographic effects and other determinants. The complexity of factors influencing the way a consumer processes food safety information makes it difficult to develop adequate risk communication strategies. This is, however, a priority for current European policy and this paper tries to answer some key questions: (1) can the consumer be segmented into socio-demographic groups in relation to their trust in food safety information? (2) are country and cultural differences relevant in the way food safety information is processed? (3) how do risk perception and trust in food safety information influence food choice in relation to other determinants? (4) How does a food scare alter the weight of these determinants? (5) How do information sources differ in terms of how they impact on consumers risk perception and behaviours? To provide some answers to the above questions, we propose a modelling framework which extends the Theory of Planned Behaviour to account for risk perception and trust and allows for country-specific effects. The model is tested on the impact of salmonella information on chicken consumption choices across five European countries, France, Germany, Italy, Netherlands and the United Kingdom, based on a nationally representative survey for a total of 2725 face-to-face interviews. Results show that although no relationship emerges between socio-demographics variables and the trust placed by consumer in food safety information, although country differences are relevant. The findings also suggest that the policy priority should be on building and maintaining trust in food and health authorities, and research institutions.food safety information, trust, risk perception, Theory of Planned Behaviour, chicken, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Risk perception and chicken consumption in the avian flu age - a consumer behaviour study on food safety information

As the avian flu pandemic threatens Europe, consumer awareness of the theoretical possibility of contraction of the avian flu virus through consumption of chicken saw a decline in demand at the end of 2005, with peaks between 40% - 50% in Southern European countries such as Italy whilst having little impact on demand in Northern countries like the UK. Such food scares, coupled with an increasing awareness of food safety issues by the general public, highlight the importance of evaluating the perceived risks associated with food purchasing and consumption are paramount in order to provide effective policy communication in this area. There is considerable empirical evidence that different consumers respond to food risk communication in different ways. This implies that policymakers and food firms cannot rely on a single public information strategy for emerging food risks. Furthermore, the impact of food safety information varies significantly according to the sources that provide it. Using data are from a nationally representative pan-European survey of 2 725 respondents from five EU countries (France, Germany, Italy, Netherlands and the United Kingdom), we show that in a situation of increased perceived risk hence increased levels of involvement households across the EU are likely to respond in culturally specific ways which suggest a need for country level policy design.Food Consumption/Nutrition/Food Safety,

Food Scares and Consumer Behaviour: A European Perspective

In this paper a consumer food choice model based on the Theory of Planned Behaviour (TPB) is extended to account for risk perception and trust. The data are from a nationally representative European survey of 2 725 respondents from five countries, France, Germany, Italy, Netherlands and the United Kingdom. The model relates the intention to purchase chicken in an extended TPB framework, which incorporates risk perceptions, and trust in alternative sources of food safety information. This model was run for two behaviours of interest: the standard likelihood of intention to purchase and the likelihood of intention to purchase conditional on news about a salmonella incident. The model has good predictive power and shows distinct country differences. Only in the case of a food scare do risk perceptions and trust come into play. The findings suggest that the government policy priority should be on building and maintaining trust in food and health authorities, and research institutions, while food chain actors could eliminate many of the adverse consequences of a food scare if they could build public trust. Interestingly there is no relationship between socio-demographic variables and the trust placed by consumers in food safety information.food safety information, trust, risk perception, Theory of Planned Behaviour, chicken, Food Consumption/Nutrition/Food Safety, D80, D12, Q18,

Lagrangian multiform structure for the lattice Gel'fand-Dikii hierarchy

The lattice Gel'fand-Dikii hierarchy was introduced by Nijhoff, Papageorgiou, Capel and Quispel in 1992 as the family of partial difference equations generalizing to higher rank the lattice Korteweg-de Vries systems, and includes in particular the lattice Boussinesq system. We present a Lagrangian for the generic member of the lattice Gel'fand-Dikii hierarchy, and show that it can be considered as a Lagrangian 2-form when embedded in a higher dimensional lattice, obeying a closure relation. Thus the multiform structure proposed in arXiv:0903.4086v2 [nlin.SI] is extended to a multi-component system.Comment: 12 page

The UK Consumer's Attitudes to, and Willingness to Pay for, imported Foods

We report results from an investigation into consumer preferences for locally produced foods. Using a choice experiment we estimate willingness to pay for foods of a designated origin together with certification for Organic and GM free status. Our results indicate that there is a preference for locally produced food which is GM free, Organic and produced in the traditional season.imported food, seasonality, willingness-to-pay, choice experiment, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, International Relations/Trade,