ACTUAL VERSUS STATED WILLINGNESS TO PAY: A COMMENT
By: Cohen, Daniel R.; Zilberman, David
Cohen, Daniel R.; Zilberman, David, ACTUAL VERSUS STATED WILLINGNESS TO PAY: A COMMENT, Journal of Agricultural and Resource Economics, Volume 22, Issue 2, December 1997, Pages 376-381
Offering evidence from the California Irrigation Management Information System (CIMIS) and centering around Kenkel and Norris conclusions regarding "Agricultural Producers' Willingness to Pay for Real-Time Mesoscale Weather Information," this article questions the use of growers' hypothetical willingness-to-pay responses as the sole basis for deciding whether to invest in Mesonet, a statewide network of weather station. Survey respondents' lack of familiarity with a new technology and strategic behavior lead to underestimates of actual willingness to pay. Moreover, weather information has numerous agricultural and nonagricultural uses, and only sampling growers overlooks gains to other potential users. Low hypothetical willingness-to-pay responses of a subsection of the potential adopters should necessarily discourage investment. Rather, a substantial willingness to pay may signal a need for further market research.