An analysis of factors affecting consumers' willingness to pay for carbon-labeled fresh milk products in Vietnam

Abstract

Carbon footprint labels have become increasingly popular in recent years as consumers become more aware of the environmental impacts of their purchasing decisions in many countries. This study examines the determinants of consumers’ willingness to pay (WTP) for carbon-labeled fresh milk products in Vietnam. Contingent Valuation Method (CVM) is employed to analyze the WTP of 288 Vietnamese consumers. We primarily investigate the impact of degree of carbon labels understanding; social norms; climate & environmental issues awareness; and awareness of responsibility to prevent climate change on the WTP. The results indicate that, on average, consumers are willing to pay a maximum price premium of about 16% increase for carbon-labeled fresh milk cartons that are over 180 ml in size. In addition, this study also revealed that the more consumers know about carbon labels and are aware about environmental issues, the more likely they are willing to pay more for ecofriendly products. This suggests that information campaigns implying awareness of carbon-labelling schemes should be considered by policymakers to promote the consumer preference toward carbon-labelled products.