An Analysis of Consumer’s Willingness to Pay for Environmental Certified Hardwood Products

This study examines Tennessee and Pennsylvania consumers’ market participation for environmentally certified hardwood products (oak table, oak shelving board, oak chair), obtains potential premiums paid for selected hardwood products, determines the effects of scope of certification and demographics on premium amounts, and builds profiles of consumers who are willingness to pay the premium for certified hardwood products.

A pretest survey taken in Tennessee was used to construct premium ranges for the main field survey. Analysis of the main field survey conducted in rural and urban areas of Tennessee and Pennsylvania is based on the results of the logistic model, descriptive statistics, t-tests and chi-square tests. Logistic models are applied to evaluate the effects of demographics, attitudes toward environment, and scope of certification on market participation for specified certified wood products and to estimate the probabilities and amounts of willingness to pay.

Results from the study suggest that about 44 percent of respondents in each state would support environmental certification of hardwood products and would pay a premium. The logistic models for each product in both states were significant except the model for the certified table at the specified premium in Tennessee. The premium level had negative influence on willingness to pay while the scope of the certification did not appear to have effect on it. The residency, education level, and interest in environmental issues and consumer awareness, as demonstrated by rural/urban, college/less than college, recycling experience, contribution to environmental organizations and forest use, played inconsistent roles in willingness to pay. However, young, female and low-income consumers had consistently positive influence on willingness to pay. Consumers who indicated they would pay more for a certified hardwood product were willing to pay $172.80 more on a $799 table, $11.49 more on a $28.80 shelving board, and $43.42 more on a $199 chair in Tennessee. In Pennsylvania, consumers would like to pay $140.09, $11.34 and $49.81 more on a table, shelving board and chair, respectively. Among those profiled as most likely to pay premiums would pay as high as $611.88 on a table, $46.99 on a shelving board, and $129.68 on a chair. Among those profiled as least likely to be willing to pay, most were not willing to pay anything more.