Ecological Economics xxx (2009) xxx–xxx

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Ecological Economics

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Analysis

Too poor to be green consumers? A field experiment on revealed preferences forfirewood in rural Guatemala

Luuk van Kempen a,⁎, Roldan Muradian a, César Sandóval b, Juan-Pablo Castañeda b,c

a Centre for International Development Issues Nijmegen (CIDIN), Radboud University Nijmegen, The Netherlandsb Instituto de Agricultura, Recursos Naturales y Ambiente (IARNA), Universidad Rafael Landívar, Guatemalac Development Research Institute (IVO), Tilburg University, The Netherlands

⁎ Corresponding author. Centre for International D(CIDIN), Radboud University Nijmegen, Th. van AquinostNetherlands. Tel.: +31 243611140; fax: +31 243615957.

E-mail address: l.vankempen@maw.ru.nl (L. van Kem1 A cross-country survey by the World Bank (2006

licences ranks Guatemala among themost cumbersome icountries surveyed).

0921-8009/$ – see front matter © 2009 Elsevier B.V. Aldoi:10.1016/j.ecolecon.2009.02.014

Please cite this article as: van Kempen, L., etrural Guatemala, Ecological Economics (20

a b s t r a c t

a r t i c l e i n f o

Article history:

The paper reports on a fiel Received 6 February 2008Received in revised form 5 February 2009Accepted 14 February 2009Available online xxxx

Keywords:Consumer behaviourField experimentsIllegal loggingGuatemala

d experiment that investigates whether households in Guatemala are willing tosurrender a small material gain in order to buy legal rather than illegal firewood. Given the ineffectiveness ofcommand-and-control policies to curb the problem of illegal logging in Guatemala, the experiment assesses thepotential viability ofmarket-oriented solutions. Local consumers indeveloping countries are generally believed tobe too poor to pay a premium for green/ethical products. Therefore, little information has been gathered onwillingness-to-pay (WTP) for such products and its determinants in non-affluent consumer markets. While ourexperimentonfirewood consumption in centralGuatemala only implies aweak and indirect test ofWTP for greenproducts, the results indicate that it is premature, if not unwarranted, to assume that the poor are not ready tomake pro-ethical choices in the marketplace. Moreover, we find that information on the legal procedures forfirewood extraction significantly affects consumer choice between legal and illegal firewood.

© 2009 Elsevier B.V. All rights reserved.

1. Introduction

1.1. Background

A very considerable proportion of the firewood used for householdconsumption in rural Guatemala—where it remains the main source ofenergy for cooking and heating—is extracted in violation of legalrequirements (Castañeda and Sandoval, 2008). Policy responses to dealwith this problem are difficult to implement in Guatemala because of thepersistence of institutional constraints (e.g. inefficient bureaucracy1 andlack of political will). However, the efficacy of command-and-controlpolicies may be reinforced if these are complemented with market-oriented instruments, by which we mean measures that tap into theethical and environmental concerns of the final consumer.

However, the rapidly growing body of literature on consumerwillingness-to-pay for products associated with more sustainableresource exploitation sends out a pessimistic message regarding themarket potential for ‘green’ (which in our case overlaps with ‘legal’ or‘ethical’) products in a country like Guatemala. As stated by Fisher et al.(2005: 11), “studies have shown thatmarkets for certified forest productsin developed countries are relatively limited, and that the prospects for

evelopment Issues Nijmegenraat 4, 6500 HE Nijmegen, The

pen).) on the ease of dealing withn this respect (165th out of 175

l rights reserved.

al., Too poor to be green con09), doi:10.1016/j.ecolecon.20

reaping a premium can be poor. [..] We can only suspect that suchprospects are even poorer in developing countries”. The assumptionunderlying this statement is that consumers from a developing countrycannot afford to care about the ethical profile of their consumption. Thisreasoning is in line with Maslow's well-known hierarchy-of-needs(Maslow, 1970 [1954]), in which the need to act in accordance withone's ethical beliefs is a so-called ‘higher-order’ need. While theseassumptions are plausible, their empirical validity has barely been underscrutiny.

Bonsu and Zwick (2007) conclude that Ghanaian consumers exhibitlower levels of ethics compared with Western counterparts, whichsuggests that ethicalmarkets are not very likely to prosper in this country.Goswami (2008) found that only a small segment of consumers—wealthier liberal professionals—is positively motivated to preferentiallybuy eco-labeled clothing in India, supporting the proposition that onlyfew (richer) consumers in developing countries may be ready to pay apremium for greenproducts. Nonetheless, Mohamed and Ibrahim (2007)found that 32% of their sample of Malaysian consumers would be willingto pay a premium for environmentally certified wood products and thatthe average premium for this subgroupwould amount to a sizeable 14.4%.In this study, however, the willingness to pay an ethical premium isestimated through elicitation, i.e., based on stated preferences,whichmaydiffer considerably from actual market behaviour.

The presence of biases in willingness-to-pay (WTP) estimatesgenerated by stated preference methods is well-documented for bothprivate goods (Wertenbroch and Skiera, 2002; Ding et al., 2005; Uramaand Hodge, 2006) and public goods (Johansson-Stenman and Svedsäter,2003; Schläpfer et al., 2004). The magnitude of the hypothetical bias

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problem in studies on ethical consumer behaviour is clearly demon-strated by De Pelsmacker et al. (2005), who conducted a conjointanalysis among a sample of Belgian consumers to estimateWTP for Fair-trade coffee. While 10% of the respondents state that they are willing topay the actual price premium of 27%, the actual market share of Fair-trade coffee does not exceed 1%.

Given the bias problem of stated preferences techniques, WTPstudies have started to adopt a number of revealed preference methods,often using experimental methodologies (Didier and Lucie, 2008). Thecommon denominator of these experimental studies is that consumershave an incentive to reveal their “true” WTP, because decisions madeduring the experiment have real consequences in terms of individualgains and losses. The ideal experiment consists inmanipulating thepricedifferential between alternative products in the actualmarketplace and,subsequently,monitoring changes in their respective sales. This strategyhas been applied, for instance, tomeasureWTP for eco-labeled plywoodproducts in a largeAmerican store (AndersonandHansen, 2004a). In thecase of rural Guatemala, however, the near absence of legal firewood inthe market precludes such an approach. Instead, we recreate a choicesituation experimentally.

The analysis of WTP has traditionally been framed within moderneconomic choice theory,whichpresumes thatmarketbehaviour respondsto the will to maximize the agent's individual satisfaction or utility. Theutility function is usually formalized as u(x,b,z,s), where x1,…, xN arecommodities,b1,…,bN are attributes of such commodities, z is a numeraireand s is avectorof consumer's characteristics (suchas age, education, levelof information, etc.). This basicnotionmaybeextended toa randomutilitymodel when components unobservable to the investigator are incorpo-rated into the function. Unobserved variables may include consumer'sfeatures or attributes of the commodities. The utility functionwould thenbe u(x,b,z,s,ε), where ε is a set of fixed constants or functions for theconsumer but a random variable with a joint density function for theinvestigator (Hanemann, 1984). The theory assumes that the consumerchooses a bundle of commodities (x,z) so as tomaximizeu, given a budgetconstraint. Criticisms on the validity of this core assumption have beenvoiced since long, not only because it is considered a narrow over-simplification of motivations driving consumer behaviour but also due toits tautological and non-falsifiable nature, since—according to critics—it isimpossible to conceive an observational phenomenon that contradicts it(Katona, 1958). According to Nixon (2006), in addition to its logicalshortcomings, by adopting a consequentialist ethic of maximizingindividual satisfaction, modern economic choice theory lacks the abilityto provide useful insights when alternative ethical stands are at stake inconsumption behaviour. Instead, choice theories alternative to theneoclassical stream of thought are usually based on the assumption that“choice may reflect a compromise among a variety of considerations ofwhich personal welfare may be just one” (Sen, 1977). These alternativetheoretical approaches are very appealing for analyzing ethical and greenconsumption since the individual benefits from pro-environmental/ethical consumption behaviour at best materialize in the long run—andmay in fact never be realized—while the cost tend to be incurredimmediately (McCarthy and Shrum, 2001), which is at odds with thepresumption of individual utility maximization.

At least two types of studies dealing with the behaviour of “green”consumers may be identified in the literature. The first type tacklesthe relationship between consumers' behaviour, values, knowledge,attitudes and demographic variables (Loureiro and McCluskey, 2002;Abdul-Muhmin 2006; Chan et al., 2008; Basu and Hicks, 2008). Asecond type consists of studies that have developed comprehensivetheoretical frameworks for explaining the determinants of behaviour(Stern, 2000; Buenstorf and Cordes, 2008). The main insight from thisbroad literature is that the decision process in green/ethicalconsumption is very complex (Moisander, 2007). FollowingMcFadden(1986), for the present paper we adopt an input–output scheme as amodel for consumer decisions, where as inputs there are externalfactors (historical and socioeconomic effects), information, product

Please cite this article as: van Kempen, L., et al., Too poor to be green conrural Guatemala, Ecological Economics (2009), doi:10.1016/j.ecolecon.20

attributes and market constraints (budget, availability) and marketchoices as output. Our main concern, however, is the role ofinformation in choice decisions regarding ethical/green attributes ofa product (firewood). Though the empirical evidence on the relation-ship between information and consumer's propensity to actually buy‘green’ products is mixed (Anderson and Hansen, 2004b; Aguilar andVlosky, 2007), we pay special attention to the role of information sincethis is an area where policy interventions are more feasible(campaigns for awareness raising, for instance).

Furthermore, we control for a number of socioeconomic variables(e.g., gender, age, ethnicity and religion) through a multivariateanalysis. As independent variables we have chosen factors that a) werepossible to evaluate through a short questionnaire and b) have beenfound to influence environmental preferences by previous studies. Forexample, Virden and Walker (1999) report a significant influence ofgender and ethnicity on environmental preferences among a sampleof Americans. Based on an extensive review, Zelezny et al. (2000)conclude that women show stronger environmental attitudes andbehaviours than men, both across different countries and age ranges.Atran et al. (2002) and Stocks et al. (2007) found significantdifferences in the management of common-pool natural resourcesbetween different ethnic groups in Guatemala and Nicaragua,respectively. Lowry (1998) shows that religious affiliation is relatedto membership in environmental groups, while Owen and Videras(2007) found that some types of beliefs stimulate pro-environmentbehaviours and attitudes, even after controlling for religious affilia-tion.We also expect age to influence environmental preferences in thelocality where we conducted the research, since younger generationshave probably been more exposed to environmental awarenesscampaigns. We also control for the effect of the relative importanceof energy sources at the household level (gas and firewood), since weexpect individuals from households with a higher degree ofdependence on gas to be less sensitive to trade-offs in the amountof firewood that they will gain/lose in the experiment.

1.2. Firewood extraction and commercialization in Tecpán, Guatemala

The firewood commercialized in Tecpán, where the experimenthas been conducted, is extracted from the area itself, either from theMunicipal Park of Tecpán, a forested area that was declared a nationalpark in 2000, or other nearby forest resources that do not hold aprotected status. In the latter case, felling trees for firewood requireseither a concession (common property) or license (privately ownedtrees) from the National Forest Management Institute (INAB, by itsacronym in Spanish). Deposit warehouses are the most popularoutlets for firewood. Several of them operate in Tecpán (despite thefact that there is only one according to the official business register).Households in the Municipality's rural communities are being servedby itinerant vendors who use pick-up trucks for distribution.

In order to be granted permission for firewood extraction, the lawprescribes the following actions: i) draw up an inventory of forestryresources as well as a short- or medium term management plan, ii)hire an expert to supervise logging operations, iii) secure a deposit orother type of guarantee for the execution of the management plan, iv)pay a 10% tax on the value of wood to be extracted, and v) comply withre-planting requirements. INAB has officially 60 days to decide onawarding the requested concession or license, but according to actorsin the logging chain this may sometimes take up to 3–4 months.Extractions of small quantities of wood for family consumption(subsistence use) are exempted from the above requirements and theprocedure for permission (which is given by the Municipality) in thiscase takes only 15 days to complete. This simplified procedure stillconstitutes an obstacle for subsistence consumption, as documentedby Wittman and Geisle (2005). Another exception concerns extrac-tions from areas that are located within urban perimeters, whichrequires permission from municipal authorities rather than from

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INAB, provided the exploitation does not exceed 10 m3. Whenextraction sites are located within protected areas, a different lawapplies that stipulates stricter requirements for a license, whichshould be obtained from the National Council of Protected Areas(CONAP for its Spanish acronym).

In addition to the permission for extraction, commercial transpor-tation of firewood requires official dispatch notes. Roadside inspec-tions of these notes by the Division for Nature Protection of the CivilPolice (DIPRONA for its Spanish acronym) render the transport stagethemost risky one of the entire illegal logging chain, where drivers tryto minimize the risk of a stiff penalty by operating at night or in theweekends when inspections are rare, by falsifying or re-utilizingdispatch notes, and through bribing DIPRONA officials. Once the logshave reached the deposits or the market, their origin is difficult totrace for final consumers.

The remainder of the paper is structured as follows. Section 2introduces the experiment, which we believe is novel in its set-up, anddescribes the pool of participants. Section 3 presents and discusses theexperimental results. These are contrasted with the outputs from thecontingent valuation exercise that was performed prior to the experi-ment. Finally, Section 4 summarizes the main contribution of the paper.

3 Still, cognitive dissonance theory predicts effects from the contingent valuationexercise on the choice experiment. See Johansson-Stenman and Svedsäter (2003) for

2. Methodology and characteristics of the sample

2.1. Experimental design

The experiment was set up in a number of strategic places in andaround the town of Tecpán, which is located on Guatemala's centralhigh plateau and belongs to the Department of Chimaltenango.2 TheTecpán Municipality's poverty rate is substantially higher than thenational average: 70% against 56% countrywide (INE, 2006). Membersof the research team, including a number of locally recruitedassistants, fluent in the K'acqchikel language, randomly approachedpassers-by and invited them to participate. Apart from being aresident of the Tecpán Municipality, participation was conditional onexperience in purchasing firewood for one's household. This excluded1) households using only gas, 2) households obtaining firewood solelythrough non-commercial channels, such as through own collectionefforts, and 3) members of firewood purchasing households withoutexperience in making firewood purchases. Before entering into thechoice experiment, a short set of survey questions was administeredto each participant, including some questions on the legal require-ments that apply to the exploitation of forest resources.

At the end of the survey, we conducted an estimation ofwillingness-to-pay for legal firewood, by means of combining openand increasing bidding questions. Namely, we asked respondents howmuch was the maximum amount they were willing to pay for xquantity of firewood (which was shown to themwithout any mentionto legality/environmental performance). Then we asked whether therespondent was willing to pay more if we ensure him/her that thefirewood fulfilled all the requirements to be “legal” and therefore itsgood environmental performance was granted. If the answer waspositive, we increased the initially stated amount by 20% and askedwhether the respondent would be willing to pay such amount. Werepeated the increasing bidding until the respondent was notanymore willing to pay the requested amount. If the subject was notfamiliar with the procedure to obtain legal firewood, the person incharge of administering the survey provided the necessary informa-tion to her/him before starting the contingent valuation exercise.Upon completion of the face-to-face survey and the contingentvaluation, the subjects directly proceeded to the choice experiment,which was conducted in a nearby spot. The experimenter was adifferent person than the one administering the survey in order to

2 The experiment was carried out in October 2006.

Please cite this article as: van Kempen, L., et al., Too poor to be green conrural Guatemala, Ecological Economics (2009), doi:10.1016/j.ecolecon.20

reduce participants' potential need to show consistency with theirstated WTP.3 After having received instructions from the experimen-ter, participants carried out the choice task described below.

Each individual was presented with two bundles of firewood thatdiffered from each other in terms of legality as well as in the numberof logs they contained. The first bundle contained a number of 8 logs,each approximately 50 cm long and tied together with a cord, whichwas presented to the participants as illegal, by indicating to them thatwe had asked the seller to show any documents that could prove thelawfulness of the logs, but that the seller had been unable to providesuch evidence. The quantity of firewood in this bundle is roughlyequivalent to that consumed by a four-member household in a day.Alongside this bundle, a second one with a fewer number of logs waspresented. This smaller bundle was presented as legal by tellingparticipants that the seller's permission had been thoroughly checkedand had proven legitimate. In support of this claim, a copy of an officialdispatch note, allegedly obtained from this seller, was depicted on aposter behind the legal bundle. If participants choose the smallerbundle, this is taken to imply that they are willing to surrenderresources following a preference for legally sourced firewood. Thedifference in logs between the illegal and legal bundle will beindicated by c and the monetary equivalent of this cost of choosinglegal by C (in Quetzales) in the remainder of the paper.

In reality, the logs of the twobundleswereobtained fromoneand thesameseller, even from the same truck load, tominimize the difference inintrinsic characteristics of the logs, such as their degree of humidity,which is an important purchase criterion due to the fact that itdetermines burning efficiency and smoke generation. Effortsweremadeto secure that the legal status and the amountof logswere thedominant,if not the only, differences between the two bundles in the perception ofparticipants. While in fact we did not solicit any documents from ourseller to know whether the truck load was of legal origin, participantsdid not seem to entertain doubts about the difference in legal statusbetween the objects of choice presented to them.

The link between (il)legality and environmental (un)sustainabilitywas visualized for the subjects by placing the illegal bundle in front ofa poster depicting a photo of a barren deforested area, while a postershowing an areawith a healthy forest cover formed the background ofthe legal alternative. Additionally, participants were told that thefirewood had been extracted from an area within the Municipalityitself. The pictures were shown just to visualize the associationbetween legality and good environmental performance of firewoodextraction. We assume that there exists a strong association betweenboth, since in the current Guatemalan regulatory framework com-pliance with legal provisions is the formal way to ensure sustainableextraction of firewood. Moreover, recent data confirm that illegalharvesting of firewood is themain cause of deforestation in the Tecpánarea (Castañeda and Sandoval, 2008).

The participants were asked to choose their preferred bundle, whichthey could take home, allegedly as a reward for their cooperation in thesurvey. No cash endowments were handed out, nor was there anymention of prices. The extra cost of legal firewood was implicit in thequantity offered, i.e., by setting cN0. We set c={2,3,4}, resulting in legalbundles of 6, 5 and 4 logs, respectively. Each participantwas presented atrade-off involving one of these cost levels. Hence, the effect of varying cwas measured across individuals rather than through a within-subjectdesign.

The value per unit of illegal logs of the size and quality used in theexperiment is approximately 0.50 Quetzales, according to informationfrom respondents in the survey andmarket observation, whichmeansthe illegal bundle of 8 logs is worth around 4 Quetzales (1 US$ PPP).

an elaborate discussion on potential biases related to the sequence of stated andrevealed preference methods.

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The implicit monetary cost of choosing legal (in Quetzales) in the threetreatments then becomes: C≈{1.00, 1.50, 2.00}. Despite the fact thatthe value of the prizes offered in the experiment may seem rathersmall, it should be kept in mind that the amount of firewood involvedwas around the daily need of an average family, and thereforerespondents took the experiment very seriously.

Our experiment involved awindfall gain for participants, whichmayhave affected their decisions compared to a situationwhere they wouldhave paid out with cash from their own pockets. The presumed upwardbias inWTP estimates that this feature may generate has its theoreticalunderpinning in Kahneman and Tversky's (1979) seminal work onreference-dependent preferences. One of their main behaviouralfindings is that “losses loom larger than gains” when it comes tochanges in welfare. Individuals are more eager to avert a loss than toinduce a gain of the same magnitude. In the terminology of Kahnemanand Tversky's prospect theory, the value function for losses is steeperthan for gains. An alternative interpretation of the same bias concernsthe observation that people tend to spend unanticipated gains moreeasily than anticipated ones, as documented in Arkes et al. (1994).

2.2. Sample characteristics

In total, 218 individuals participated in the experiment, ofwhich 82.6%female. This lop-sided gender ratio in the participant pool reflects the factthat the experiment was conducted on a market day, which led to theinterception of many female shoppers. Urban dwellers are also over-represented in our sample. Despite attempts to redress urban bias bysending out a mobile team to conduct the experiment in several ruralcommunities, close to two-thirds of the participants are residents of theurbancentreof Tecpán, althoughsomeneighborhoodswhereparticipantswere recruited would more accurately be described as peri-urban.According to official statistics, urban dwellers only account for 30% ofthe total population in the TecpánMunicipality. Urban bias also shows upin the lower percentage of individuals of indigenous origin in our sample(80%) compared to that in the general population (92%), given that ladino(mestizo) households are likely to be concentrated in the Municipality'smore urbanized parts.

Fig. 1. Classification of participants according to

Please cite this article as: van Kempen, L., et al., Too poor to be green conrural Guatemala, Ecological Economics (2009), doi:10.1016/j.ecolecon.20

Concerning the income level of the households represented in thesample, our criteria for participation have likely trimmed both tails ofthe income distribution. The exclusion of households relying purely ongas and those relying solely on own firewood collection has probablyeliminated the wealthiest and the poorest households. The economicwelfare level of the participants has beenmeasured subjectively in theform of an income evaluation question, similar to the one introducedby Van Praag (1968), where respondents rated their household'seconomic situation on a ladder scale from ‘good’ to ‘bad’ whencompared to others in the community. Apart from the difficulties inobtaining reliable estimates of household's current income levelsthrough a street interview, subjective measures of economic welfareare arguably more appropriate in the case of a choice experiment,where subjects might act on how they perceive their own economicsituation rather than on their actual—objectively measured—incomelevel. As Lokshin et al. (2006) point out, “characteristics as anticipationof future shocks, household's perception of income security, percep-tion about changes in the household's needs over the lifecycle, [and]the relativity component of household welfare, are reflected in thesubjective measures of well-being, but omitted from the objectivemeasures”. In addition, empirical studies comparing subjective andobjective income measures at the macro level, such as Ravallion andLokshin (2002), tend to find a highly significant positive correlationbetween both. About 4 out of every 10 participants reported that theirhousehold's economic situation is more favorable than that of theaverage household in the community, whereas 1 in 10 rated theireconomic situation as distinctly worse and thereby as precarious.

Self-rated economic welfare only exhibits a weak positive correlationwith educational status. This may be due to the fact that the educationprofile of the participants is generally weak. Some 38% never attendedschool and an additional 8% dropped out before completing primaryeducation. Only 15% of the sample has a secondary education degree.Despite this low degree of variation in schooling outcomes, we analyzewhether the 46% that did not finish primary school behaved differently inthe experiment from those who did. Additionally, participants' religiousaffiliationwill be includedas anexplanatoryvariable in the analysis. Abouthalf the subjects (51%) identified themselves in the survey as catholic,while the other half (49%) expressed adherence to a protestant church.

information on extraction permits (n=218).

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Table 1Share of participants choosing legal firewood (n=218)

Cost of choosing legal in experiment

c=2 [25%] c=3 [37.5%] c=4 [50%] All treatments

C≈1.00 C≈1.50 C≈2.00

All participants 0.72 0.57 0.32 0.49(21/29) (58/102) (28/87) (107/218)

Economicsituation(self-rated)

Favourable 0.83 0.60 0.38 0.54(5/6) (15/25) (8/21) (28/52)

Average 0.79 0.59 0.31 0.51(15/19) (38/64) (17/54) (70/137)

Precarious 0.25 0.38 0.25 0.31(1/4) (5/13) (3/12) (9/29)

Fig. 2. Effect of information on choice for legal firewood in experiment (n=218).

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The degree of information among subjects was elicited through anested question, asking people first whether they thought one neededa permission to extract firewood, and, provided they answeredaffirmatively, we then posed the question what actor or institutionthey believed is authorized to grant such permission. The results arepresented in Fig. 1.

Interestingly, 16.4% was not aware of any legal requirements to felltrees for commercial or subsistence use, while an additional 14.8%recognized the need for a license, but had no clue as to whatauthorities to apply to for obtaining the same. Both categories areconsidered ‘poorly informed’ on the legality issue. This qualificationalso applies to another group of respondents, i.e., those who providedan incorrect answer to the question regardingwho can grant a loggingpermission. Over 15% of the respondents mistakenly believed it is theprivate landowner who is in charge of issuing permission to extractfirewood from his property.

As visualized at the bottom of Fig. 1, those who were poorlyinformed (the three above-mentioned groups sum up to 45.6% of thesample) will be separated in the analysis from the remaining 54.4%who were able to answer the questions correctly. This latter group ofwell-informed subjects either mentioned INAB, CONAP or municipalauthorities as the appropriate agent to turn to for a license. Given thelegal stipulations reviewed in the Introduction section, each of theseanswers is correct, depending on the status and location of the areafrom which resources are extracted.

The average household consists of six members, which typicallyconsumes one carga of firewood per week (80 logs of approximately50 cm of length). While logs are preferred, some poorer householdsbuy sticks and branches, as these can be obtained at a lower price.About 90% of the surveyed households buy all firewood through themarketplace, whereas the remaining 10% also gathers firewood

Table 2Logistic regression: probability of choosing legal bundle of firewood in experiment (n=209

Variable Parameter

GENDER (dummy; 0=male; 1=female) −0.25RELIGION (dummy; 0=catholic; 1=protestant) −0.52ETHNIC (dummy; 0=indigenous; 1= ladino) 0.89STOVE (dummy; 0=open fire; 1=stove) 0.44EDUCATION (dummy; 0=no education degree; 1=primary completed) 0.43AGE (in categories) −0.84⁎⁎⁎ECONOMIC WELFARE (self-evaluation on a three-step ladder) 1.09⁎⁎⁎QCONS (quantity consumed, standardized to carga/week) 0.83⁎⁎⁎GAS (dummy; 0=no; 1=yes) 3.23⁎⁎⁎Interaction GAS QCONS −1.46⁎⁎⁎COST OF CHOOSING LEGAL (experimental treatments; c={2, 3, 4}) −3.14⁎⁎⁎INFORMATION (dummy; 0=poorly informed; 1=well-informed) 1.22⁎⁎⁎Interaction INFORMATION ETHNIC −1.95⁎⁎Nagelkerke R2=0.47 (McFadden R2=0.33)χ2=89.9 (pb0.001)

⁎⁎⁎ and ⁎⁎ indicate statistical significance at 1 and 5%, respectively.

Please cite this article as: van Kempen, L., et al., Too poor to be green conrural Guatemala, Ecological Economics (2009), doi:10.1016/j.ecolecon.20

directly from nearby forests or plantations, often without permissionfrom the landowners. However, the latter group of households stillstrongly depends on the marketplace for obtaining firewood.

3. Results and discussion

Before presenting the results of the multivariate analysis—whichincludes controls for a set of individual and household characteristics—we first briefly review the results from a simple cross-tabulation forthose variables inwhich we take particular interest. The variable to beexplained is the share of individuals choosing the legal bundle offirewood in the experiment, which serves as a proxy for people'swillingness-to-pay for legal firewood. We expect this fraction to benegatively correlated with the cost of the trade-off between legal andillegal firewood and positively correlated with both the relativeeconomic situation of the household and the individual's degree ofinformation on regulations for extracting firewood.

3.1. Univariate analysis

Table 1 shows the fraction ‘choosing legal’ at different cost levels,both for the whole sample as well as broken down by participants' self-rated economic situation. Considering first the total sample, it appearsthat an increase in the cost markedly reduces the fraction that takeshome legal firewood.While this share is as high as 0.72 at c=2, only 32%is still prepared to do so when the cost has doubled to c=4. Across alltreatments, close to half the participants (49%) choose legal and even at

)

estimate Odds ratio estimate Wald chi-square p-value

0.78 0.32 0.5730.59 2.16 0.1422.45 1.44 0.2311.56 2.02 0.1561.54 1.45 0.2290.43 13.23 b0.0012.98 12.18 b0.0012.29 8.01 0.005

25.36 16.39 b0.0010.23 7.20 0.0070.04 18.55 b0.0013.40 8.87 0.0030.14 4.45 0.035

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high cost this fraction is non-negligible. The results are thus clearlyinconsistent with the ‘zero premium’ assumption for low-incomecommunities. When broken down by categories of relative economicsituation of households, the univariate picture suggests that thepropensity to choose legal is positively correlated with this variable.This holds true for each cost level, although the differences between the‘favorable’ and ‘average’ groups are small compared to the gap withthosewho rate their economic situation as ‘precarious’. Still, at least 25%of the participants who identify themselves as belonging to this lattercategory—and likelyearning an incomeclose to the extremepoverty line—picked up the legal bundle in the treatments. The groups reporting‘favorable’ and ‘average’ economic conditions neatly follow the observedtrend of declining fractions when c increases. Such a trend cannot bediscerned for those self-stated as economically worse-off, but this maybe due to the limited size of this category in absolute terms (n=29).

The clustered bar graph in Fig. 2 depicts the relative frequencies of‘choosing legal’ whenwe distinguish between those participants whoare poorly informed and those who are well-informed about loggingpermissions.

In line with expectations, members of the well-informed groupshow a higher propensity to choose legal than their poorly informedcounterparts, regardless of the cost involved. The relative frequenciesare on average 16 percentage points apart. At c=2, for example, 40%chooses legal in the well-informed group against only 24% in thegroup with poor information on logging permissions. Hence, thisresult suggests that information on legal requirements increasespeople's propensity to substitute illegal for legal firewood, even ifsome firewood has to be given up in the process.

The following sub-section presents the outputs from a logisticregression performed to test the robustness of the above results whena set of control variables are taken into consideration.

3.2. Multivariate analysis

Table 2 summarizes the results of the logistic regression. Due tomissing values, nine participants could not be included. As can beobserved in the table, the participant's gender, religious affiliation(catholic or protestant), ethnic origin (indigenous or ladino), and theway they cook food (open fire or stove) have little explanatory power.The same holds for education, which fails to turn up as a significantpredictor of behaviour in the experiment. These results are not in linewith the literature cited in the Introduction section, which report anoteworthy effect of these variables on environmental preferences orperformance. Nevertheless, the role of these factors in determiningenvironmental behaviour may be expected to vary according to theexperimental situation, cultural settings and the type of environ-mental preferences concerned. Our results suggest that general-izations about these relationships are tricky.

By contrast, the respondent's age appears to be an importantdeterminant, where the younger generation demonstrates a higherpropensity to make a trade-off in favor of the legal option than olderparticipants. Other significant determinants are the quantity offirewood consumed by the household and whether a householdfulfils part of its energy needs with gas alongside firewood. First, theproclivity of participants to choose the legal bundle increases with theamount of firewood consumption. Members of gas-consuming house-holds are alsomore likely to pick the legal bundle of firewood up in theexperiment. This effect weakens for those households who, despitetheir use of natural gas, still heavily rely on firewood, as shown by thesignificance and negative sign of the interaction term of the quantityconsumed variable (QCONS) and the dummy variable for gas-usinghouseholds (GAS). Members from households consuming largequantities of firewood may be less sensitive to the trade-off theyface in the experiment, since the cost of choosing legal is relatively lowwhen compared to their total expenditure on firewood. Gas-consum-

Please cite this article as: van Kempen, L., et al., Too poor to be green conrural Guatemala, Ecological Economics (2009), doi:10.1016/j.ecolecon.20

ing households may be less sensitive to implicit price differentials infirewood due to the possibility of substitution.

If we recall the observed tendencies in the univariate analysis, it cannow be concluded from Table 2 that these are robust to the addition oftheabove-mentioned control variables. The cost level c entersnegativelywith a reliability of over 99%. The regression results also clearly bear outthe importance of a household's economic situation. Self-ratedeconomic situation has a positive sign and is highly significant(pb0.001). The better the relative economic situation of the household,the higher is the willingness to surrender resources for legal firewood.

Finally, the separation of the poorly informed from the well-informed participants adds significant explanatory power to themodel. The positive sign of the information dummy confirms thatbeing informed on the requirements regarding the extraction offirewood increases the likelihood to ‘choose legal’. Given the insignif-icance of education in the model, we did not incorrectly pick up apositive effect from more general knowledge (generated from school-ing) in Fig. 2. In fact, education levels are onlyweaklycorrelatedwith thisvery specific type of information on logging permissions (ρ=0.16).Interestingly, the positive effect of being well-informed on one's choicein the experiment applies to the group of participants of indigenousorigin only. Interaction of the information variable with the dummyvariable for ladinos results in a significant offsetting effect. Given thesmall absolute number of ladinos in the sample (n=44), we are hesitantto conclude that information on legality doesnot affect the ethical trade-off of non-indigenous individuals for some socio-cultural reason, sincewe cannot exclude the possibility of this being an artefact in the data.The ratio estimate in the third column of Table 2 indicates that, amongthe indigenous majority, well-informed individuals are 3.4 times morelikely to ‘choose legal’ than their poorly informed counterparts. Over thewhole sample, the effect is slightly weaker, but still significant at the 5%level. Interacting the information dummy with other independentvariables did not reveal other groups that are relatively (in)sensitive toinformation on logging permissions. As stated in the Introductionsection, empirical studies on relationship between environmentalinformation and green/ethical market behaviour have shed mixedresults. Our research may be then positioned among the ones finding apositive relation (Fraj and Martinez, 2007).

3.3. Theoretical implications of results

From the point of view of conventional economic choice theory, theoutputs of our choice experimentwould be interpreted as the result of themaximization of consumer's satisfaction, according to consumer'spreferences, which are reflected in a marginal rate of substitutionbetween illegal and legal firewood. We consider such an interpretationto be deprived of substantive content, however (Sanchez-Cuenca, 2008).Sen (1977) clearly identified theflaws of the utilitymaximization logic: “Ifyou are observed to choose x rejecting y, you are declared to have apreference for x over y. Your personal utility is defined as simply anumerical representation of this preference, assigning a higher utility to apreferred alternative. With this set of definitions you can hardly escapemaximizing your own utility, except through inconsistency”. Contrary tothe assumption of utility maximization, we argue that when the agentchooses the bundle with the lower amount of firewood, she or he isselecting an option thatwill improve some kind of delusive social welfareat the expense of her/his own short-run level of utility. We believe thatchoosing the legal bundle can hardly be interpreted as a case ofinstrumental reciprocity (Sobel, 2005) or sympathy, the latter understoodas a case in which concern for others directly affects one's own welfare.Therefore,we argue that sacrificingfirewood in our experiment should beinterpreted as a case of “commitment” or “self-imposed choiceconstraints” (Sen, 1977, 1997; Broussolle, 2005), which refer to theproposition that the accountability and obligation to others may take theform of restrictions on choice.

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The social psychology literature coins this type of individual behaviouras “social norm activation” (morally appropriate behaviour). That is, a feltobligation to select a particular choice may stem from compliance withperceived other-expectations (Ek and Söderholm, 2008). Building on thisnotion, the term “citizen consumer” has been adopted, to refer to“someone who acts beyond her own interest as a consumer and takesresponsibility for wider concerns beyond the individual level” (Freestoneand McGoldrick, 2008). In the same line of reasoning, the concept of“consumer moral consciousness” has been coined to stress the relation-ship between consumers’ acts and the level of awareness of ethicalimplications of one's consumption patterns (McGregor, 2006).

Self-imposed choice constraints may be a matter of moralconsciousness, but may also be caused by the aspiration to pleaseexperimenters or peers, as a generic act to support a good cause(warm glow), or it may be related to cultural habits. Unfortunately, ourmethodological setting does not allow us to isolate participants' exactmotivations. Independently of the motivation, it is very remarkablethat such a high proportion of our sample is willing to bear a sizableand real sacrifice in the consumption of a good that has immediateand important use in the household.

The fact that the self-stated economically worse-off among oursample is also to some extent willing to bear costs in the pursuit ofethical/green consumption makes the case for self-imposed choiceconstraints even stronger, and challenges the conventional assump-tion that “in developing countries short-term biophysical needs maytake precedence over long-term sustainability” (Gowdy and Mayumi,2001) or the conjecture that green/ethical consumption is the result ofa post-modern lifestyle (Haanpää, 2007). The proposition thatenvironmental concerns are a luxury of the rich has been wellcontested by several ecological economists (Gadgil and Guha, 1995;Duffield et al., 1998; Berkes et al., 2000; Martinez-Alier, 2005). Wethink our paper contributes to this stream of literature by means oftesting consumption preferences of the rural poor with a novelmethodological approach. However, as discussed in the following sub-section, our findings also suggest that the poor may bemore willing tobear “in kind” than cash sacrifices when facing trade-offs in choicedecisions. We deal with this issue below.

3.4. Stated vs. revealed preferences

In the contingent valuation elicitation, 73% of the sample declared apositive willingness to pay an ethical/green premium on legal overillegal firewood. Over the entire sample, the average price premium infavor of legal firewood equaled 21% over the base price for a bundle offive logs of illegal firewood. An interesting asymmetry comes to thesurfacewhen stated and revealed preferences of individual respondentsare compared. Whereas 36.1% of those who selected legal firewood inthe choice experimentdid not declare aWTPhigh enough to justify sucha choice (at least for theparticular trade-off thatwaspresented to them),only 3.3% of those making the opposite choice (those preferring theillegal option) should not have done so according to their statements inthe contingent valuation exercise. This asymmetry suggests that ethicalmotives came out stronger in the choice experiment than in contingentvaluation, which is contrary to expectations, as one would believe thattakingout thehypothetical characterwould result in a higher propensityto choose the ethical/green choice. In fact, the rationale for applyingrevealed preference methods is to correct for the conjectured upwardbias on WTP in hypothetical settings.

We should be cautious, however, in drawing conclusions andproposing interpretations. Apart from the bias introduced by thewindfall character of the experiment, we have to bear in mind that theexperimental results are conditioned by the fact that decisions weremade in relation to firewood endowment rather than actual purchasewith cash. A trade-off in terms of firewood endowment may entail alower marginal utility loss for participants due to the embodiment of itsvalue in a particular commodity. Although participants could in

Please cite this article as: van Kempen, L., et al., Too poor to be green conrural Guatemala, Ecological Economics (2009), doi:10.1016/j.ecolecon.20

principle resell the firewood to extract its cash value after theexperiment, some transaction costswould have to be borne. The relativesalience of a monetary (rather than material) cost in the contingentvaluation could have dampened the enthusiasm for legal firewood. Inconnection to this, it should also be pointed out that the choiceexperiment involved a ‘one-shot’ decision. The fact that people werewilling to accept to bear the cost of a given endowment once, does notguarantee that one would be prepared to do so in case of repeatedchoice. The contingent valuation question may have evoked a morestructural rather than an incidental situation in the participants' minds.

The difficulty of pinpointing participants' exact perceptions andmotivations in both the contingent valuation and the choice experimentpre-empts an unambiguous interpretation of the higher observedsupport for legal firewood in our experimental set-up than one wouldexpect based on earlier WTP declarations. Our results indicate that fieldexperiments may shed new light on the complex relationship betweenstated and revealed preferences and that simplistic assumptions forpredicting consumers' behaviour shouldbe avoided. Theextent towhichstated and revealed preferences are dependent on the vehicle by whichthe sacrifice takes place (windfall, material endowment, cash expendi-ture, etc.) requires further research. Also, the hypothesis that the poorare more willing to bear material (in kind) than cash sacrifices could betested in future experiments.

4. Concluding remarks

It is commonly assumed that the bulk of consumers in developingcountries are “too poor to be green” (Martinez-Alier, 1995) or, in morespecific terms, too poor to express their ethical/environmentalconcerns in the marketplace. Our experiment conveys a ratherdifferent picture. The fraction of our sample that is willing tosubstitute illegal for legal firewood is far from negligible, despite thecosts involved. Even though we cannot conclude that a local marketfor “certified” legal firewood would be viable, there seems amplescope for awareness raising as a policy intervention. A necessarycondition for any consumer campaign to be successful, however, isthat consumers are able to distinguish between legal and illegalfirewood in the marketplace.

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