WILLINGNESS TO PAY FOR THE MITIGATION OF ENVIRONMENTAL DAMAGES CAUSED BY OIL PALM PRODUCTION AND PROCESSING IN SOUTHWEST AND SOUTHSOUTH, NIGERIA

Igbosoroeze C. A., Sanusi M. M. and Banmeke T.O.A.

Nigerian Journal of Agricultural Economics, 2025, vol. 15, issue 2

Abstract: Oil palm production and processing significantly contribute to Nigeria’s economic growth, but its environmental impact is concerning. This study examined the willingness to pay (WTP) for mitigating environmental damages caused by the oil palm industry in Edo and Ondo States, Nigeria. A multistage sampling technique, was used to select 550 respondents, including producers, processors, and those engaged in both activities. The Dichotomous Choice Contingent Valuation Method (DC-CVM) was used to determine the average willingness to pay (WTP) of ₦505.4, with an estimated annual environmental damage cost of ₦28.97 billion. The logistic regression analysis showed that several factors influenced WTP. For producing farmers, bid price (Φ = -4433.9, p<0.01), income (Φ = 0.00000004, p<0.05), education (Φ = 0.04, p<0.05), and awareness of environmental degradation (Φ = 0.02, p<0.001) were significant. Among processors, bid price (Φ = -378.6, p<0.1), income (Φ = 0.00000004, p<0.05), education (Φ = 0.06, p<0.05), and awareness (Φ = 0.60, p<0.001) played key roles. For respondents involved in both production and processing, bid price (Φ = -652.7, p<0.01), income (Φ = 0.00000004, p<0.1), household size (Φ = 0.08, p<0.05), education (Φ = 0.06, p<0.01), and awareness (Φ = 0.60, p<0.001) were significant factors. The premium the oil palm producers and processors are willing to pay calls for policy measures that will bring up mitigation strategies that will reduce environmental degradation and ensure sustainability of the oil palm sector in Edo and Ondo States.

Keywords: Environmental Economics and Policy; Farm Management (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:naaenj:413194

DOI: 10.22004/ag.econ.413194

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