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How is internal radiation exposure risk evaluated at the markets? Perceived quality degradation of Fukushima peach

Shigeru Matsumoto and Viet-Ngu Hoang ()

No e122, Working Papers from Tokyo Center for Economic Research

Abstract: The Great Tohoku Earthquake and massive tsunami disabled the Fukushima Daiichi power plant cooling system, which resulted in a meltdown of the reactor core and hydrogen explosion of the reactor buildings. A large amount of radioactive substances was released into the environment and the agricultural production in surrounding area was severely damaged by the radioactive contamination. Many experimental studies have been conducted after the nuclear accident to understand how consumers evaluate the internal radiation exposure risk associated with the consumption of agricultural food produced in the affected region. The studies have reported that a typical consumer differentiates agricultural foods produced at the contaminated region from those produced at non-contaminated region and then spends non-negligible amounts of money to lower their perceived internal radiation exposure risk. However, only a few studies have examined how internal radiation exposure risk is evaluated at the market level. In this study, we analyze the sales data of Japanese wholesale markets to examine how consumers' valuation about agricultural food has been altered by the nuclear accident. By modifying the Dixit-Stiglitz demand model, we propose an empirical model to quantify the change in consumer's valuation between competitive agricultural products. We then apply the proposed model for the analysis of daily peach sales data obtained from Japanese wholesale markets. Our empirical results demonstrate that consumer valuation of Fukushima peach dropped significantly in the nuclear accident year, but it rapidly recovered in the following year. The result suggests that the measures against radioactive contamination are positively evaluated among Japanese consumers.

Pages: 25 pages
Date: 2018-01
New Economics Papers: this item is included in nep-agr, nep-env and nep-knm
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