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Drinking and protecting: a market approach to the preservation of cork oak landscapes

Michael Ahlheim and Oliver Frör

No 12-2010, FZID Discussion Papers from University of Hohenheim, Center for Research on Innovation and Services (FZID)

Abstract: With the availability of new techniques to close wine bottles avoiding the risk of “corky” taste the tradition of closing wine bottles with cork stoppers is on the retreat. As a consequence the Mediterranean cork oak forests with their rich biodiversity are endangered since their cultivation is not profitable anymore. This paper explores the viability of a market approach to the preservation of these ecologically valuable landscapes. In an internet-based Contingent Valuation survey we assess wine consumers' willingness to pay a higher price for wine bottles closed with high-quality cork stoppers instead of buying wine with alternative stoppers in order to preserve the cork oak landscapes. We find that though many wine consumers have experience with tainted wine they are, nevertheless, willing to buy wine with (highquality) cork stoppers at higher prices. Their average WTP is, however, not sufficient to cover the additional costs of these stoppers. Thus, we propose a financing mix of market returns and government subsidies for preserving the cork oaks. As a precondition for this market approach to be successful bottles with high-quality cork stoppers must be clearly identifiable in the shops, and consumers must be informed about the ecological consequences of supporting the cork production.

Keywords: Provision of public goods; cost-benefit analysis; Contingent Valuation; cork oak landscapes (search for similar items in EconPapers)
JEL-codes: D6 H4 Q27 Q51 Q57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-env and nep-pbe
Date: 2010
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