A contingent valuation analysis to determine profitability of establishing local organic wine markets in Spain

Abstract

AbstractIn this research an alternative is proposed for viticulture producers that would allow them to maintain their income and prevent the abandonment of their agricultural activity. The proposed alternative is the production of organic wine with subsequent commercialization in the local market. The suitability of the alternative is measured by the acceptance of the product in local markets. This acceptance was determined through contingent valuation, which relates probability of purchase to willingness to pay (WTP). Since regional differences could exist for product acceptance, the preliminary hypothesis was formulated that the importance of the viticulture sector in the regional economy makes consumers value farm work more highly and pay more for sustainable agricultural practices. Two regions of Spain were taken into consideration because of the different weight of their agricultural activity: Castile-La Mancha and the Community of Valencia. A survey of 800 wine consumers was made (400 from each region) to determine WTP. From the results it was shown on the one hand that organizing organic wine in local markets can be a profitable alternative for wine producers and, on the other hand, consumers from regions where wine production shares a larger proportion of the regional economy are willing to pay more for organic wine.