Income, environmental quality and willingness to pay for organic food: a regional analysis in South Korea

Abstract

AbstractThis paper explores the dynamic relationship between income and the willingness to pay (WTP) a premium for organic food across regions with varying levels of environmental development in South Korea. It is widely recognized that income significantly influences consumers’ decisions to purchase organic products. Using the Environmental Kuznets Curve (EKC) hypothesis as a contextual framework, we confirm that income leads to a higher WTP for organic foods once a specific income threshold is reached. This threshold marks the transition to the “environmental improvement stage,” where regional economic development begins to reduce environmental degradation. Below this threshold, economic priorities often overshadow environmental concerns, resulting in a “pollution-intensive stage” where rising income exacerbates environmental degradation and negatively impacts WTP for organic foods. Our results indicate that the influence of income on organic food demand is sensitive to the level of environmental development. Specifically, the effect of income on WTP varies: it is negative in the pollution-intensive stage and positive in the environmental improvement stage. The magnitude of these effects intensifies with increasing pollution, thereby widening the sustainability gap between these regions. Our findings underscore the importance of addressing economic inequality as a crucial step toward achieving environmental sustainability.