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Abstract

Coffee is one example of a good whose consumption can lead to environmental degradation that the consumer is unaware of. During the 19th century, new high-yield varieties of coffee were developed that could be grown under the direct sunlight of recently deforested areas. An ecologically friendly alternative to mass-produced sun-grown systems is shade-grown coffee. This coffee is grown under traditional forest cover, providing ecological benefits such as species habitat, but at lower yields. In the global market, a price premium is the practice of placing a higher price than the market price on a specific good. If consumers value the additional economic or social benefits provided by shade-grown coffee, they will pay the additional cost. One way to determine the value that consumers place on the ecological benefits provided by shade-grown coffee is to create a hypothetical market using a contingent valuation survey. This study used a contingent valuation survey to conclude the components that affect hypothetical willingness to pay. Our results determined that gender was the only significant factor in determining hypothetical willingness to pay, with females willing to pay more for shade-grown coffee than their male counterparts.

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