Performing Department
Agri & Resource Economics
Non Technical Summary
Bottled water consumption has been increasing consistently over the last several decades in the United States, with a per capita consumption rising from 1.6 gallon in 1976 to 28.2 gallon in 2010. As a result, bottled water has become the fastest growing segment of non-alcoholic beverages, representing an overall share of 30% in 2010. The objectives of this project are to examine the determinants of bottled water consumption, to evaluate the positive health effect of such a rising drinking habit on obesity control, and to evaluate the negative environmental effects with associated plastic bottle wastes. Using sales data of bottled water and other beverages for two periods (1988-1992 and 2006-2008) from IRI and A.C. Nielson, this project will estimate a random coefficient logit demand model of consumer beverage choices. Taste parameters with respect to nutritional characteristics will be used to identify the key factors contributing to huge consumption increase of bottled water over time and the substitution between healthy and unhealthy beverages. The demand estimation results will further be used to evaluate the effects of different bottle recycling and deposit policies on consumer purchase of bottled water and further recycling behaviors. Finally, a comprehensive cost/benefit analysis of bottled water consumption will be conducted.
Animal Health Component
0%
Research Effort Categories
Basic
0%
Applied
100%
Developmental
0%
Goals / Objectives
The objectives of this project are to examine the determinants of bottled water consumption, to evaluate the positive health effect of such a rising drinking habit on obesity control, and to evaluate the negative environmental effects with associated plastic bottle wastes. Specifically, this project has six sub-objectives: 1.Estimate the taste parameters of U.S. consumers of bottled water in the liquid refreshment beverages market for two different periods (1988-1992 and 2006-2008), with focus on nutritional factors (e.g., calories, sugar, sodium, caffeine, etc.), comparing to carbonated soft drinks, juice, energy drinks and milk. 2.Identify the nutritional factors contributing to huge consumption increase of bottled water over time, link them to the obesity rate in the corresponding period, and evaluate the effects of increasing bottled water consumption on obesity control. 3.Evaluate the health effects of bottled water consumption and estimate the potential dollar amount saving of medical costs. 4.Simulate and evaluate the effect of bottle recycling and deposit policies on consumer purchase of bottled water and further recycling behaviors. 5.Evaluate the environmental effects of bottled water consumption, especially the costs associated with plastic bottles.6. Assess the overall social and economic costs/benefits of bottle water consumption.
Project Methods
No change to report - requestion to end the project 9/30/6 due to PD leaving the University of Connecticut.The proposed research starts with estimating U.S. consumer's demand for bottled water in the US by a mixed logit discrete choice model following the framework of Berry, Levinsohn and Pakes (1995). This analysis will estimate two set of models using data sample from different time periods, during which we observe a noticeable growth in bottled water consumption. The estimated coefficients will then be used to evaluate how consumer's preference for different nutritional factors among bottled water and other beverages changes over time. The demand estimates will then be used to calculate demand elasticity of price and other nutritional factors across healthy bottled water and other less healthy beverages. Using the results from demand estimation, we can derive the substitution from other sweetened soft drinks to bottle water and generated the potential calories intake reduction for consumers. Calories intake reduction is closely related to weight loss, better health condition, lower obesity rate, and further less medical costs. Specifically, using the calories intake reduction, we can calculate the associated possible weight loss and BMI reduction per person. As indicated by Cawley and Meyerhoefer (2012), an additional unit increase of BMI will raise the medical expenditures by $149. Therefore, we can estimate the potential savings in medical costs of obesity. Based on the results, counterfactual experiments of policies will be conducted to examine how different bottle law policies can affect consumer's initial purchase choices of bottled water. The results can also be used to analyze how consumers in different social-demographic groups are differently impacted. Bottle law policies will not only affect consumer's initial purchase choices, but also the recycling behavior after consumption. We can then simulate the probabilities that a household choose to recycle the used water bottles, given the households' certain demographic characteristics. To accomplish this, we will use the parameters that determine consumers' recycling behavior estimated by Ashenmiller (2011) to simulate the probabilities. Given the simulated recycling probabilities for each household in our sample, we can derive a complete picture of the effects of different bottle law policies on water bottles generation. The next step is to estimate the potential extra costs associated with skyrocketing plastic bottle increases from bottled water consumption. Energy is required for various phases of bottled water production, transportation, use, and after use. Gleick and Cooley (2009) finds out that, combining all of the energy inputs totals, producing bottled water requires between 5.6 and 10.2MJ l−1. Therefore we can estimate the extra total costs prior to use from increasing bottled water consumption. There are also associated collection costs, landfill costs, and recycling costs after use. We will estimates these costs from various government reports. Together with costs and our demand estimates, we can generate the total environmental costs from increasing bottled water consumption. Finally, one can evaluate the total economic impact of bottled water consumption.