Empirical Analysis of Farmers' Willingness to Accept Voluntary Tobacco Conversion Programs in Taiwan
Empirical studies on tobacco farming in Taiwan are almost nonexistent. To fill the gap, we apply a two-stage model to explore the factors that determine tobacco farmers' willingness-to-accept (WTA) value to forfeit their contracts on growing tobacco. The results from a first-step Probit model suggest that farmers who are optimistic toward the future of the tobacco industry are less likely to sell their contracts, and large farmers, in terms of scale of cultivation, are less willing to give up their farming contracts. The second stage of our analysis relies on a two-stage least squares model. We find that WTA value is positively associated with actual farming practices, and higher previous contract trading prices lead to a higher WTA value. Consistent with the rationale in the first stage, we also find that optimism regarding the future of the tobacco industry leads to a higher WTA price.