Incentives for the Adoption of Socially Beneficial Technologies: The Case of an E. coli Vaccine

Abstract

Using the E. coli vaccine as a case study, this thesis examines the factors affecting the adoption of technologies with positive spillover (externality) effects related to food safety. Positive spillovers occur when the benefits from a technological innovation extend beyond the firm (farm) adopting the technology or they do not flow to the adopter. If there are insufficient incentives for the firm to adopt the new technology, adoption levels are sub-optimal, resulting in forgone benefits to society. These benefits include the avoidance of potential health costs, productivity loss and premature death costs as a result to exposure to E. coli O157:H7. Therefore, if the market incentives to adopt the technology are strengthened, adoption levels of the technology could reach socially optimal levels resulting in an improvement in food safety. This has been the case in the Canadian cattle industry, where the uptake of the E. coli vaccine by cow-calf producers has been very low. As such, a number of potential incentives to increase adoption of the vaccine were identified and assessed through a survey of cow-calf producers on the Prairies. Data from the survey were analyzed using a stated preference methodology, Best-Worst Scaling, and Latent Class cluster analysis. A Binary Probit Model was also used to examine the factors affecting willingness to adopt the vaccine. The results suggest that a significant number of producers were not aware of the existence of the E. coli vaccine. In addition, producers were most likely to be influenced in their adoption decisions by market/supply chain oriented incentives and government intervention incentives in the form of subsidies. On the other hand, incentives that were least likely to influence cow-calf producers’ decisions to adopt included government intervention through recommending use of vaccine and neighbours (other cow-calf producers) adopting the vaccine. The Latent Class cluster analysis revealed the existence of three unique producer clusters with different attitudes towards these incentives. Several socio-demographic variables and individual characteristics utilized in the Probit analysis were found to be determinants of a producer’s willingness to adopt an E. coli vaccine. The implications of this research are such that producer education and awareness campaigns may be utilized as tools for disseminating information on food safety technologies such as the E. coli vaccine. Furthermore, the market/supply chain incentives may be used to form potential market-based solutions to address the current low adoption rates. The existence of three unique producer clusters suggest that a one-size fits all strategy to encourage the adoption of the E. coli vaccine might be difficult to implement and thus a more targeted approach may be a feasible alternative.