Does food processing mitigate consumers' concerns about crops grown with recycled water?

This paper presents results from a field experiment designed to evaluate whether food processing alleviates consumers' concerns about crops grown with recycled water. Recycled water has emerged as a potentially safe and cost-effective way to replace or supplement traditional irrigation water. However, adoption of recycled water by U.S. agricultural producers has been modest, in part, because of concerns that consumers will be reluctant to accept their products. Our results suggest that simple processing of foods such as drying or liquefying can relieve some of consumers' concerns about use of recycled irrigation water. While consumers of processed foods are indifferent between irrigation with recycled and conventional water, they are less willing to pay for fresh foods irrigated with recycled water relative to conventional water. We also found that consumers would experience a welfare gain from a labeling policy communicating the use of recycled irrigation water on both processed and fresh foods. Our analysis further reveals that informational nudges that provide consumers with messages about benefits, risks, and both the benefits and risks of using recycled water have no statistically significant effect on consumers' willingness to pay for fresh and processed foods irrigated with recycled water relative to a no-information control group.