LAUSR

Scientific assessment related to the externalities of the tea ecological pest management (TEPM) system that can affect socio-economic development and ecological benefits is important to the sustainable development of the tea industry. This paper used the contingent valuation method to evaluate the externalities associated with TEPM and the factors affecting its adoption by farmers through survey data collected from Anxi county, Fujian province, China. The results showed that the positive externalities, which were not internalized (embodied in price), affected the willingness of tea farmers to adopt TEPM. The willingness to accept a subsidy for adopting the TEPM system was significantly affected by the individual tea farmer’s age, education level, income, plantation, knowledge of human health and risk preference. The compensation threshold of externalities for TEPM was 5668.80 yuan per hectare per year. It is suggested that the government should adopt this threshold as a minimum subsidy to mitigate information asymmetry in two markets, namely ecological management technology and trading between suppliers and buyers of tea products. Finally, production stability and improved price for high quality tea resulting from healthy ecology in TEPM could enhance positive externalities. This coupled with other benefits, such as a reduction in the amount of resources spent on pesticides, could result in governmental subsidies for TEPM being gradually reduced over time.