Economic effects of Pfiesteria

Pfiesteria is a single-celled microorganism that is a toxic predator of a number of fish species. We measure the effects of information about Pfiesteria on three related decision processes of the consumer: risk perceptions, seafood demand, and willingness to pay for a mandatory seafood inspection program. Using responses to a survey on seafood consumption and hypothetical Pfiesteria-related fish kills, we find that announcement of a fish kill increases the perceived risks of seafood and decreases the demand for seafood. Information policies that assure the safety of seafood have little effect in restoring consumer confidence in seafood. Perceived negative information tends to decrease welfare by more than the counter effects of perceived positive information. Welfare losses are recovered through a mandatory seafood inspection program rather than safety announcements.