How do agricultural markets respond to radiation risk? Evidence from the 2011 disaster in Japan

Since the explosion of the Fukushima Daiichi Nuclear Power Plant in March 2011, public anxiety surrounding the radioactive contamination of food and the environment has become widespread. This article examines how vegetable prices in the Tokyo Metropolitan Central Wholesale Market were affected in the wake of the nuclear accident. This study exploits the quasi-experimental condition generated by this accident to test market price changes using monthly panel data on the price of six types of fresh vegetables from each of the 47 prefectures in Japan. Our estimation results show that the prices of vegetables grown in Fukushima Prefecture decreased by 10–36% after the disaster compared with the counter-factual estimates in the absence of a perceived radiation risk. This effect has persisted even after radioactive detection tests showed negative results in subsequent years. The consumer behavior of avoiding vegetables from Fukushima and instead buying vegetables grown in other areas may explain the price gap.