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Predicting consumer demand responses to carbon labels

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  • Shewmake, Sharon
  • Okrent, Abigail
  • Thabrew, Lanka
  • Vandenbergh, Michael

Abstract

Providing carbon footprint labels for all food products is a daunting and potentially infeasible project. Knowing how consumers substitute away from high carbon goods and what they choose as substitutes is essential for understanding which goods are likely to result in meaningful reductions in carbon emissions. This paper proposes a model to systematically estimate how consumers will respond to information from a carbon footprint label. Our model uses consumers' value of their individual carbon footprint with own- and cross-price elasticities of demand data on carbon emissions from life cycle analysis to simulate shifts in consumer demand for 42 food products and a non-food composite, and subsequent changes in carbon emissions from different labeling schemes. Our simulation results have several findings, including: (1) carbon labels can reduce emissions, but labeling only some items could lead to perverse impacts where consumers substitute away from labeled goods to unlabeled goods with a higher carbon footprint; (2) carbon labels can inform consumers such that their previous beliefs about carbon footprints matter; and (3) carbon labels on alcohol and meat would achieve the largest decreases in carbon emissions among the 42 food products studied.

Suggested Citation

  • Shewmake, Sharon & Okrent, Abigail & Thabrew, Lanka & Vandenbergh, Michael, 2015. "Predicting consumer demand responses to carbon labels," Ecological Economics, Elsevier, vol. 119(C), pages 168-180.
  • Handle: RePEc:eee:ecolec:v:119:y:2015:i:c:p:168-180
    DOI: 10.1016/j.ecolecon.2015.08.007
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    Cited by:

    1. Grebitus, Carola & Steiner, Bodo & Veeman, Michele M., 2016. "Paying for sustainability: A cross-cultural analysis of consumers’ valuations of food and non-food products labeled for carbon and water footprints," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 50-58.
    2. repec:eee:ecolec:v:146:y:2018:i:c:p:658-667 is not listed on IDEAS
    3. Kurz, Verena, 2017. "Nudging to reduce meat consumption: Immediate and persistent effects of an intervention at a university restaurant," Working Papers in Economics 712, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    Carbon emissions; Food labeling; Consumer behavior; Food demand systems; Eco-labels; Carbon footprint; Life cycle analysis;

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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