IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Predicting consumer demand responses to carbon labels

Listed author(s):
  • Shewmake, Sharon
  • Okrent, Abigail
  • Thabrew, Lanka
  • Vandenbergh, Michael
Registered author(s):

    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.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800915003432
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 119 (2015)
    Issue (Month): C ()
    Pages: 168-180

    as
    in new window

    Handle: RePEc:eee:ecolec:v:119:y:2015:i:c:p:168-180
    DOI: 10.1016/j.ecolecon.2015.08.007
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Bergtold, Jason S. & Akobundu, Eberechukwu & Peterson, Everett B., 2004. "The FAST Method: Estimating Unconditional Demand Elasticities for Processed Foods in the Presence of Fixed Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(02), August.
    2. Unnevehr, Laurian J. & Jagmanaite, Evelina, 2008. "Getting rid of trans fats in the US diet: Policies, incentives and progress," Food Policy, Elsevier, vol. 33(6), pages 497-503, December.
    3. Nicholas E. Piggott, 2003. "Measures of precision for estimated welfare effects for producers from generic advertising," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 379-391.
    4. Dastrup, Samuel R. & Graff Zivin, Joshua & Costa, Dora L. & Kahn, Matthew E., 2012. "Understanding the Solar Home price premium: Electricity generation and “Green” social status," European Economic Review, Elsevier, vol. 56(5), pages 961-973.
    5. James Eales & Catherine Durham & Cathy R. Wessells, 1997. "Generalized Models of Japanese Demand for Fish," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1153-1163.
    6. Bin, Shui & Dowlatabadi, Hadi, 2005. "Consumer lifestyle approach to US energy use and the related CO2 emissions," Energy Policy, Elsevier, vol. 33(2), pages 197-208, January.
    7. Fredrik Carlsson & Mitesh Kataria & Alan Krupnick & Elina Lampi & Åsa Löfgren & Ping Qin & Susie Chun & Thomas Sterner, 2012. "Paying for Mitigation: A Multiple Country Study," Land Economics, University of Wisconsin Press, vol. 88(2), pages 326-340.
    8. Cohen, Mark A. & Vandenbergh, Michael P., 2012. "The potential role of carbon labeling in a green economy," Energy Economics, Elsevier, vol. 34(S1), pages 53-63.
    9. Roe, Brian & Teisl, Mario F. & Levy, Alan & Russell, Matthew, 2001. "US consumers' willingness to pay for green electricity," Energy Policy, Elsevier, vol. 29(11), pages 917-925, September.
    10. Pauline M. Ippolito & Alan D. Mathios, 1990. "Information, Advertising and Health Choices: A Study of the Cereal Market," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 459-480, Autumn.
    11. Johannes Diederich & Timo Goeschl, 2014. "Willingness to Pay for Voluntary Climate Action and Its Determinants: Field-Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(3), pages 405-429, March.
    12. Sonia Akter & Jeff Bennett, 2011. "Household perceptions of climate change and preferences for mitigation action: the case of the Carbon Pollution Reduction Scheme in Australia," Climatic Change, Springer, vol. 109(3), pages 417-436, December.
    13. Celine Michaud & Daniel Llerena & Iragael Joly, 2013. "Willingness to pay for environmental attributes of non-food agricultural products: a real choice experiment," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 40(2), pages 313-329, March.
    14. Löschel, Andreas & Sturm, Bodo & Vogt, Carsten, 2013. "The demand for climate protection—Empirical evidence from Germany," Economics Letters, Elsevier, vol. 118(3), pages 415-418.
    15. Okrent, Abigail M. & Alston, Julian M., 2012. "The Demand for Disaggregated Food-Away-from-Home and Food-at-Home Products in the United States," Economic Research Report 132469, United States Department of Agriculture, Economic Research Service.
    16. Huang, Kuo S., 1993. "A Complete System of U.S. Demand for Food," Technical Bulletins 157046, United States Department of Agriculture, Economic Research Service.
    17. Bjorner, Thomas Bue & Hansen, L.G.Lars Garn & Russell, Clifford S., 2004. "Environmental labeling and consumers' choice--an empirical analysis of the effect of the Nordic Swan," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 411-434, May.
    18. Mancino, Lisa & Kuchler, Fred & Leibtag, Ephraim, 2008. "Getting consumers to eat more whole-grains: The role of policy, information, and food manufacturers," Food Policy, Elsevier, vol. 33(6), pages 489-496, December.
    19. Guillaume Gruère, 2015. "An Analysis of the Growth in Environmental Labelling and Information Schemes," Journal of Consumer Policy, Springer, vol. 38(1), pages 1-18, March.
    20. Kahn, Matthew E. & Kok, Nils, 2014. "The capitalization of green labels in the California housing market," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 25-34.
    21. Grabs, Janina, 2015. "The rebound effects of switching to vegetarianism. A microeconomic analysis of Swedish consumption behavior," Ecological Economics, Elsevier, vol. 116(C), pages 270-279.
    22. Onozaka, Yuko & Nurse, Gretchen & Thilmany, Dawn D., 2010. "Local Food Consumers: How Motivations and Perceptions Translate to Buying Behavior," Choices, Agricultural and Applied Economics Association, vol. 25(1).
    23. Vlaeminck, Pieter & Jiang, Ting & Vranken, Liesbet, 2014. "Food labeling and eco-friendly consumption: Experimental evidence from a Belgian supermarket," Ecological Economics, Elsevier, vol. 108(C), pages 180-190.
    24. Michael J. Lenox & Charles E. Eesley, 2009. "Private Environmental Activism and the Selection and Response of Firm Targets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 45-73, March.
    25. David P. Baron & Daniel Diermeier, 2007. "Strategic Activism and Nonmarket Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 599-634, September.
    26. Jerome Vanclay & John Shortiss & Scott Aulsebrook & Angus Gillespie & Ben Howell & Rhoda Johanni & Michael Maher & Kelly Mitchell & Mark Stewart & Jim Yates, 2011. "Customer Response to Carbon Labelling of Groceries," Journal of Consumer Policy, Springer, vol. 34(1), pages 153-160, March.
    27. Kahn, Matthew E., 2007. "Do greens drive Hummers or hybrids? Environmental ideology as a determinant of consumer choice," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 129-145, September.
    28. Joo-Suk Lee & Seung-Hoon Yoo & Seung-Jun Kwak, 2010. "Public's willingness to pay for preventing climate change," Applied Economics Letters, Taylor & Francis Journals, vol. 17(6), pages 619-622.
    29. repec:aph:ajpbhl:10.2105/ajph.2008.151415_8 is not listed on IDEAS
    30. Carlsson-Kanyama, Annika & Ekstrom, Marianne Pipping & Shanahan, Helena, 2003. "Food and life cycle energy inputs: consequences of diet and ways to increase efficiency," Ecological Economics, Elsevier, vol. 44(2-3), pages 293-307, March.
    31. Matsdotter, Elina & Elofsson, Katarina & Arntyr, Johan, 2014. "Got green milk? Field Experimental Trail of Consumer Demand for a Climate Label," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 183076, European Association of Agricultural Economists.
    32. Vieux, F. & Darmon, N. & Touazi, D. & Soler, L.G., 2012. "Greenhouse gas emissions of self-selected individual diets in France: Changing the diet structure or consuming less?," Ecological Economics, Elsevier, vol. 75(C), pages 91-101.
    33. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Monographs, University of California, Davis, Giannini Foundation, number 251908.
    34. Gadema, Zaina & Oglethorpe, David, 2011. "The use and usefulness of carbon labelling food: A policy perspective from a survey of UK supermarket shoppers," Food Policy, Elsevier, vol. 36(6), pages 815-822.
    35. Harding, Matthew & Lovenheim, Michael, 2017. "The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes," Journal of Health Economics, Elsevier, vol. 53(C), pages 53-71.
    36. Alain Carpentier & Hervé Guyomard, 2001. "Unconditional Elasticities in Two-Stage Demand Systems: An Approximate Solution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 222-229.
    37. Solomon, Barry D. & Johnson, Nicholas H., 2009. "Valuing climate protection through willingness to pay for biomass ethanol," Ecological Economics, Elsevier, vol. 68(7), pages 2137-2144, May.
    38. MacKerron, George J. & Egerton, Catrin & Gaskell, Christopher & Parpia, Aimie & Mourato, Susana, 2009. "Willingness to pay for carbon offset certification and co-benefits among (high-)flying young adults in the UK," Energy Policy, Elsevier, vol. 37(4), pages 1372-1381, April.
    39. John L. Park & Oral Capps, 1997. "Demand for Prepared Meals by U.S. Households," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 814-824.
    40. repec:elg:eechap:15612_18 is not listed on IDEAS
    41. Druckman, Angela & Chitnis, Mona & Sorrell, Steve & Jackson, Tim, 2011. "Missing carbon reductions? Exploring rebound and backfire effects in UK households," Energy Policy, Elsevier, vol. 39(6), pages 3572-3581, June.
    42. Carola Grebitus & Bodo Steiner & Michele Veeman, 2013. "Personal Values and Decision Making: Evidence from Environmental Footprint Labeling in Canada," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 397-403.
    43. Kahn Matthew E & Vaughn Ryan K., 2009. "Green Market Geography: The Spatial Clustering of Hybrid Vehicles and LEED Registered Buildings," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(2), pages 1-24, March.
    44. Gilbert E. Metcalf, 2009. "Market-Based Policy Options to Control U.S. Greenhouse Gas Emissions," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 5-27, Spring.
    45. Brian Roe & Ian Sheldon, 2007. "Credence Good Labeling: The Efficiency and Distributional Implications of Several Policy Approaches," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 1020-1033.
    46. Beilei Cai & Trudy Cameron & Geoffrey Gerdes, 2010. "Distributional Preferences and the Incidence of Costs and Benefits in Climate Change Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(4), pages 429-458, August.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:119:y:2015:i:c:p:168-180. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.