IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v32y2005i3p419-438.html
   My bibliography  Save this article

Price Premiums for Eco-friendly Commodities: Are ‘Green’ Markets the Best Way to Protect Endangered Ecosystems?

Author

Listed:
  • Paul Ferraro
  • Toshihiro Uchida
  • Jon Conrad

Abstract

‘Green’ markets represent a means through which public goods can be privately provided. A green product is an impure public good consisting of a private good (e.g., rain forest honey) bundled with a jointly produced public good (e.g., biodiversity protection). In the context of ecosystem protection, popular green commodities include eco-tourism excursions, coffee grown under forest canopies (‘shade-grown’), tagua nuts for buttons and ornaments, rainforest nuts and oils for cosmetic products, and rain forest honey. We examine the dynamic efficiency of eco-friendly price premiums in achieving ecosystem protection and rural welfare goals by contrasting the use of price premiums to the use of payments that are tied directly to ecosystem protection. We demonstrate analytically and empirically that direct payments are likely to be more efficient as a conservation policy instrument. Depending on the available funds, the direct payments may be better or worse than green price premiums in achieving rural welfare objectives. If direct payments are not feasible for social or political reasons, we demonstrate analytically and empirically that the price premium approach is likely to be more effective at achieving conservation and development objectives than the currently more popular policy of subsidizing capital acquisition in eco-friendly commercial activities. Copyright Springer 2005

Suggested Citation

  • Paul Ferraro & Toshihiro Uchida & Jon Conrad, 2005. "Price Premiums for Eco-friendly Commodities: Are ‘Green’ Markets the Best Way to Protect Endangered Ecosystems?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(3), pages 419-438, November.
    • Handle: RePEc:kap:enreec:v:32:y:2005:i:3:p:419-438
    DOI: 10.1007/s10640-005-7962-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10640-005-7962-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10640-005-7962-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ferraro, Paul J. & Simpson, R. David, 2005. "Cost-effective conservation when eco-entrepreneurs have market power," Environment and Development Economics, Cambridge University Press, vol. 10(5), pages 651-663, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefanie Engel & Charles Palmer, 2011. "Complexities of Decentralization in a Globalizing World," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(2), pages 157-174, October.
    2. Eusebius Pantja Pramudya & Lukas Rumboko Wibowo & Fitri Nurfatriani & Iman Kasiman Nawireja & Dewi Ratna Kurniasari & Sakti Hutabarat & Yohanes Berenika Kadarusman & Ananda Oemi Iswardhani & Rukaiyah , 2022. "Incentives for Palm Oil Smallholders in Mandatory Certification in Indonesia," Land, MDPI, vol. 11(4), pages 1-28, April.
    3. Delmas, Magali A. & Gergaud, Olivier & Lim, Jinghui, 2016. "Does Organic Wine Taste Better? An Analysis of Experts' Ratings," Journal of Wine Economics, Cambridge University Press, vol. 11(3), pages 329-354, December.
    4. Birgit Bednar-Friedl & Doris Behrens & Michael Getzner, 2012. "Optimal Dynamic Control of Visitors and Endangered Species in a National Park," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 1-22, May.
    5. Pirard, Romain & Lapeyre, Renaud, 2014. "Classifying market-based instruments for ecosystem services: A guide to the literature jungle," Ecosystem Services, Elsevier, vol. 9(C), pages 106-114.
    6. Delmas, Magali A. & Grant, Laura E., 2008. "Eco-Labeling Strategies: The Eco-Premium Puzzle In The Wine Industry," Working Papers 37325, American Association of Wine Economists.
    7. Kecinski, Maik & Messer, Kent D. & Peo, Audrey J., 2018. "When Cleaning Too Much Pollution Can Be a Bad Thing: A Field Experiment of Consumer Demand for Oysters," Ecological Economics, Elsevier, vol. 146(C), pages 686-695.
    8. Robert Innes & George Frisvold, 2009. "The Economics of Endangered Species," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 485-512, September.
    9. Yinqiu Ji & Christopher C. M. Baker & Viorel D. Popescu & Jiaxin Wang & Chunying Wu & Zhengyang Wang & Yuanheng Li & Lin Wang & Chaolang Hua & Zhongxing Yang & Chunyan Yang & Charles C. Y. Xu & Alex D, 2022. "Measuring protected-area effectiveness using vertebrate distributions from leech iDNA," Nature Communications, Nature, vol. 13(1), pages 1-17, December.
    10. Groom, Ben & Palmer, Charles, 2014. "Relaxing constraints as a conservation policy," Environment and Development Economics, Cambridge University Press, vol. 19(4), pages 505-528, August.
    11. Joshua S. Gans & Vivienne Groves, 2012. "Carbon Offset Provision with Guilt‐Ridden Consumers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(1), pages 243-269, March.
    12. Lippert, Christian, 2009. "Fraud and free riding in tropical forests – on the potential for certification to enforce sustainable resource use indirectly," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 58(03), pages 1-11, April.
    13. Leander Raes & Nikolay Aguirre & Marijke D’Haese & Guido Huylenbroeck, 2014. "Analysis of the cost-effectiveness for ecosystem service provision and rural income generation: a comparison of three different programs in Southern Ecuador," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(3), pages 471-498, June.
    14. Kitti, Mitri & Heikkila, Jaakko & Huhtala, Anni, 2006. "Fair policies for the coffee trade - protecting people or biodiversity?," Discussion Papers 11858, MTT Agrifood Research Finland.
    15. Atallah, Shady S. & Gómez, Miguel I., 2014. "Bioeconomics of Climate Change Adaptation: Coffee Berry Borer and Shade-Grown," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170215, Agricultural and Applied Economics Association.
    16. Zhen, Huayang & Qiao, Yuhui & Zhao, Haijun & Ju, Xuehai & Zanoli, Raffaele & Waqas, Muhammad Ahmed & Lun, Fei & Knudsen, Marie Trydeman, 2022. "Developing a conceptual model to quantify eco-compensation based on environmental and economic cost-benefit analysis for promoting the ecologically intensified agriculture," Ecosystem Services, Elsevier, vol. 56(C).
    17. Delmas, Magali A. & Gergaud, Olivier, 2021. "Sustainable practices and product quality: Is there value in eco-label certification? The case of wine," Ecological Economics, Elsevier, vol. 183(C).
    18. Guzhen Zhou & Wuyang Hu & Wenchao Huang, 2016. "Are Consumers Willing to Pay More for Sustainable Products? A Study of Eco-Labeled Tuna Steak," Sustainability, MDPI, vol. 8(5), pages 1-18, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.

      More about this item

      Keywords

      conservation; dynamic efficiency; eco-label; ecosystem; payments; subsidies; H21; Q28;
      All these keywords.

      JEL classification:

      • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
      • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

      Statistics

      Access and download statistics

      Corrections

      All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:32:y:2005:i:3:p:419-438. See general information about how to correct material in RePEc.

      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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

      IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.