A Review of Eco-labels and their Economic Impact

Abstract

In many countries, various eco-labels have emerged for informing consumers about the environmental impact of the offered products. Using recent advances in the empirical and theoretical literature, this review questions the efficiency of eco-labeling. We combine a literature review with discussions of empirical examples. We underline the limitations of eco-labels for signaling credible information to consumers. In particular, both the complexity and the proliferation of eco-labels are likely to hamper their efficiency in guiding consumers. From a regulatory perspective, several studies show that eco-labels are useful, but they cannot be considered a panacea for improving environmental quality. Indeed, it is often socially optimal to combine eco-labels with other regulatory tools such as standards banning polluting products and tax/subsidy mechanisms depending on the environmental quality. The conclusion suggests research priorities for tackling unanswered questions.

Environmentally Sustainable Food Consumption: A Review and Research Agenda From a Goal-Directed Perspective

“…As a somewhat more structured type of intervention, various eco-labels have emerged with the aim of communicating the ecological merits of products (Delmas and Lessem, 2017;Yokessa and Marette, 2019). Eco-labels using logos have been found to capture visual attention more than text (Rihn et al, 2019).…”

“…More worryingly, consumers face an ever increasing number of sustainable food labels, some of which may be complementary, while others add to the growing competition of product information in consumers' minds (Sirieix et al, 2013), resulting in consumer confusion, distrust, and dissatisfaction (Moon et al, 2017). The complexity and the proliferation of eco-labels thus hamper their efficiency in promoting ESFC (Yokessa and Marette, 2019).…”

“…Berger (2019) found that an approach that combines gamification elements with norm-based feedback (especially feedback based on injunctive norms) effectively steers consumers toward more sustainable food choices. Yokessa and Marette (2019) conclude that it is usually best to combine eco-labeling with other regulatory tools such as standards banning polluting products and including tax mechanisms. On the contrary, Hagmann et al (2019) suggest that interventions (such as nudges and taxes) can counteract so that people are less willing to support a carbon tax when they get the possibility to be nudged.…”

A Tax Coming from the IPCC Carbon Prices Cannot Change Consumption: Evidence from an Experiment

“…The relative efficiency of each instrument depends on many parameters, including the market conditions. For instance, eco-labels are often characterized by difficulties to convey technical information, and by the proliferation of various claims and logos, implying consumers' confusion among various labels, and risks of inefficiencies in the conveyed signals of green products [11]. Beyond this specific instrument, the economic theory does not isolate one instrument dominating the other ones in terms of welfare impact [12].…”

Local and Global Welfare When Regulating Organic Products: Should Local Regulation Target Production or Consumption?

“…To understand these trade-offs coming from local organic regulation, one solution consists of examining the results of previous articles. There are many contributions regarding the role of labeling and its positive impact on consumers' willingness to pay around the world [5]. In the following paragraphs, we restrict our attention to papers examining the impact of organic regulation on producers.…”