Ecolabelling of Seafood: The Basic Concepts - SEAFOOD Ecolabelling: Principles and Practice - page 8

that under the voluntary model of ecolabelling, the direct and indirect costs for
achieving ecolabelled seafood products are borne by those who do not necessar-
ily reap many of the benefits. This matter of establishing the exact nature of both
the costs and the benefits is fundamental to success in the business model of vol-
untary ecolabelling because it is the basic driver of the market-based incentive
system.
In situations where the harvesting of fish from the wild, or where the operation
of aquaculture facilities, does not fully recognise and eliminate the environmental
impacts of their activities, the price structure for their products does not include
the full price of the management of any related environmental, socio-economic or
cultural impacts. This is a major factor in fisheries management systems, and the
'externalisation' (or the converse, the lack of 'internalisation') of such costs so that
they are not reflected in product pricing is well recognised as a major weakness of
many modern fisheries management systems (e.g. Gardiner & Viswanathan 2004).
This situation is exacerbated where governance systems are weak, leading to lim-
ited management effectiveness, and where fishery product prices are controlled
by external factors, such as distorted global trade patterns, competition tactics or
regional/global commodity trading, and become divorced from their true cost of
production. Individual countries and fisheries may use normal economic instru-
ments (such as inclusion of the costs of environmental remediation in fishery costs)
to ensure that product price reflects the true cost of production, but this may be-
come difficult to implement in situations of trade globalisation, where products are
sourced globally on price alone and where some countries do not internalise the
environmental impacts of fishing into export product prices.
Market-based incentives such as ecolabelling may fulfil two positive roles in
relation to the pricing systems for seafood products. First, they may, depending
on the standard established within the assessment system, encourage fisheries and
aquaculture industries to internalise all the relevant environmental management
costs, so that market prices increase to properly reflect the true cost of produc-
tion. There are of course other matters contributing to product price (such as fuel,
labour, infrastructure costs and transport), but in highly environmentally destruc-
tive fisheries the costs of moving into compliance with an ecolabelling standard
will be high. The products of such fisheries should become more expensive than
equivalent but more sustainable products that also hold the ecolabel, potentially
driving consumer preferences towards the alternative sustainable product. The cost
of bringing a fishery into compliance with the ecolabelling standard therefore be-
comes a disincentive for an environmentally destructive fishery to attempt to com-
ply. Both the direct cost and the product price increment this would require may
be expected to reduce the willingness of such fisheries to submit for ecolabelling
assessment, and the more weakly a fishery considers that it is performing, the more
sensitive it will be to the standing costs of ecolabelling assessment. This is the
cost inertia that a fishery must overcome to submit for ecolabelling, and the more
environmentally destructive a fishery is, the greater the cost inertia and the price