The Economics of Ecolabelling - SEAFOOD Ecolabelling: Principles and Practice - page 39

Worldwide Fund for Nature (WWF) teamed up with Unilever, the multinational
corporation, to create the Marine Stewardship Council (MSC) in 1997 to certify
sustainable capture fisheries (see Chapter 4), and the Global Aquaculture Alliance
(GAA) formed the Aquaculture Certification Council (ACC) in 2002 to certify
sustainable shrimp aquaculture producers (see Chapter 5). Those production sources
that are certified may place ecolabels on affiliated products, signalling to consumers
that the product was produced sustainably.
The goal of ecolabelling programmes is to create market-based incentives for
better management of fisheries and aquaculture. The consumer plays a critical
role in the success of such programmes, as without consumer demand for the
product there would be no market. Thus, much of the focus of economic research
over the past several years has been on evaluating potential consumer demand and
willingness to pay a premium. Indeed, much of the focus of those who wish to
evaluate the success or failure of ecolabelling programmes lies in measuring actual
price premiums.
However, it is also apparent that consumers do not demand ecolabelled seafood
purely on their own initiative. The role of marketing and creating a market for
sustainable seafood is very important to ecolabelling programmes. In this, the eco-
nomics of ecolabelling go well beyond simply consumer demand. The economics
of ecolabelling is also about demonstrating corporate social responsibility (CSR)
and about the economic reasons why corporations supply certified products to
consumers - even when consumers do not seemingly have a pre-existing demand
for the product. So, for corporations, ecolabelling is about balancing the benefit
of avoiding market risks against the costs of supplying certified product. In the
case of capture fisheries, the economics of ecolabelling also encompasses the eco-
nomics of the fishery, the costs of sustainable fishing practices and certification,
and whether the marginal benefits of changing practices outweigh the marginal
costs.
The purpose of this chapter is to review the economics of ecolabelling. To facil-
itate this, the chapter is structured to 'move down' the market chain. We will begin
by looking at consumer demand for ecolabelled products by reviewing the impor-
tance of information and the acquisition of information. The following section will
review the current literature on the economics of seafood ecolabelling, regarding
the issues of price premiums and consumers' willingness to pay for ecolabelled
products. This is followed by a section discussing the economic role of the middle
layer of the market - the retailers, wholesalers and processors - who choose to
supply certified products to the consumer. The discussion of the initial two sec-
tions can generally be applied to either ecolabelling of products from sustainable
capture fisheries or best practices from aquaculture, although much of the focus is
on sustainable capture fisheries since most of the research has been conducted on
that subject. The economics of ecolabelling and certification of capture fisheries in
particular is discussed briefly in the third section of the chapter. The final section
presents conclusions and needs for future research.