Eco-labeling of fish in Europe
The EU eco-label. Source: European Union
Eco-labeling certifies that a product is more environmentally friendly or greener than its competitor without such a label. Since the last century, it is understood as a market-based tool aiming to promote the sustainable use of natural resources and has been a growing concern from a scientific and political point of view.
There are at least three chief reasons for the development of fish eco-labeling:
- The state of the world fisheries (Fisheries and aquaculture) and aquaculture: according to the Food and Agriculture Organization (Food and Agriculture Organization (FAO)), 75% of the fish stocks are either fully exploited, over-exploited (Overfishing), depleted or recovering; and the level of catches remains stable since 1990 after several decades of steady growth.
- The motivation of the fishing industry: in particular, the retailing industry, under the pressure of environmental Non-Governmental Organizations, is urging fishermen to pay more attention to the environment and natural resources in their common behaviors.
- The increasingly consumer awareness for environment preservation: there is a growing consensus worldwide about the human impact on nature, in particular with regard to climate change and natural resource depletion.
The European Union joined the debate about seafood eco-labels relative late. Compared to private initiatives that have been flourishing within the industry since the late 1990s. Nevertheless, the demand for green fish has never been so high, especially for those with specific characteristics of fishery products and for particular groups of consumers. The state of The European Union regulations regarding fishery eco-labeling schemes is introduced in a first section; the second section develops the theoretical ways of including the environmental dimension into the demand model for seafood products; finally, some empirical findings from different surveys (USA, UK, rest of Europe) about the demand for fish eco-labels are discussed in a third section, before drawing a few conclusions about the future of eco-certified fishery products in Europe.
Contents
The European unfinished fish eco-labeling scheme
Nearly a decade after the creation of the first worldwide eco-label for fisheries (the Marine Stewardship Council was created in 1997), the European Union joined the debate about seafood eco-labels. In June 2005, the European Commission began discussion on a community approach to eco-labeling for fishery products. This discussion considered three options:
- No action or public intervention
- A single Community scheme
- Some minimum requirements for voluntary schemes
With a large consultation of stakeholders between 2005 and 2007 (Advisory Committee for Fish and Aquaculture, European Union Institutions and Expert group), the reflection is still under way in 2009. On November 25, 2005, a conference gathering the major stakeholders was organized. A general consensus was obtained for the third option, considering that the fishermen should be involved. The main focus of the eco-label should be placed on sustainability, but the quality of the products was also considered as part of the label. Aquaculture was nonetheless left outside of the project. Basically, the eco-labeling scheme should follow the Food and Agriculture Organization (Food and Agriculture Organization (FAO)) guidelines, with a preference given to “responsible” fishing rather than a mere “eco”-labeling scheme. This third scenario was confirmed a few months later (Feb 14th, 2006) by the European Economic and Social Committee. The issue of a fair distribution of eco-labeling costs along the supply chain was added to the agenda, as well as the compatibility with World Trade Organization rules. A simple, strict and transparent certification scheme should be developed, with public accreditation of certified eco-labels. IUU fisheries should be targeted in priority to improve the public image of the fishing industry.
When the debate moved to the European Parliament in April 2006, the conclusion first prioritized scenario 2 (single European scheme), complementing the European Union regulations in force, but finally left open the choice between options 2 and 3 in its resolution. Scenario 2 presents higher administrative costs, but gives more independence (accreditation, certification bodies and monitoring are more credible for consumers). Scenario 3 does not fully address the eco-labeling issue, particularly regarding this independence.
In 2009, after a new consultancy round, option 3 dominates the European discussion but the list of minimum requirements is still under discussion and the administrative procedure of public accreditation needs to be clarified. The Commission prepares a draft council regulation setting minimum certification criteria for sustainable fishing, with a possible adoption in autumn 2009. The proposal will be certainly based on the Food and Agriculture Organization 2005 guidelines for the eco-labeling of fish and fishery (Fisheries and aquaculture) products according to three central criteria: fisheries management; state of the stocks; ecosystem considerations. In the meantime, the eco-labeling initiatives are flourishing everywhere in Europe with more or less credibility according to how the scheme is supported and who does it.
The determinants of green demand
The consumer demand for eco-label on seafood products is probably affected by the same determinants as those for green products. Accordingly, before analyzing socio-economic and psychological factors explaining the fish eco-label demand, we provide a rapid overview of factors explaining green demand.
Consumer motivations
The reasons why 75% of Europeans are, according to the European Commission, “ready to buy environmentally friendly products even if they cost a little bit more” can be understood through their individual motivations and constraints.
The consumers’ motivations arise from different psychological and socio-economical factors. Some economists argued in 2006 that environmental morale and motivation may be explained by altruism, social norms and reciprocal fairness, internalized norms (related to high principles inducing self-evaluations) and intrinsic motivation (i.e. the willingness to pursue an activity for the welfare it induces in itself). Through altruism, an individual takes into account the benefit that its consumption brings to others. His altruism may however be impure even if he gets a “warm glow” from the contribution to the welfare of others. The altruism is all the purer as the link between consumption and environment is weak. This relation may be spatial (e.g. for local damages due to consumption of polluting products) or temporal (for future damages resulting from consumption). When environmental damages and consumption are non-separable, the purchase of green product can be motivated by concerns about health (as a substitution for or complementary to concern about the environment). This fact is especially true for fish because this kind of product is generally associated with a healthy image.
The social and internalized norms driving individual behavior derive respectively from the sanction coming from the other members of the society and those taken by individuals themselves. Finally, intrinsic motivation leads individuals to achieve activities for the welfare they induce in themselves. For example, in the case of tuna purchase with the Dolphin-Safe label, the intrinsic motivation corresponds to the satisfaction derived from the safety of dolphins. Therefore, the green demand increases with the degree of altruism, or the warm-glow of consumers and with the relationship between consumption and environmental damages.
Furthermore, several studies point out differences in preferences according to age, gender, marital status, occupational status, geography and especially income and education.
Consumer preferences
Some microeconomic models introduce such motivations in consumer preferences. They provide an adequate framework for the analysis of the green demand and, beyond that, for the actors’ strategies within a green market.
The common microeconomic analysis of consumer choices rests on a utility function that translates consumer preferences among different baskets of goods. Following the pioneer approach of the American economist Lancaster, goods can be defined as bundles of intrinsic characteristics and the utility level of a consumer then depends on the level of each good’s characteristic. The impact of consuming a product on the environment may also be considered as a particular feature, namely the green characteristic. The consumer can view this attribute as a vertical, horizontal or public characteristic.
In the vertical product differentiation models, the green qualities of a good are all the more high since its negative environmental impact is low, but consumers differ by their marginal willingness-to-pay for green qualities. Obviously, income limits the revelation of preferences through willingness-to-pay for lower-income consumers, but it cannot be considered as a determinant of preferences in itself. Thereby, green demand rises with the number of consumers who are sensitive to environment matter and especially their degree of sensitivity.
In the horizontal differentiation models, each consumer has an ideal (green or not green) variety. The consumer’s utility decreases with the distance between his/her ideal variety and the variety he/she really consumes. Green demand thus depends on the disutility due to the distance between his ideal variety and the green variety. Moreover, what distinguishes a green variety from another here is the fact that only green purchase leads to warm glow induced by a contribution to a better environment: the less the product pollutes, the higher the utility level is. Consequently, green demand results from the consumers’ degree of internalization of the environmental externality when they buy products.
One can also consider the green product as an Public good] that provides not only a common private characteristic but also a public attribute: environmental quality. The consumer’s utility is then an increasing function of the private characteristics, arising from the consumption of both conventional and green goods, and the public characteristics, arising only from the consumption of green goods. A rise in the consumers’ ecological awareness stimulates demand for the green characteristic when there is no substitute to the green product. However, if consumers have the option of making a donation to an eco-logical association, which directly contributes to improving environmental quality, an increase in the consumers’ ecological awareness may reduce the demand for environmental quality, through a crowding-out effect. Green demand is also related not only to environmental awareness but also to the existence of ecological organizations.
Consumer constraints
The consumer is however confronted with budget constraints that may limit expenditure, particularly on green products. The education level may also impact on consumer attitude in their knowledge of environmental issues and their treatment of eco-information.
Budget constraint plays an especially important role in consumer choice between green products and standard ones since green goods are often more expensive than their standard substitutes. The higher price of green products may be explained by the fact that they are generally more labor intensive (e.g. traceability), produced on a smaller scale and/or fashioned using more environmentally friendly technologies. In particular, green fish are more costly than standard fish. Moreover, consumers may interpret higher price products as better environmental quality of the products. Consumers may prefer green products if they value this characteristics but may purchase cheaper non-labeled fish because of their low income. This phenomenon is reinforced with the growing competition of very low price substitutes. Conversely, the wealthiest consumers can more easily buy their favorite products, which may or may not be green.
Consumers also typically face incomplete information on the environmental consequences of a product from cradle to grave. First at all, the environmental information on the product life cycle is rarely put on products. Thereby, consumers have to search, find and understand such information. This may be a long, costly and uncertain process. Even if consumers find some environmental information on a product, they are not always able to interpret it. For instance, when they see “responsible fishing” or “selected products for a preserved ocean” on seafood packages, do they really know the effects of these purchases on marine resources? Through ignorance of the environmental stakes or suspicion toward green labeling, consumers may then turn away from green products. However, thanks to a few credible eco-labels, consumers know that the labeled product is better for the environment than others over its whole life cycle. In that respect, the eco-label may also help to reveal consumers’ environmental preferences.
The above analysis underscores the central determinant of green demand: ecological awareness which, on one hand, is explained by a certain degree of altruism and, on the other hand, results in a willingness-to-pay more for a green product than for a standard one, and both economic and informational constraints. In the following sections, we attempt to explain the determinants of the specific demand for environmental-friendly caught fish.
Demand of European consumers for fish eco-label schemes
There are a number of papers dealing with the issue of consumer reaction to seafood eco-labeling. We summarize here their key results from a number of recent studies.
Surveys carried out on households originating from different countries (USA, Europe, Norway…) outlined the heterogeneity in international reactions to seafood eco-labeling and the significance of cultural differences across nations. Nevertheless, there are several common factors influencing the consumer preferences for eco-labeled seafood:
- According to the species, the negative sensitiveness of consumers to the premium for an eco-labeled product is greater or smaller.
- The region plays also a major role: the American west-coast inhabitants are more willing to buy “green” seafood. In the same way, British consumers are less likely to buy foreign products than domestic fish.
- The product form determines the consumers’ behavior, those who purchase frozen fish being less likely to choose eco-labeled fish.
- The origin of fish affects the purchase, farmed fish being less purchased than wild fish.
- The fish consumption level of consumers affects positively their probability buy eco-labeled fish.
- The gender also influences consumers’ behavior: the women are more receptive to eco-labels than men.
- There is no consensus about the role of the type of certifying organization (World Widelife Fund, National Oceanic and Atmospheric Administration, Marine Stewardship Council, other Non-Governmental Organizations): certain works show that it plays no role for consumers, whereas others outline the certifying body is likely to affect fish consumption, with a preference granted to governmental bodies as compared to Non-Governmental Organizations.
A recent survey conducted in several European countries (Belgium, Denmark, France, Italy and the Netherlands) emphasized consumption criteria and socio-economic features explaining demand for fish eco-labeling schemes, and also the links between the probability of accepting fish eco-label and that of being concerned the status of fish stocks.
First of all, the eco-labeling demand is influenced by the attention that consumers pay to certain fish characteristics. The most important attribute is the fish form (frozen or fresh): the more a consumer pays attention to this characteristic, the more likely he is favorable towards eco-labeling. This could be explained by the narrow association between natural fresh products and environment, this linkage fading away with the degree of processing. The second most important feature influencing consumers’ opinion is the origin of fish products. This can be attributed to certain preference given to local production because of the closeness to products and legal framework, but also the resulting distance covered by fish (“food miles”) and its harmful consequences for the environment. The other features playing an important role in eco-labeling demand are the visual aspect of fish, that assures its nutritional safety, and, to a lesser extent, the wild versus farmed origin. Finally, the greater or smaller attention paid to the price of fish and to the level of resource stocks play only a minor role. The latter result is rather surprising but reveal the fuzzy perception that consumers may have about the scarcity of natural resources and presumably their belief that a higher price signals a higher environmental quality.
Secondly, the eco-labeling demand is affected by several consumers’ characteristics, as their subjective informational level on marine resource problems (the perceptions regarding fishing activities and fishing regulation), their socio-economic characteristics (gender, age, family status, professional situation, localization of habitation, and sea frequentation) and the country of living. Individuals’ feeling about fishery regulation plays a major role in their intrinsic motivation for fish eco-labeling. Indeed, individuals thinking that the fisheries (Fisheries and aquaculture) are acceptably or adequately regulated are less likely to be in favor of a seafood eco-label program. Their intrinsic motivation is crowded-out by the benefic impact of (perceived) fishery regulation on the marine resource state, because they also feel less responsible in the resource preservation. Information on the state of fish stocks plays an influential role too: when individuals think that marine resources are stable, they are less likely to demand an eco-label and to pay attention to resource levels. Consequently, the lack of information may lead consumers to reject green products because of their underestimation of the environmental consequences of their consumption. The seaside frequentation also acts positively onto the likelihood of demanding a green fish label. Socio-economic characteristics have also an influence on individuals’ opinion of fish eco-labeling and resource preservation. As shown by previous studies, the sociological profile of the pro-label corresponds to young woman well educated, although her marital status does not significantly affect her motivation. The country of living affects the probability of accepting a fish eco-label, but the analysis of this country effect is unclear. The countries with the highest level of eco-labeling acceptability are Belgium and France. This acceptability is lower in the Netherlands and especially in Denmark. North-European consumers eat more processed fish than in southern Europe and we saw that demand for green fish is negatively influenced by the degree of processing. However, this is not so obvious to link the national demand for seafood eco-label and their environmental awareness.
A separate British study dealing with environmental matters of the consumers of farmed salmon has shown that environment ranks at the first place among consumers’ criteria, far above the quality of products, the job creating role of fish farming, the capacity of avoiding conflicts among coastal users or even the fair price of salmon.
These motivations result in a more or less significant willingness-to-pay a premium for eco-certified fish. For instance in the previous study, three-quarters of surveyed households had a positive willingness-to-pay (with an average premium of 22%) for salmon farmed using a method that caused only half the amount of organic pollution, while the willingness-to-pay is positively influenced by the priority for environment and the income and the negatively by the household size. However, this willingness is not so widespread internationally. In the comparison between American and Norwegian consumers, at a 0% price premium, the estimated probability of a Norwegian consumer to choose certified seafood is approximately 74%, whereas this probability is 88% for a U.S. consumer. Actually, the Norwegian consumers are much more sensitive to a price premium increase than US consumers: they will respond by reducing more significantly their demand for certified products.
Conclusion
In the years to come, the European and worldwide seafood [[market]s] will increasingly consider eco-labels. In 2009, the fish eco-label leader Marine Stewardship Council has certified or is assessing some 6 million tons of seafood, i.e. nearly 7% of the world total wild harvest, with a market valuing US$ 1.5 billion annually. Even though the willingness-to-pay a premium for eco-labeled seafood products is not clearly demonstrated, the demand for green products is very strong and should lead the industry to change its fishing behavior, particularly under the pressure of big retailers, processors and Non-Governmental Organizations. There is a consensus throughout Europe towards the adoption of the Food and Agriculture Organization (Food and Agriculture Organization (FAO)) 2005 guidelines according to three central criteria: fisheries (Fisheries and aquaculture) management; state of the stocks and ecosystem considerations.
What should be the empirical effects of fishery eco-labeling on European consumption behavior? Even if it is a bit too early for an actual and comprehensive appraisal of the major eco-certification schemes, a few studies have already reported a positive impact of eco-labels on the demand for fish products, at least through a re-insurance process of consumers. For instance, the dolphin-safe eco-label campaign promoted by the US tuna industry took at least four years to produce its first positive effects on tuna consumption, although the conclusion was not straightforward whether the impact was due to the eco-label itself or to other media campaigns (newspapers, TV, producers’ advertising, congress debate…). Theoretical expectations are high regarding the demand for eco-certified seafood products, especially for some groups of consumers (young, well-educated people having a closeness with the fishing industry or the seaside) and products (wild-caught, domestically produced and fresh fish), but the awareness yet needs to improve in order to extend the green demand for seafood to other groups of consumers and products. More empirical evidence of a key influence of eco-labels on both demand (prices) and supply (state of fish stocks) sides still need to be brought to foster a larger development of eco-labels.
Further reading
- Brécard, D., Hlaimi B., Lucas S., Salladarré F., Perraudeau Y., 2009. Determinants of demand for green products: An application to eco-label demand for fish in Europe, Eco-logical Economics 69, 115-125.
- Guillotreau, P., Monfort, M.-C., Perraudeau Y. and Salladarré, F., 2008. The seafood eco-labeling experience in Europe: a new “market for lemons”? Lessons from a European survey. Paper presented at the International Institute of Fisheries Economics and Trade conference, Vietnam, 22-25 July 2008.
