Skip to main content

Ecolabels, uncertified abatement, and the sustainability of natural resources: an evolutionary approach

Abstract

This study presents an evolutionary model where firms decide their environmental strategy, which may include certification of voluntary abatement by joining an eco-label, in settings where conservation outcomes exert an influence on the price premia that certified and uncertified green firms receive. Findings support that either certified or uncertified voluntary abatement can be sustained in the long run as a result of market incentives, but not simultaneously. When certified abatement takes place in the long-run, it results in an improvement in the state of the natural capital as compared to situations where abatement is not certified. However, certification practices that are not attractive enough for companies to subsist in equilibrium can generate transitional dynamics eroding conservation outcomes. Moreover, given the endogenous nature of environmental conservation on firms’ abatement decisions, temporary policies increasing the state of the environment can change the long-term incentive structure of the system favoring certification of abatement. A context of applicability of the model is illustrated by tourism uses of natural resources.

This is a preview of subscription content, access via your institution.

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7

Notes

  1. Other relevant motivations for firms to undertake corporate social responsibility efforts not captured in the model presented here are the existence of externalities, public goods and altruism, as well as contract incompleteness (Crifo and Forget 2014), or political strategic interactions between corporate advocates and conservation stakeholders (Buckley 2013).

  2. We thank one of the anonymous referees for this comment.

  3. http://www.toinitiative.org/

  4. http://www.blueflag.org/

  5. We thank one of the anonymous referees for these remarks.

  6. Arguably, more than one certification program may be available for companies, and the same holds true for alternative uncertified abatement practices. In such cases, the model simply reduces all certified alternatives (or all uncertified alternatives) into one. It remains an open question to explore fully the potential interaction between different alternative abatement strategies of the same type - certified or uncertified.

  7. The model abstracts from the relevant potential dynamic impact over time of eco-innovations on production costs and hence on profits, induced as a consequence of the evolution of the environmental strategies of firms. The need to simplify in certain aspects of the model is imposed by the complexity of dealing with a three-dimensional dynamic system. Extending the model by including dynamic costs to account for the role of eco-innovations could represent a research avenue to be pursued in future research.

  8. Arguably, in the cases of joint consumption of a private good and the natural resource’s services, the price may include an additional component, common to the three strategies, which depends on the quality of the natural resource. However, this component can be neglected since the dynamics of strategy selection only depend on comparative payoffs. Nevertheless, it would be relevant in evaluating welfare effects of the creation of the ecolabel.

  9. The analysis of the case where the natural resource condition has a negative effect on price premiums is possible but it is not presented here due to space constraints. The authors can prove on request that, in that case, almost all equilibria can be stable either simultaneously or not.

  10. Assuming critical depensation allows consideration of the effect on the population configuration of changes in the minimum viable size of the resource, \( \underset{\bar{\mkern6mu}}{K} \). (See section 4.) However, notice that we admit the possibility of a standard logistic equation for the replenishment function since we allow \( \underset{\bar{\mkern6mu}}{K}=0 \).

  11. Without detriment to our analysis, we skip a forth isocline composed of equilibrium populations where only certified and uncertified green firms exist, with equal profits. This isocline is inconsequential since, as stated in proposition 2 later in the text, equilibria with certified and uncertified green firms can never be stable.

  12. If some brown firms act as promoters of the ecolabel, the creation of this scheme will reduce the differentiation premium and, therefore, will increase the payoff of being brown compared to being uncertified green, so the argument holds a fortiori.

  13. Trajectories iii and v in Figure 6.b are qualitatively equivalent to trajectories i and ii respectively in Figure 6a.

  14. http://ec.europa.eu/environment/ecolabel/facts-and-figures.html retrieved October 2nd, 2014.

  15. http://ec.europa.eu/environment/emas/documents/articles_en.htm retrieved September 2nd, 2014.

References

  • Alchian AA (1950) Uncertainty, evolution, and economic theory. J Polit Econ 58(3):211–221

    Article  Google Scholar 

  • Antoci A, Borghesi S, Galeotti M (2013) Environmental options and technological innovation: an evolutionary game model. J Evol Econ 23:247–269

    Article  Google Scholar 

  • Arora S, Gangopadhyay S (1995) Toward a theoretical model of voluntary overcompliance. J Econ Behav Organ 28(3):289–309

    Article  Google Scholar 

  • Bansal S, Gangopadhyay S (2003) Tax/subsidy policies in the presence of environmentally aware consumers. J Environ Econ Manag 45:333–355

    Article  Google Scholar 

  • Baron DP (2011) Credence attributes, voluntary organizations, and social pressure. J Public Econ 95:1331–1338

    Article  Google Scholar 

  • Blanco E, Lozano J, Rey-Maquieira J (2009a) A dynamic approach to voluntary environmental contributions in tourism. Ecol Econ 69:104–114

    Article  Google Scholar 

  • Blanco E, Rey-Maquieira J, Lozano J (2009b) The economic impacts of voluntary environmental performance of firms: a critical review. J Econ Surv 23:462–502

    Article  Google Scholar 

  • Bougherara D, Combris P (2009) Eco-labelled food products: what are consumers paying for? Eur Rev Agric Econ 36:321–341

    Article  Google Scholar 

  • Buckley R (2002) Tourism ecolabels. Ann Tour Res 29:183–208

    Article  Google Scholar 

  • Buckley R (2013) Social-benefit certification as a game. Tour Manag 37:203–209

    Article  Google Scholar 

  • Candela G, Cellini R (2006) Investment in tourism market: a dynamic model of differentiated oligopoly. Environ Resour Econ 35:41–58

    Article  Google Scholar 

  • Clark, CW (1990) Mathematical bioeconomics: the optimal management of renewable resources, 2nd edition. New York: John Wiley and Sons

  • Commission E (2005) Evaluation of EMAS and Eco-label for their revision: research findings. IEFE- Università Bocconi

  • Commission E (2009) Study on the costs and benefits of EMAS to registered organizations. Study contract No. 07.0307/2008/517800/ETU/G.2

  • Conrad K (2005) Price competition and product differentiation when consumers care for the environment. Environ Resour Econ 31:1–19

    Article  Google Scholar 

  • Crifo P, Forget VD (2014) The economics of corporate social responsibility: a firm-level perspective survey. J Econ Surv

  • Dodds R, Joppe M (2005) CSR in the tourism industry? The status of and potential for certification, codes of conduct and guidelines. International Finance Corporation, World Bank Group

  • Dosi C, Moretto M (2001) Is ecolabelling a reliable environmental policy measure? Environ Resour Econ 18:113–127

    Article  Google Scholar 

  • EEA (2007) State of the environment report. vol 1. Office for Official Publications of the European Communities, Luxembourg

  • Eriksson C (2004) Can green consumerism replace environmental regulation?—a differentiated-products example. Resour Energy Econ 26:281–293

    Article  Google Scholar 

  • Flanagan K, Uyarra E, Laranja M (2011) Reconceptualising the ‘policy mix’ for innovation. Res Policy 40:702–713

    Article  Google Scholar 

  • Font X (2002) Environmental certification in tourism and hospitality: progress, process and prospects. Tour Manag 23:197–205

    Article  Google Scholar 

  • Friedman D (1991) Evolultionary games in economics. Economics 59:637–666

    Article  Google Scholar 

  • Garcia C, Servera J (2003) Impacts of tourism development on water demand and beach degradation on the Island of Mallorca (Spain). Geogr Ann: Ser A Phys Geogr 85:287–300

    Article  Google Scholar 

  • Gudmundsson E, Wessells CR (2000) Ecolabeling seafood for sustainable production: implications for fisheries management. Mar Resour Econ 12:97–113

    Google Scholar 

  • Hawkins JP, Roberts CM (1994) The growth of coastal tourism in the Red Sea: present and future effects on coral reefs. Ambio 23:503–508

    Google Scholar 

  • Heyes AG, Maxwell JW (2004) Private vs. public regulation: political economy of the international environment. J Environ Econ Manag 48:978–996

    Article  Google Scholar 

  • Hillery M, Nancarrow B, Griffin G, Syme G (2001) Tourist perception of environmental impact. Ann Tour Res 28(4):853–867

    Article  Google Scholar 

  • Huybers T, Bennett J (2003) Environmental management and the competitiveness of nature-based tourism destinations. Environ Resour Econ 24(3):213–233

    Article  Google Scholar 

  • Ibanez L, Grolleau G (2008) Can Ecolabeling schemes preserve the environment? Environ Resour Econ 40(2):233–249

    Article  Google Scholar 

  • IEA (2011) Interactions of policies for renewable energy and climate. International Energy Agency. OECD, Paris

  • Kitzmueller M, Shimshack J (2012) Economic perspectives on corporate social responsibility. J Econ Lit 50(1):51–84

    Article  Google Scholar 

  • Kotchen MJ (2006) Green markets and private provision of public goods. J Polit Econ 114(4):816–834

    Article  Google Scholar 

  • Laffont JJ, Tirole J (1996a) Pollution permits and compliance strategies. J Public Econ 62:85–125

    Article  Google Scholar 

  • Laffont JJ, Tirole J (1996b) Pollution permits and environmental innovation. J Public Econ 62:127–140

    Article  Google Scholar 

  • Lozano J, Blanco E, Rey-Maquieira J (2010) Can ecolabels survive in the long run?: The role of initial conditions. Ecol Econ 69(12):2525–2534

    Article  Google Scholar 

  • Lyon TP, Maxwell JW (2008) Corporate social responsibility and the environment: a theoretical perspective. Rev Environ Econ Policy 2(2):240–260

    Article  Google Scholar 

  • Mailath GJ (1998) Do people play Nash equilibrium? Lessons from evolutionary game theory. J Econ Lit 36(3):1347–1374

    Google Scholar 

  • Margolis J, Walsh J (2001) People and profits? The search for a link between company’s social and financial performance. Lawrence Erlbaum, Mahwah

    Google Scholar 

  • Mason C (2006) An economic model of ecolabeling. Environ Model Assess 11(2):131–143

    Article  Google Scholar 

  • Mason CF (2011) Eco-labeling and market equilibria with noisy certification tests. Environ Resour Econ 48(4):537–560

    Article  Google Scholar 

  • Mattoo A, Singh HV (1994) Eco-labelling: policy considerations. Kyklos 47(1):53–65

    Article  Google Scholar 

  • Moraga-González JL, Padrón-Fumero N (2002) Environmental policy in a green market. Environ Resour Econ 22(3):419–447

    Article  Google Scholar 

  • Moreau F (2004) The role of the state in evolutionary economics. Camb J Econ 28(6):847–874

    Article  Google Scholar 

  • Nyborg K, Howarth RB, Brekke KA (2006) Green consumers and public policy: on socially contingent moral motivation. Resour Energy Econ 28(4):351–366

    Article  Google Scholar 

  • Nyborg K, Rege M (2003) On social norms: the evolution of considerate smoking behavior. J Econ Behav Organ 52(3):323–340

    Article  Google Scholar 

  • OECD (1997) Eco-labelling: actual effects of selected programmes, vol G(97)105. OCDE, Paris

    Google Scholar 

  • Osés-Eraso N, Viladrich-Grau M (2007) On the sustainability of common property resources. J Environ Econ Manag 53(3):393–410

    Article  Google Scholar 

  • PATA (2007) Asia Travel Intentions Survey. April 2007. Pacific Asian Travel Association

  • Pergams ORW, Zaradic PA (2008) Evidence for a fundamental and pervasive shift away from nature-based recreation. Proc Natl Acad Sci 105(7):2295–2300

    Article  Google Scholar 

  • Portney PR (2008) The (Not So) new corporate social responsibility: an empirical perspective. Rev Environ Econ Policy 2(2):261–275

    Article  Google Scholar 

  • Rivera J (2002) Assessing a voluntary environmental initiative in the developing world: the Costa Rican certification for sustainable tourism. Policy Sci 35:333–360

    Article  Google Scholar 

  • Ruggeri G (1999) The marginal cost of public funds in closed and small open economies. Fisc Stud 20:41–60

    Article  Google Scholar 

  • Safarzyńska K, van den Bergh J (2010) Evolutionary models in economics: a survey of methods and building blocks. J Evol Econ 20(3):329–373

    Article  Google Scholar 

  • Sedjo RA, Swallow SK (2002) Voluntary Eco-labeling and the price premium. Land Econ 78(2):272

    Article  Google Scholar 

  • Sethi R, Somanathan E (1996) The evolution of social norms in common property resource use. Am Econ Rev 86(4):766–788

    Google Scholar 

  • Siikamäki J (2011) Contributions of the US state park system to nature recreation. Proc Natl Acad Sci 108(34):14031–14036

    Article  Google Scholar 

  • Soytas U, Becker KG (2003) Is limit pricing evolutionarily stable? J Evol Econ 13(3):281–288

    Article  Google Scholar 

  • Thøgersen J (2002) Promoting green consumer behavior with eco-labels. In: Dietz T, Stern PC (eds) New Tools for Environmental Protection: Education, Information, and Voluntary Measures. National Academy Press, Washington DC, pp 83–104

    Google Scholar 

  • Uchida H, Roheim CA, Wakamatsu H, Anderson CM (2014) Do Japanese consumers care about sustainable fisheries? Evidence from an auction of ecolabelled seafood. Aust J Agric Resour Econ 58(2):263–280

    Article  Google Scholar 

  • Unep (ed) (1998) Ecolabels in the Tourism Industry. United Nations Environment Programme, Paris (52 pp.)

  • van den Bergh J (2007) Evolutionary thinking in environmental economics. J Evol Econ 17(5):521–549

    Article  Google Scholar 

  • WTO, UNWTO (2002) Voluntary initiatives for sustainable tourism: worldwide inventory and comparative analysis of 104 eco-labels, awards and self-commitments. WTO, Madrid

    Google Scholar 

  • Xepapadeas A (2005) Regulation and evolution of compliance in common pool resources. Scand J Econ 107(3):583–599

    Article  Google Scholar 

Download references

Acknowledgments

We received helpful comments from John Maxwell, Carmen Arguedas, participants in the Fourth World Congress of Environmental and Resource Economists. We thank three anonymous referees for their helpful comments and directions. Remaining errors are our own. We are also grateful for the financial support of the University of Innsbruck.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Esther Blanco.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Blanco, E., Lozano, J. Ecolabels, uncertified abatement, and the sustainability of natural resources: an evolutionary approach. J Evol Econ 25, 623–647 (2015). https://doi.org/10.1007/s00191-015-0403-y

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00191-015-0403-y

Keywords

  • Ecolabels
  • Evolutionary games
  • Sustainable management
  • Voluntary abatement

JEL classifications

  • M14
  • Q28
  • C73