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Will consumers follow climate leaders? The effect of manufacturer participation in a voluntary environmental program on consumer preferences

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Abstract

In 2002, the US Environmental Protection Agency (USEPA) established a voluntary environmental program called the Climate Leaders (CL) Program. Participating firms developed greenhouse gas emissions inventories, set emissions reductions goals, and annually reported progress toward those goals. While the program was not designed to function as an eco-labeling program, one possible motivation for participation in the program was to positively influence consumer perceptions for firm products and services. USEPA discontinued the CL program in 2011. In this study, data from a contingent choice experiment from a national online survey are used to examine whether the CL program could have been effectively adopted as a consumer product labeling program. Results suggest that consumers are willing to pay more for refrigerators manufactured by CL program participants and that willingness-to-pay is influenced by both respondent characteristics and attitudes.

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Notes

  1. See, for example: Gadema and Oglethorpe (2011); Saunders et al. (2010); Upham et al. (2011); Ward et al. (2011a); and Ward et al. (2011b).

  2. A copy of the text of the survey is available from the authors upon request.

  3. Familiar was chosen as a scaling term as it outperformed a variety of different individual-specific variables and combinations of variables in terms of log likelihood score and statistical significance. In general, choice of scaling term(s) had a relatively limited effect on coefficient estimates for the product attributes.

  4. Because WTP is a linear function of demographic variables \( H_{i} \), the sample mean of WTP is the same as WTP evaluated at the sample mean \( \bar{H} \).

  5. Green Energy represents respondent opinions about GHG emissions and the use of green or alternative energy, which might potentially be endogenous. To test for endogeneity, probit estimation of Green Energy is carried out with individual data and generalized residuals (Gourieroux et al. 1987) were derived. The generalized residual term is included as a regressor in the main (GMNL) regression, interacted with Label, and is found insignificant (t = –0.56, p value = 0.576), which suggests no evidence of endogeneity of Green Energy (Terza et al. 2008).

  6. The log likelihood value of the GMNL models was compared with those from the corresponding random parameter logit and conditional logit models using the log likelihood ratio test. In each case, the GMNL model performed significantly better than the other models.

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Acknowledgments

This research was funded, in part, by a grant from the United States Environmental Protection Agency’s Science to Achieve Results (STAR) grant program though grant number R832849 to the University of Tennessee. Although the research described in the article has been funded by the United States Environmental Protection Agency, it has not been subjected to the Agency’s peer and policy review and therefore does not necessarily reflect the views of the Agency and no official endorsement should be inferred. The authors would also like to acknowledge the valuable comments provided by two anonymous reviewers.

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Authors and Affiliations

  1. Departmental of Agricultural and Resource Economics, University of Tennessee, 302 Morgan Hall, 2621 Morgan Circle, Knoxville, TN, 37996, USA

    Xiaogu Li, Christopher D. Clark, Kimberly L. Jensen & Steven T. Yen

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  1. Xiaogu Li
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  2. Christopher D. Clark
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  3. Kimberly L. Jensen
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Correspondence to Christopher D. Clark.

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Li, X., Clark, C.D., Jensen, K.L. et al. Will consumers follow climate leaders? The effect of manufacturer participation in a voluntary environmental program on consumer preferences. Environ Econ Policy Stud 16, 69–87 (2014). https://doi.org/10.1007/s10018-013-0071-9

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  • DOI: https://doi.org/10.1007/s10018-013-0071-9

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