How can health concerns improve environmental public good provision through labels?

Elodie Letort (), Fanny Le Gloux () and Pierre Dupraz
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Elodie Letort: SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement
Fanny Le Gloux: SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement

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Abstract: This paper deals with the environmental performance of labeling strategies promoting an agricultural commodity characterised by the joint and complementary provision of an environmental public good and a private characteristic such as health benefits. In a theoretical analysis, we explore different market settings with an eco-label, health label, or a label promoting both health and the environment to see how the degree of information given to homogeneous consumers on the public and private characteristics affects public good provision. We show that when consumers only have access to partial information on one of the two complementary characteristics (eco-label or health label), public good provision is higher through a health label in most situations. An eco-label leads to higher provision in a small market if consumers' preferences for the environment are higher than for health. We prove that in most situations, public good provision increases when the label promotes both characteristics rather than one (full information). The extent of this increase depends on consumers' preferences and the market size. The public good remains underprovided in all market settings from the perspective of a social planner. However, under certain conditions, a health label and a health and environment label lead to the optimal provision of public good from the perspective of an environmental agency.

Keywords: environmental services; joint production; market differentiation; impure public good model (search for similar items in EconPapers)
Date: 2021-06-23
New Economics Papers: this item is included in nep-env
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03338427v1
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Published in 26th Annual Conference of the European Association of Environmental and Resource Economists, Jun 2021, Berlin, Germany

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Working Paper: How can health concerns improve environmental public good provision through labels (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03338427

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