So how much do you pay for ethical consumption? Estimating the hedonic price for Fair Trade coffee in Sweden

This study applies the method of hedonic pricing to estimate the impact of the Fair Trade-label on the market for coffee in Sweden. Over the past decades, the general public interest in products bearing some environmental or social responsibility label has grown considerably in the EU, and Sweden is one of the countries where public awareness of labelling issues is particularly high. The sale of labelled products in regular supermarkets has increased significantly in Sweden but despite growing supply and acceptance, a lot remains to be understood about the market. This study takes a revealed preference approach using weekly scanner sales panel data recently made available by Nielsen and the Swedish Retail Institute (HUI). A representative sample of grocery stores all over Sweden is covered, as well as all major brands supplying roasted coffee. Hedonic estimates are obtained for what consumers pay for different characteristics as accessible from the package. Results point to a considerable premium of 38% paid for Fair Trade coffee, underlining high public awareness reflected in the retailers’ pricing policy.Fair Trade; coffee; eco-labels; hedonic pricing; ethical consumption

Essays on the Economics of Environmental and Sustainability Labelling

Environmental protection, sustainability, and the combat against climate change are central topics for today’s societies. For reaching policy targets in any of these areas, it will be crucial to achieve far-ranging behaviour change in many respects. Given that a substantial part of environmental problems can be traced back to consumption patterns, involving citizens and impacting on consumer behaviour are of major importance. There is a growing need to design policy programmes which have the potential to succeed in setting the right incentives. Environmental and sustainability labelling is one of the policy instruments increasingly employed to meet this objective. However, to date the market shares of products with environmental or sustainability labels remain low and stated positive consumer attitudes towards labelled products do not consistently translate into buying behaviour. So what are the main obstacles preventing efficient labelling and the factors impacting negatively on the demand side? Contributing to answering this central question is one of the main objectives of this thesis. It consists of three self-contained essays which study various aspects of the potential impact of labelling on the market for food products with a sustainability or ethical background. The first paper takes up the topic of the pricing of labelled products and applies a hedonic pricing framework to the case of Fair Trade labelled coffee in Sweden. The second paper is concerned with the attitude-behaviour gap with regard to purchasing organic food and focuses on various determinants of demand for products with an organic label. The third paper focuses on the analysis of consumer choice in the presence of the growing multitude of environmental and ethical labels used for marking products with a respective background. The results obtained in this thesis present highly relevant empirical results and are of interest to policymakers and scholars alike as they do not only focus on policy advice but also stimulate the academic debate. Its analysis of the impact the existing multiplicity of labels has on consumers contributes to a research front which has not received appropriate levels of attention yet. Findings point to a need to modify the current set-up in the field of environmental, sustainability, and ethical labelling. Focusing on consumers’ needs in trying to make labelling schemes work efficiently and lowering consumer evaluation costs as much as possible should be given high priority in the design of policy measures. Public sector involvement will continue to be of key importance