Willingness to pay for eco-labelled forest products in Northern Ireland

Abstract

Wooded areas provide us with a variety of market and non-market benefits, but rising deforestation, contributed to by pressures on landowners to clear forested areas to use as pasture and arable land, may cause the irrevocable loss of these benefits. To combat this, there is a need to encourage landowners to create or retain wooded areas on their land, as well as manage them sustainably.

A proposed solution is the use of an eco-labelling scheme. Eco-labelling is a pro- cess by which distinctive branding is applied to a product to assure a customer that the product is “environmentally-friendly”. Customers may be willing to pay more for eco- labelled forest products and eco-labels allow producers of forest products to differentiate themselves in the market or enter new markets entirely. It also acts a market-based instrument to encourage sustainable forest management.

Through use of an experimental Vickrey auction, the study determined that people are willing to pay an average of 88p more for every £1 spent on an eco-labelled wood product. This positive willingness-to-pay is largely related to the consumers’ increased knowledge of the environment, their conservation-orientated environmental beliefs and their higher level of education. Information presented also plays a role in determining willingness-to-pay, with consumers favouring less information about the product’s credentials, and preferring to be told generally that the product is “eco-friendly” and “sustainable”.

When tested for their opinions on label design, participants were against a label that was offered by a forestry industry body, believing them to lack trustworthiness and expertise, preferring one offered by an NGO or a government department. As for the visual appearance of a label, their preference was for a simple logo over all other types shown, but did not have a preference for contact information.

Date of Award	Jul 2018
Original language	English
Awarding Institution	Queen's University Belfast
Sponsors	Department of Agriculture, Environment and Rural Affairs
Supervisor	Alberto Longo (Supervisor) & George Hutchinson (Supervisor)