The potential of carbon neutral labeling to engage coffee consumers in climate change mitigation

Abstract

Carbon neutral labeling of food products is a market-based approach to reduce carbon footprints in the agri-food sector. To better understand consumers’ preferences and attitudes towards a carbon neutral label on globally traded agri-food products, the willingness to pay (WTP) of German consumers for a carbon neutral label on specialty coffee was examined. A discrete choice experiment was conducted in Germany, where coffee is often sold with multiple labels or claims, in order to examine the WTP for alternative combinations of a carbon neutral label with either a Fair Trade label or a claim of direct trade coffee sourcing. Choice data were analyzed using random parameter logit models which determined a positive WTP for the carbon neutral label. This estimate exceeds the corresponding marginal costs of certification and the marginal social cost of carbon, yet it is relatively lower than the estimated WTP for the Fair Trade label and the direct trade claim. A positive synergy effect on utility was also determined for the combination of a carbon neutral label and a direct trade claim. If no additional information was provided, consumers often perceived coffee as a “natural product” that does not generate any greenhouse gas emissions. Thus, awareness-building policies are needed to make carbon neutral labels an effective market-based tool to reduce greenhouse gas emissions in the agri-food sector.