Consumer demand for a certified climate label of milk : evidence from a randomized field experiment in a Swedish setting

Abstract: There is a generally accepted need to decrease the environmental impact and global greenhouse gas (GHG) emissions caused by the food industry. Studies have shown that by altering the consumption patterns of food products, the emissions of GHG can be substantially lowered (Carlsson-Kanyama and González, 2009). Climate labeling for food products is an example of a policy instrument recently initiated in many countries in order to inform consumers, influence choices about food consumption and thereby reduce GHG emissions of the industry. Even though the interest in climate labeling schemes is growing all around the world little evidence exist showing that climate labeling schemes are actually an effective policy instrument in mitigating GHG emission in the food industry. There is a recognized need for better understanding of consumer response and demand for climate labels. This is the first study to report results from a randomized controlled field experiment in which the researcher manipulates product labels to estimate demand effects of a climate label across multiple retail stores. The experiment was conducted in a Swedish setting by studying the sales of climate certified milk products, certified according to the standards of a Climate Certification of Food (CCF). This experiment has found that the climate certification has a positive effect on sales of the labeled product. Sales of the climate labeled product rose by 6 percent when the information about the climate certification was provided the consumers. However, the climate label can still only be justified as a policy instrument if the labeling system actually reduces GHG emissions. Another finding in this experiment is that the increase in sales of climate certified milk is due to a substitution effect from mainly organically produced milk, which also has an enhanced environmental quality. This finding suggests that the total environmental impact has not changed much with the information about the climate label provided the consumers.