Association for Public Policy Analysis & Management

In the face of growing food demand and continued environmental degradation, agricultural practices that preserve ecosystem services are growing. Nongovernmental organizations have taken a market-based approach, introducing certification programs which compensate farmers who adhere to sustainability standards for their consequent reductions in yield by charging consumers a price premium. We conduct a choice experiment to test consumers’ willingness to pay for such eco-labeled products. The choice experiment presented consumers with five discrete choices that varied according to three attributes: price, certification, and country of origin. The experiment tests two specific ecosystem-friendly certifications, Rainforest Alliance and Smithsonian Bird Friendly Certification by Smithsonian Migratory Bird Center, as well as two alternative certifications, Fair Trade and USDA Organic. We find that consumers are willing to pay a price premium up to 300-450% for eco-labeled products over Organic or Fair Trade products. Between the two eco-labeled products, consumers prefer Rainforest Alliance over Smithsonian Bird Friendly.