Prospects for voluntary responsibility schemes in BSR

Prospects for voluntary
responsibility schemes in
BSR aquaculture
Ari Ekroos, Salla Salo & Vesa Leskinen
Contents
1.
Economic background and literature review
2.
Sustainability in aquaculture
3.
Identifying the attributes of a BSR win-win-win label
4.
Scenario analysis
5.
Questions and Discussion
Introduction:
Economic background and
literature review
A vast variety of aquaculture eco-labels…
•
Case example: Uni. Victoria (2011) study benchmarks 20 standards covering
marine finfish production (Marine finfish represents only 7% of global aquaculture
volume)
Source: How Green is Your Eco-Label? Comparing the Environmental Benefits of Marine Aquaculture Standards, University of Victoria (2011)
Economic motivation: Certification mitigates
information asymmetry
Search attributes
Experience attributes
Attribute ascertainable prior
to purchase
Attribute ascertainable after
use
Attribute not ascertainable
even after use
•
•
•
•
•
•
•
•
Price
Appearance
…
Source: Modified from OECD 2011
Images on this slide courtesy of vichie81, bigjom, noomhh / FreeDigitalPhotos.net
Taste
Freshness
…
Credence attributes
Sustainability
...
Theory and practice of the ”sustainability premium”
•
If consumers prefer environmental attributes of ecolabelled products, they will shift their demand
towards such products
 Results in price premium and incentive for producers to move to sustainable production
(Roheim et al. 2011)
In theory
•
In practice
•
Little empirical evidence on consumers’ willingness to pay premiums for environmental attributes
•
Indentify attributes for a BSR win-win-win label that drives sustainability and realizes
price premiums
Fair distribution of induced premium and sustainability investments and certification
costs
Aquabest
•
•
•
Who benefits?
Who pays?
Is there a price premium on ecolabelled
seafood? (Roheim et al., 2011)
•
Price premiums have been studied by agricultural economists for years
•
•
Fair trade coffee (Galarraga and Markandya, 2004)
Organic products (Lin et al., 2008; Smith et al., 2009; Zhang et al., 2009)
• Regarding seafood, most past studies seem to have focused on
consumer preferences and hypothetical willingness to pay a
premium
•
•
Wessells et al. (1999), Johnston et al. (2001), Jaffry et al. (2004), Johnston and
Roheim (2006) and Brécard et al. (2009)
Gulbrandsen (2006) argues that forestry and fisheries ecolabels have been
created as a result of pressure by environmental groups on consumerfacing corporations, rather than in response to consumer demand
Roheim et al. (2011): Key findings
•
The only empirical analysis of ecolabelled seafood price premiums so far
•
Journal of Agricultural Economics 62(3), 2011
•
•
•
Economic analysis of MSC-certified Alaska pollock prices
Scanner data from London metropolitan area supermarkets 2007-2008
MSC-pollock seems to have ~14% price premium
•
Open questions:
•
•
•
•
Limited geographical & product scope
Does the premium transmit from retail level to producers?
Is the premium large enough to compensate for investment and certification cost?
“The most compelling evidence that benefits outweigh the costs comes from the
behavior of the fishing industry itself: the number of fisheries in assessment and
becoming certified continues to grow.”
The ecological impact of ecolabelling
(Tlusty 2012)
• Uncertainty on whether seafood certification is driving significant
environmental improvements
• Gardiner and Viswanathan 2004, Kaiser and Edwards-Jones 2006,
Ward 2008b; Jacquet et al. 2009
• Seafood certification has existed for only a decade: limited
availability of empirical data and research
• No models for quantifying ecological impacts have been formalized
so far
•
Conceptual models by Clay 2007, Parkes et al. 2009
Tlusty (2012) continued
•
Tlusty formulates formal model of ecological impacts of seafood certification
programs
•
Fish and Fisheries 2012(3)
•
Identifies factors that are critical for maximizing
the benefits of certification (maximizing “pull”)
• Knowledge of pre-certification distribution of
metrics being assessed
• Probability of improvement
•
Single certification programs will only have a
marginal effect
• Best results from multiple thresholds /
certificates combined with innovation
Sustainability
What is sustainability?
•
•
No common global definition – risk of consumer confusion
Different sustainability priorities in aquaculture v. capture fisheries
Case example: Comparison of minimum substantive requirements in FAO certification guidelines
FAO Guidelines on Aquaculture Certification2
1.
2.
3.
4.
Animal health and welfare
Food safety
Environmental integrity
Socio-economic aspects
Focus on social & economic factors
in addition to environmental sustainability
FAO Guidelines on Marine
Capture Fisheries Ecolabelling1
1.
2.
3.
Stock management system
Control of overfishing
Ecosystem considerations (habitat impacts, nontargeted catch etc.)
Focus on stock management
and ecosystem impacts
Sources: Summarized from 1Guidelines for the Ecolabelling of Fish and Fishery Products From Marine Capture Fisheries, Revision 1, FAO (2009); 2Technical Guidelines on Aquaculture Certification Version
Approved by the 29th Session of Committee on Fisheries (COFI) held in Rome in January 2011
What Does Sustainability Mean for
Seafood?
• Sustainability has become an increasingly topical issue on the
European aquaculture agenda
• Three responsibility schemes
• Local
• Organic
• Eco-certified production
• Promotion of local food production is on political agenda in all
countries, organic and eco-certified aquaculture are newer
trends
• Important to remember that certification and labelling are
not the only ways to assure sustainability
Organic Certification
• Only products from aquaculture can be considered
organic
• Originates from agriculture, applied into aquaculture later
• Unlike the private eco-labels, organic standards are
regulated by the European Commission
• Commission Regulation (EC) No 710/2009, Aug. 5, 2009.
• Published before developing the sufficient standards
• Several private organizations have their own standards
• Organic fish production is marginal
What is an Eco-label?
Greener
Environmentally
friendly
More
sustainable
What is an Eco-label?
• A sea-food ecolabel is a mark, logo or label affixed to a
seafood product that helps a purchaser identify products
that have a reduced environmental impact
• Under the FAO, eco-label schemes are defined as
• “entitl[ing] a fishery product to bear a distinctive logo or
statement which certifies that the fish has been harvested in
compliance with conservation and sustainability standards. The
logo or statement is intended to make provision for informed
decisions of purchasers whose choice can be relied upon to
promote and stimulate the sustainable use of fishery resources”
History of Eco-labels
• In the beginning, ecolabels were created by governments
• Examples of these early eco-labels are The Blue Angel
(1977), the Canadian Environmental Choice (1988), the
Nordic Swan (1989), and the European Flower (1992)
• Are not yet applied to food products at all
• “[a]lthough some schemes were quite successful in terms of
industry participation…many of the government-sponsored
programs suffered from low take-up by producers and
retailers and little interest among consumers”
(Gulbrandsen (2006))
History of Eco-labels
• This low up-take of government-sponsored programs led
to market-based incentive systems
• There is no overall global governance system in place to
manage eco-label systems
Primary interests of different stakeholders
Producers
• Marketing advantage
• Brand protection
• Animal welfare
• Sustainable supply
Processors
• Marketing advantage
• Brand protection
• Quality of primary
product
• Sustainable supply
Eco-labelling industry
• Main business activity
Public sector (Government & local authorities)
• Resource conservation
• Consumer protection & food security
• Employment and sector economy
Source: Modified from OECD 2011
Retailers
• Marketing advantage
• Brand protection
• Quality of processed
product
• Sustainable supply
Consumers
• Quality and price
considerations
• Environmental &
health considerations
NGOs
• Environmental, animal welfare & health considerations
Search for win-win-win label in the
BSR area
The Current status of Aquaculture
certification in the BSR
• Cerification schemes are not yet broadly used in
the BSR
• In other parts of the world, the situation is
different
• Information assymmetry between the producer
and consumer over credence attributes is large
Cost and benefits of Eco-labelling
• Product attained an eco-label could be purchased at a higher price
providing the industry sectors involved in the eco-labelling program
with a price advantage over unlabelled products
• Increased purchase of eco-labelled products could urge non-ecolabelled companies develop their practices which would reduce
ecological impacts
• No market for unlabelled (“horror scenario”)
• At the moment paying for certification is expensive and small farms
are not able to finance a cost and they don’t find certification
financially feasible
• Only the schemes that are beneficial to all stakeholders will be able
to succeed in the market
Identifying the potential for a BSR win-win-win label
FAO Guidelines minimum
substantive requirement focus areas
Potential certification mechanisms for value-added
through voluntary labelling
1. Animal health and welfare
•
•
Organic production
Enviromental certificates (ecolabels)
2. Food safety
•
•
Organic production
Enviromental certificates (ecolabels)
3. Environmental integrity
•
Enviromental certificates (ecolabels)
4. Socio-economic aspects
•
Local food certificates
Attributes of win-win-win BSR ecolabel?
• Certificate must have requirement thresholds that surpass legislative
requirements (Tlusty 2012)
•
•
Focus on environmental integrity
Socio-economic, animal health, and food safety issues essentially covered by
national legislation?
• How to accommodate small producers?
•
Certification costs should be based on sales / size of producer
• Focus on BSR-specific environmental integrity issues
•
•
Baltic sea feed
Compensation mechanisms
Conceptual economic model of win-win-win certificate
Value added?
Who benefits?
Who pays?
Where are we headed to?
T
h
r
e
e
s
c
e
n
a
ri
o
s
Self-regulation via eco-labels?
Resource
Ownership
Environm
impacts
Legal
control
Value add of
eco-labeling
FISHERY
STOCKS
Common
Controversial
Seawide
Often
deficient
Quite
evident
CULTURED
FISH
Private
Clear
Local
Stringent
Much less
evident
Questions and discussion
Thank you
Faculty of Law
University of Helsinki
M-depatment/ENG
Aalto Universit