Policy Instruments for Creating Markets for Biodiversity: Certification and Ecolabeling

29 Pages Posted: 14 Oct 2001

See all articles by Paulo A. L. D. Nunes

Paulo A. L. D. Nunes

University of Padua - Dipartimento Territorio e Sistemi Agro Forestali (TeSAF)

Yohanes E. Riyanto

Nanyang Technological University (NTU) - Division of Economics

Date Written: September 2001

Abstract

This paper provides an economic evaluation of certification and ecolabeling as an important policy instrument for creating markets for biodiversity. In the paper we conclude that the success of a policy instrument for creating markets for biodiversity depends on the nature crucial factors, including the ability of the policy instrument to deal with (a) the public good nature of most of the nonmarket biodiversity benefits; (b) the asymmetric informational characteristics related to the biodiversity (and environmental friendly) market supply and demand mechanisms; (c) the impact of certification practices in the producer's costs, and (d) the cross price elasticity between regular and market certified products. Indeed, in some cases certification and ecolabeling policy instruments alone are not sufficient to guarantee a successful creation of markets for biodiversity. Finally, the certification schemes need to be sufficiently flexible to allow mutual recognition among the countries involved, as well as to meet the demand of weak sensitive markets. By mutual understanding, and learning with the past experiences, certification and ecolabeling will positively contribute to the creation of markets for biodiversity and thus expected to assist to the development of an effective and broadly accepted sustainable management of such a scarce natural resource.

Keywords: Biodiversity, regulation, certification, ecolabeling, information, adverse selection, consumer awareness, command-and-control

JEL Classification: Q20, L50

Suggested Citation

Dias Nunes, Paulo Augusto and Riyanto, Yohanes E., Policy Instruments for Creating Markets for Biodiversity: Certification and Ecolabeling (September 2001). FEEM Working Paper No. 72.2001. Available at SSRN: https://ssrn.com/abstract=286834 or http://dx.doi.org/10.2139/ssrn.286834

Paulo Augusto Dias Nunes (Contact Author)

University of Padua - Dipartimento Territorio e Sistemi Agro Forestali (TeSAF) ( email )

Legnaro, Padova 35020
Italy

Yohanes E. Riyanto

Nanyang Technological University (NTU) - Division of Economics ( email )

HSS 04-53, 14 Nanyang Drive
Singapore, 639798
Singapore

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