Project EXTENSITY www.extensity.ist.utl.ptEnvironmental and Sustainability Management Systems in Extensive Agriculture Guaranteed Sustainability Label: is it a way of promoting sustainable agriculture? Cristina Marta-PedrosoGonalo M. MarquesTiago DomingosEnvironment and Energy Section, DEM, Instituto Superior Tcnico, Lisbon, Portugal

Extensity Approach in promoting to Sustainable Extensive Agriculture to ExtensiveNorm of Guaranteed Sustainability

Project EXTENSITY www.extensity.ist.utl.ptEnvironmental and Sustainability Management Systems in Extensive Agriculture Guaranteed Sustainability Label: is it a way of promoting sustainable agriculture? A consumers preferences assessment for sustainability labeled beefCristina Marta-PedrosoGonalo M. MarquesTiago DomingosEnvironment and Energy Section, DEM, Instituto Superior Tcnico, Lisbon, Portugal

Outline Motivation and Objectives Method and Experimental design Results Conclusions

The label is expected to convey consumers relevant information for their purchase decisions; The label aimed to differentiate beef regarding: Production process (environmentally friendly) Animal welfare (decrease of the confinement period) Health and food safety (rastreability) Independent control of quality Farmers will adopt the label if it would become a mechanism that effectively facilitates farmers capturing the rewards of their superior performance in relation to the conventional production process. Motivation and Objectives (1) Voluntary labelling mechanism Compliance with the Guaranteed Sustainability Norm

There is a general agreement on the increasing of consumers preference for green and safety agri-food products Motivation and Objectives (2) Research on ascertaining the preferences of Portugueses consumers for such differentiated products is then needed. Only a few studies aimed at investigating the Portuguese consumers preferences for certified agri-food products have been carried out. Estimating the maximum WTP for SLB Objectives Obtaining a demand curve for SLB

Method and Experimental Design (1) In the recognition of the importance of revealing consumer preferences for such differentiated products a contingent valuation survey was carried out across a sample of Portuguese consumers. The contingent valuation survey Face to face interviews were used for administering contingent valuation questionnaire; Visual material was used as interview support. Interviews were carried out by a survey and opinion studies company at hypermarkets in the metropolitan area of Lisbon. Only beef consumers were approached;

Are you willing to pay more for Guaranteed Sustainability Labeled Beef than you pay for conventional beef?

YesNoPrice offerYesNo

What is the maximum you would be willing to pay for a kilo of Guaranteed Sustainability labeled beef?

/kg/kgDescription of SLB against conventional1st Interaction with the good descriptionVisual SupportVisual SupportWTP Elicitation Design Method and Experimental Design (3)Share

Conventional

Temporary or permanent natural or semi-natural pasturesProduction systems

Guaranteed Sustainability

Permanent Sown biodiverse pastures rich in leguminous. More productiveHigher stocking rate Fattening (steers after weaned) occurs in confinement (15 months). Diet is based on concentrates.Steers fattening occurs in direct grazing supplemented by hay and silageEnvironmental ImpactGreenhouse Gases: Emissions: 9.1 kgCO2eq/kg/meat Sequester: 0 kgCO2eq/kg/meatGreenhouse Gases: Emissions: 9.1 kgCO2eq/kg/meat Sequester: 25.2 kgCO2eq/kg/meatThere is a deficit of about 400 kgCO2eq/inhabitant for 2010 in terms of Portuguese compliance with the Kyoto ProtocolSoil erosion12.8 kg solo/kg/meat/yearSoil erosion7.2 kg solo/kg/meat/yearSoil formation is a very slowly process (non-renewal resource)Industrial fertilizers75.3 kgN/kg meatIndustrial fertilizers51.9 kgN/kg meatDecrease of diffuse water pollutionQuality control and food safetyIndependent certification bodiesSelf control

Conventional

Temporary or permanent natural or semi-natural pasturesProduction systems

Guaranteed Sustainability

Permanent Sown biodiverse pastures rich in leguminous. More productiveHigher stocking rate Fattening (steers after weaned) occurs in confinement (15 months). Diet is based on concentrates.Steers fattening occurs in direct grazing supplemented by hay and silageEnvironmental ImpactGreenhouse Gases: Emissions: 9.1 kgCO2eq/kg/meat Sequester: 0 kgCO2eq/kg/meatGreenhouse Gases: Emissions: 9.1 kgCO2eq/kg/meat Sequester: 25.2 kgCO2eq/kg/meatThere is a deficit of about 400 kgCO2eq/inhabitant for 2010 in terms of Portuguese compliance with the Kyoto ProtocolSoil erosion12.8 kg solo/kg/meat/yearSoil erosion7.2 kg solo/kg/meat/yearSoil formation is a very slowly process (non-renewal resource)Industrial fertilizers75.3 kgN/kg meatIndustrial fertilizers51.9 kgN/kg meatDecrease of diffuse water pollutionQuality control and food safetyIndependent certification bodiesSelf controlGiven as baseline1210Varied across subjectsBid vector: 11-25

Modelling Framework Experimental Design and methodological approach (4)

Are you willing to pay more for Guaranteed Sustainability Labeled Beef than you pay for conventional beef?

YesNoPrice offerYesNo

What is the maximum you would be willing to pay for a kilo of Guaranteed Sustainability labeled beef?

/kg/kgLogistic RegressionLog Linear Regression Anchoring correction Modelling Framework Experimental Design and methodological approach (5)

Results (2)Income = 1, 2, 3, 4, 51- [385.91 - 771.82]2- [771.83 - 1,157.73]3- [1,157.74 - 1.543,64]4- [1,583.65 - 1,929.55]5- [ 1,929.56] -1.055- 0.801VariablePredicted Probability0.2580.1670.1260.1030.088Logistic Regression (Probability of WTP=0)

Results (3)Log Linear Regression; Anchoring correction

Without anchoring

With anchoring

p-value

p-value

13.56260709

0 **

11.9832191

0 **

2.15012219

-

3.1253616

-

0

-

0.3713805

0 **

Log(Income)

0.78938883

0.00037 **

1.1234402

0.00051 **

Children

-0.24550912

0.293

-0.6762203

0.047 **

Comp Import

0.05443948

0.466

0.2244985

0.040 **

Log-Likelihood

-1204.04

-1141.08

_1274606089.unknown

_1274606090.unknown

_1274606088.unknown

Income = 1, 2, 3, 4, 511.983- 0.6760.2241.1230.371Children = 1 / 0CompImport = 1, 2, 3, 4, 5Results (3)Log Linear Regression; Anchoring correction

Demand Curve for sustainability labeled beef

Assumptions:

Respondent i total monthly consumption of beef is constant (Q)

Respondent i total expense with beef is constant; substitution takes place

Empirical data:

Respondent i total monthly consumption of beef

Consumption pattern of SLB (share, [0,1]) Results (4)

Demand Curve for sustainability labeled beefResults (5)

In average, monthly household consumption of SLB decreases 0.8 kg per 1 increment in its price.Demand Curve for sustainability labeled beefResults (6)

Conclusions In average, household consumption of SLB decreases 0.8 kg per 1 increment in its price. Consumers are willing to pay an extra price premium ranging between 3 and 3.5 per kilo of SLB. Regarding my initial broad question about whether guaranteed sustainability label beef is a way of promoting sustainable agriculture we concluded that there is demand and that the estimated WTP should be framed in farms financial analysis.