Are agrochemical‐free and biodiversity‐friendly attributes substitutes or complements? Evidence from a coffee choice experiment

Abstract

Eco‐labels inform consumers about the sustainable attributes of a product, but consumer face challenges to differentiate and select for specific attributes. Certification programs are similarly challenged to incentivize adoption of sustainable practices in product supply chains when consumer ability to differentiate sustainable attributes is low. This study investigates consumers' Willingness to Pay (WTP) for different environmental attributes of coffee production, and whether attributes that conserve biodiversity and limit agrochemical usage are substitutes or complements. We designed and implemented a hypothetical coffee choice experiment combining coffee farm vegetation management attributes that impact biodiversity (conventional monoculture, shade‐grown, or “Bird Friendly” systems that conserve wildlife habitat) and chemical input (conventional, pesticide‐free, or organic) attributes. We found that consumers think of biodiversity and agrochemical management attributes as sustainability substitutes and have the highest WTP for pesticide‐free and organic attributes. Consumer groups with strong concern about the future of the environment had high WTP for all environmental attributes, but still considered the attributes to be substitutes. Our results suggest that eco‐label programs with biodiversity and agrochemical attributes, such as the Smithsonian Bird Friendly® coffee certification, could increase market participation by simplifying environmental sustainability messaging, simplifying farm‐level certification requirements, and targeting environmentally concerned consumers. [EconLit Citations: D12, Q01, Q13, L66].