Ex-ante evaluation of policies for front-of-package communication of product environmental footprints of food items

Summary

CONTEXT: Front-of-pack communication of product environmental footprints (PEF label) has raised significant attention as a societally accepted and potentially effective way to reduce environmental impacts of our food systems.
OBJECTIVE: This study aims to ex-ante evaluate a policy for introducing PEF labels on food products from a socio-economic perspective.
METHODS: We specify two PEF label policy implementation options and describe their intervention logic against three desired outcomes: i) consumers buy more environmentally-friendly products, ii) producers provide more environmentally-friendly products, and iii) increased public awareness of the environmental impact of food production. We evaluate the potential effectiveness and efficiency of a PEF label based on a review of existing empirical findings in the literature and insights from economic theory. Finally, we derive conclusions and policy recommendations.
RESULTS AND CONCLUSIONS: Regarding Outcome i), we find no convincing evidence that a PEF label could lead to a substantial dietary shift. Empirical data shows that consumer uptake is limited, with a high risk of misinterpretation of scores. As a PEF label primarily communicate public goods (e.g. less GHG emissions, biodiversity benefits, etc.), free-riding among consumers is likely and transaction costs for informed decision-making remain high. For Outcome ii), we find that producers and processors are incentivised to produce more environmentally-friendly, if supply-chain-specific-data is collected, which imposes substantial transaction costs for businesses and public authorities. Finally, regarding Outcome iii), while the PEF label may increase awareness about the environmental impacts of foodstuffs, targeted education measures based on didactic principles would like achieve this more efficiently. Current scientific evidence suggests that introducing front-of-pack communication of product environmental footprints is neither an effective nor cost-efficient policy for promoting environmentally-friendly food systems. Instead, a policy mix combining financial and regulatory measures targeted to the different outcomes appears more promising.