Karl Ludwig Brockmann

Environmental labels—the German ‘Blue Angel’

Abstract Environmental considerations are becoming increasingly important for consumers and producers. A credible environmental label can only be established if it is issued by a neutral or state organisation on the basis of scientifically derived criteria. This holds true for the German ‘Blue Angel’. A case study of emulsion lacquer paints labelled with the Blue Angel indicates that an environmental label can support a products market penetration effectively, even if this is accompanied by rising prices. Nevertheless, it is quite clear from survey data, that in general households willingness to pay higher prices for an environmentally friendly product is unlikely to be strongly pronounced. In the case study there was a scope for demand expansion at an even higher price level because the individual consumer can expect a personal positive advantage by utilizing the labelled product.

Certification and Tropical Timber Supply

This study is not concerned with drafting transitional scenarios. Instead, it assesses the long-term effects of a certification scheme, whereby the focus of interest lies in the reactions on the demand side. For this reason it is assumed with regard to the quantities supplied to the market, that sustainable forest management will, in the long term, compensate the production losses which could arise on a short- to medium-term basis due to the change from previously predominant reckless exploitation to sustainable management. Therefore we assume that total supply of tropical timber can kept at the present day level.18 This should be possible primarily through conservative methods of forest management in which harvesting minimizes damage suffered by the remaining stock, but it can also be achieved by extending the transport infrastructure to production forests which have so far not been used, that is by opening up new forests within the areas already declared by legislation today as production forests.

Trend Analysis and Basic Scenarios

The present chapter analyses the utilization and substitution trends for tropical timber after 1984 on the basis established in the previous two chapters. Information from the previous years is generally not carried forward because it is considered obsolete.

Environmental Labels and Consumer Behaviour

The ecological aspects of products are becoming increasingly important. Many companies now advertise the environmental compatibility of their products. This is accomplished partly through internal declarations of single companies or associations choosing their own criteria. A survey carried out by IPOS (1993) showed that the credibility of such declarations on the part of consumers is generally slight. Self-declarations of this kind are possible because terms such as „environmentally compatible“ and „bio“ are not protected by law.

Concepts of Sustainability and the Design of a Certification Scheme for Tropical Timber

The calculated scenarios for certification assume the existence of a functioning certification scheme. Therefore only brief consideration is given here to the concept of sustainability and the conditions for designing a functioning certification scheme for tropical timber.

Extended Scenarios for Individual Submarkets

Sections 10.1 to 10.5 develop extended certification scenarios for five important submarkets for tropical timber, including the price effects through the costs for certification, through willingness of consumers to pay higher prices and through OECD-wide introduction of a certification scheme for tropical timber (big country version). The effects on the aggregate German tropical timber market are calculated in Chapter 11.

Definitions, Database and Data Processing

It is first of all necessary to provide a formal definition for the term „tropical timber“ compatible with this research subject, because this term can be used in rather different manners. Strictly speaking, tropical timber is the designation applied to timber growing in more or less closed tropical forests between the Tropic of Capricorn and the Tropic of Cancer. The most recent estimates made by the United Nations (UN) indicate that these forests constitute 43% of the world-wide timber stock (UN/ECE /FAO 1992:1). The species structure of natural tropical forests is dominated by non-coniferous trees. Coniferous species such as agathis or pinus merkusii are found only to a limited extent.34 Because of the dominance of non-coniferous timber species, the term „tropical timber“ is often used as if it applies only to non-coniferous tropical timber.

Extended Scenarios of the Aggregate Timber Market

In this chapter scenarios are calculated for tropical timber certification in the aggregate German timber market. The German tropical timber market (Section 11.1) stands in the foreground. As already found for the scenarios of the submarkets, the distinction between an OECD-wide certification scheme and one confined to the Federal Republic of Germany, is of special importance for the aggregate market consideration too. Different conditions affecting tropical timber demand resulting from certification of all timber species or from energy taxation are not considered for the total market scenarios because — as can be seen in the submarket scenarios — only small differences arise from these causes. Instead, a brief analysis of the effects on the German market for non-tropical timber follows in Section 11.2.

Distribution of Tropical Timber in the Federal Republic of Germany

For evaluating the consequences of a certification scheme for the German tropical timber market it is necessary to determine imports, further processing and final utilization of tropical timber in the German timber industry.

Effectiveness and Efficiency of a Certification Scheme Aimed at Protecting Tropical Rain Forests

A certification scheme for tropical (and non-tropcal) timber from sustainable production can be called effective only if efforts to suppress the production of tropical timber by „reckless exploitation“ succeed with the aid of this instrument. As Mattoo/Singh (1994) have shown theoretically, an environmental label leads to the desired reduction of the „environmentally damaging“ substitute only when -before introduction of the environmental label — the latent demand for the environmentally friendly commodity is greater than the available supply. In view of the increasing concern in industrialized countries over global warming and the small quantities of sustainably produced tropical timber, we can assume this condition is fulfilled.13