Office for Environmental Programs - Theses
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ItemRigorous methodological approaches for estimating economic impacts of certifications( 2015)The present review explored the literature estimating economic impacts of certifications observed in different economic sectors: tourism, retail and the wholesale market. Study cases explored in this review used rigorous methodological approaches to estimate economic impacts. Rigorous methodological approaches differ from non-rigorous ones as they use quantitative data, define credible counterfactuals and use either quasi or field experiments to estimate economic impacts (Blackman and Rivera 2010). Economic impacts of certifications could be estimated at the producer or consumer level. Field experiments are mainly used to estimate impacts of certifications at the consumer level. Quasi experiments are mostly used to estimate impacts at the producer level. Both approaches differ in that field experiments randomly allocate subjects to treatment while the later does not (Gerber and Green 2012). Alternative quasi-experimental designs are proposed for controlling for biases that could arise from the non-random allocation of subjects to treatments (Frondel and Schmidt 2005). Biases affecting outcomes could take the form of “overt” (observable) or “hidden” (non observable; Rosenbaum 1995). The “cross section estimators” model suggested within the quasi-experimental design framework, controls for “hidden” biases such as self-selection into the scheme (Frondel and Schmidt 2005). In doing so, it is observed that it is widely used for estimating impacts of schemes in the tourism sector. On the contrary the “matching estimators” model, which compares certified and non-certified subjects sharing observable characteristics, is mainly used for estimating impacts of certifications such as fair trade and organic in the wholesale market. All models have strengths and weaknesses that need to be recognized when analysing results. Despite limitations in the estimation of outcomes, the use of rigorous approaches for estimating certification impacts should be preferred to non-rigorous ones and results crucial in providing feedback for improving certifications´ effectiveness. With the augmented number of certifications worldwide, research estimating its impacts should continue increasing in order to protect consumer´s from “free riding behavior” of producers.