Consumer Preferences for Transparent Carbon-Neutral Labels: A Choice Experiment

This paper focuses on the impact of transparency in carbon-neutral labeling on consumer preferences and willingness to pay. In current markets, there is a proliferation of various climate labels representing different concepts but overlapping characteristics, which may lead to consumer confusion. Furthermore, theoretical evidence suggests that a proliferation of labels might promote those labels with lower environmental quality. Therefore, this study aims to empirically understand whether providing information on the percentage of CO₂ offsetting and CO₂ reduction influences consumer preferences for carbon-neutral labels. I conduct a discrete choice experiment among UK tea consumers through an online survey. I use a split sample approach, comparing consumers' willingness to pay for standard carbon-neutral labels and “transparent” carbon-neutral labels, which additionally disclose the percentage of CO₂ offsetting and CO₂ reduction. Furthermore, I examine the effect of various factors, including concerns about carbon offsetting, trust, and confusion, on consumers' preferences for standard and transparent carbon-neutral labels.