- Email: [email protected]
Rebound effects due to economic choices when assessing the environmental sustainability of wine
Food Policy 49 (2014) 167–173
Contents lists available at ScienceDirect
Food Policy journal homepage: www.elsevier.com/locate/foodpol
Rebound effects due to economic choices when assessing the environmental sustainability of wine Graziella Benedetto a, Benedetto Rugani b, Ian Vázquez-Rowe b,c,d,⇑ a
Department of Science for Nature and Environmental Resources, University of Sassari, Via Piandanna 4, I-07100 Sassari, Italy Public Research Centre Henri Tudor (CRPHT)/Resource Centre for Environmental Technologies (CRTE), 6A avenue des Hauts-Fourneaux, L-4362, Esch-sur-Alzette, Luxembourg c Peruvian LCA Network, Department of Engineering, Pontificia Universidad Católica del Perú, Avenida Universitaria 1801, San Miguel, Lima 32, Peru d Department of Chemical Engineering, School of Engineering, University of Santiago de Compostela, 15782 Santiago de Compostela, Galicia, Spain b
a r t i c l e
i n f o
Article history: Received 4 October 2013 Received in revised form 8 July 2014 Accepted 31 July 2014
Keywords: Carbon footprint Consequential LCA Indirect effects Life Cycle Assessment Sustainable consumption
a b s t r a c t The identification and working mechanisms of Rebound Effects (REs) have important policy implications. The intensity of these impacts is crucial when it comes to detecting strategies to promote sustainable consumption of food and beverages, as in the case of wine. In fact, neglecting the occurrence of REs in wine production and delivery leads to under- or over-estimating the effects that novel more sustainable technologies may produce. An in-depth analysis on the ways in which the stakeholders may react to the availability of a new product (e.g. wine produced through a process oriented to the reduction of CO2 emissions) may be particularly useful to allow producers and consumers to target the REs with respect to the overall goals of desired sustainability. In this article, we first provide a definition and a classification of different types of REs and then analyse some exemplificative cases applied to the supply and consumption of wine produced through technologies that reduce environmental emissions or resource consumptions. A final step analyses the methodological tools that may be useful when including REs in life cycle thinking as applied to the wine sector. Ó 2014 Elsevier Ltd. All rights reserved.
Introduction Growth in economic activities originating as a consequence of the increase in production efficiency generates a phenomenon commonly referred to as the Rebound Effect – RE (Hertwich, 2005; Sorrell and Dimitropoulos, 2008). More specifically, the RE describes intensifications of resource or energy efficiency that do not necessarily result in a corresponding decrease in energy or resource use (Binswanger, 2001). While historically associated with the study of energy use, the topic of REs plays a significant role in the debate regarding the quantification of environmental impacts (i.e. resource use, pollutant emissions or generated wastes) using environmental management tools (Chitnis et al., 2013; Druckman et al., 2011). An example of these tools is the Carbon Footprint – CF indicator (BSI, 2011), which originates from the standardized and broadly accepted Life Cycle Assessment (LCA) method (ISO, 2006). Both CF and LCA aim, among other environmental management ⇑ Corresponding author at: Peruvian LCA Network, Department of Engineering, Pontificia Universidad Católica del Perú, Avenida Universitaria 1801, Lima 32, Peru. Tel.: +51 626 2000 4765. E-mail address: [email protected] (I. Vázquez-Rowe). http://dx.doi.org/10.1016/j.foodpol.2014.07.007 0306-9192/Ó 2014 Elsevier Ltd. All rights reserved.
methodologies, at elucidating on whether the introduction of a technical, apparently more sustainable, innovation in the product’s supply-chain may lead to a real environmental improvement of the entire life cycle. In doing so, the product in question is intended to become more ‘eco-compatible’ than its traditional counterpart. In contrast with this steady-state view, which matches the perspective covered by attributional LCA studies (EU, 2010), it is worth considering an evolutionary (dynamic) view in which the possible reactions on the market due to the implementation of this ‘new’ product are quantified and analysed (Giampietro and Mayumi, 2008). In fact, the latter fits in with the strategy followed in consequential LCA (CLCA), a life cycle approach that intends to raise the utility of LCA studies (e.g. policy making) by monitoring the environmental consequences of a change (UNEP, 2011). In addition, the identification of REs and their functionality mechanisms underlies important policy implications. The dimension of these effects is essential when the aim is to establish strategies to implement sustainable production and consumption patterns. In general, neglecting REs may result in an under- or over-estimation of the environmental and economic impacts that new sustainable technologies can provide at a broader scale (Chitnis et al., 2013). An in-depth analysis on the ways producers, on the one
168
G. Benedetto et al. / Food Policy 49 (2014) 167–173
hand, and consumers, on the other, may respond to the availability of a new production technology or a new product is essential to address the overall targets of desired sustainability to understand which might be the activity levels to be expected from this improvement. An interesting example is the wine sector, which has recently experienced a set of development actions addressed to perform a requalification of the supply-chain and labelling through the implementation of sustainable production models. For instance, Commission Regulation (EC) No. 607/2009, which develops Council Regulation No. 479/2008, advances a new framework for the labelling and presentation of certain wine products, which will have a direct effect on the European organisation of the wine market in the revised Common Agriculture Policy (CAP) 2014–2020). This new framework is expected to increase the wine niche markets, by introducing important modifications in the viticulture (e.g., adaptation of vineyards to organic and/or biodynamic practices) and packaging stages (e.g. the use of lighter bottles) along the supply chain. In fact, the implementation at a small scale of some of these actions have led to subsequent variable changes in the costs of winemaking and, therefore, in the final price paid by consumers. For instance, while CF studies on wine production suggest that the associated GHG emissions are lower when using PET bottles rather than glass (Point et al., 2012; Vázquez-Rowe et al., 2012), the related reduction of costs has increased the exportability of wine and, therefore, increased at the same time the overall life cycle carbon emissions caused by transportation, as well as the final price at retailing (Waye, 2008). Based on this background, the main aim of this article is to examine the concept of REs in the context of sustainable wine production (i.e. wine produced with technologies capable of reducing the consumption of resources and the emission of pollutants and wastes), while defining a roadmap to address current open questions about the assessment of REs in CF and LCA of wine through a CLCA approach. Analysing wine rather than other food or drink products that are more essential in the human diet (e.g. dairy or cereal-based products) has been considered effective in this article since wine products currently tend to go beyond national economic boundaries. This circumstance strongly influences price and market worldwide, making wine an interesting example due to its complex REs implications. Nevertheless, beyond the focus on the wine sector presented in this article, discussion attempts to explore the importance of REs in the food and beverages sector from a life-cycle perspective. The structure of the article is centred on the definition and classification of REs and the related economic and environmental implications associated with the inclusion of a possible technological innovation on the micro- and macro-level of the wine market, considering factors that influence the supply and demand of wine and their inter-relationship (e.g. the elasticity of price and income at the consumption’s demand scale).
Rebound Effects: theoretical background In the field of energy economics and savings, the RE (or takeback) refers to specific systemic responses that originate from the introduction of more efficient technologies in the production cycle. As a result, the positive effects attained with the new technology are generally counterbalanced due to the continuous dynamic adaptation of the economy to its own structures (Giampietro and Mayumi, 2008). For instance, Berkhout et al. (2000) state that a RE of 10% implies that 10% of the energy efficiency improvement initiated by the technological improvement is offset by increased consumption (p. 426). Extreme cases occur when the RE is higher than 100% (Jevons’ paradox or backfire) or even when the RE turns
out to be negative (defined as super-conservation) due to larger than expected effective savings (Jevons, 1865; Wei, 2010). In the field of LCA and environmental-economic accounting, Weidema (2008) defines REs as ‘‘[. . .] the derived changes in production and consumption when the implementation of an improvement option liberates or binds a scarce production or consumption factor, such as: (a) money (when the improvement is more or less costly than the current technology); (b) time (when the improvement is more or less time consuming than the current technology); (c) space (when the improvement takes up more or less space than the current technology), or d) technology (when the improvement affects the availability of specific technologies or raw materials)’’ (p. 1). Moreover, he distinguishes between three types of REs: (1) ‘‘specific’’, occurring when production and consumption of the product analysed changes; (2) ‘‘general’’, which takes place when the overall production and consumption changes; and (3) ‘‘behavioural’’, when the organisation of production and consumption changes, affecting both the product under study and other related products. REs are relevant at a producer scale as well as from the point of view of the consumer. Accordingly, it is worth recalling the definition given by Sorrell (2007a; p.5) concerning two other potential targets in which the direct REs can be decomposed: – in the case of producers, REs can be separated in two groups: ‘‘substitution effect REs’’ (whereby the cheaper energy service substitutes for the use of capital, labour and materials in producing a constant level of output) and ‘‘output effect REs’’ (whereby the cost savings from the energy efficiency improvement allow a higher level of output to be produced – thereby increasing consumption of all inputs, including the energy service); – in the case of consumers, REs are also divided in two types: ‘‘substitution effect REs’’ (whereby consumption of the (cheaper) energy service substitutes for the consumption of other goods and services while maintaining a constant level of ‘utility’ or consumer satisfaction) and ‘‘income effect REs’’ (whereby the increase in real income achieved by the energy efficiency improvement allows a higher level of utility to be achieved by increasing consumption of all goods and services, including the energy service). Substitution REs driven by consumer choices are valid for all consumption goods where the substitution effect is the most evident factor to explain the negative slope of the demand through the analysis of indifference curves (Samuelson and Nordhaus, 2002). In other words, the substitution effect shows that when the price of a good increases, consumers tend to choose other goods to satisfy their needs at a lower cost. In contrast, the income effect informs on the impact that a variation in price may have on the demand of goods which results from the effect of price variations on the actual income of consumers. In this respect, companies follow the same behavioural approach: the supply curve is influenced by the costs of production, which in turn are influenced by the prices of inputs and technological progress. In the shortterm, an increase in input prices implies an increase in costs, and thus a reduction in supply; while in the medium- to long-term, the reduction in price for some inputs may induce firms to replace the inputs that became relatively more expensive with those new factors, translating into a supply increase (Samuelson and Nordhaus, 2002). Finally, a ‘‘macro’’ effect also exists and cannot be neglected due to the transition towards a low carbon emissions economy. In fact, this opens many new opportunities of economic expansion, by generating new fast-growing markets (e.g. in the field of renewable energy production) that represent potential sources of development for companies, sectors and entire nations.
G. Benedetto et al. / Food Policy 49 (2014) 167–173
What Rebound Effects should we expect in the wine sector? A preliminary outlook The aim here is to evaluate, in a simplified but straightforward way, the potential REs occurring through the life cycle of wine production and consumption from a conceptual perspective. As an example for the discussion, we assume that the adoption by a wine company of a GHG protocol for analysis and monitoring of the CF (independently or within the LCA framework), which aims at providing technical suggestions to reduce life cycle emissions of CO2equivalent, represents an innovative process (i.e. helping to improve the application of existing industrial practices or defining new industrial strategies) and product (adding new attributes to the wine, making it a ‘new entity’; e.g. a wine bottle with an ecolabel). Moreover, it can induce systemic effects both on consumers and producers that can be associated with the framework of neoclassic economic principles, e.g. income and price elasticity, consumer behaviour, basic principles of demand and supply theory, etc. (Samuelson and Nordhaus, 2002). A first direct RE from the producer side originates from the reduction in costs due to the introduction of new technologies that reduce the CF. In other words, the boost in production and products delivery may arise from improved management and decisional solutions within the company framework and from learning processes that increase the productivity of resources in use. Fig. 1 shows the variation of production function based on a variable factor where the quantity of output (wine) depends on a given input, while other factors remains fixed (De Benedictis and Cosentino, 1979). The production functions related to the pre- and post- introduction of the selected technology, i.e. conventional and sustainable production, respectively, are delineated. In the latter, a reduction of CO2 emissions is assumed to occur due to the implementation of one or more technical innovations. In this case, the same quantity of wine (e.g. output, y1) can be obtained through a decrease in the consumption of inputs (e.g. plant protection agents, water, energy, etc.) and/or a better management of productive factors (e.g. renewal of internal and external logistics, with reference to goods and human resources, improvement of technical efficiency in the use of water for irrigation and of plant protection agents. . .). Similarly, more wine can be produced with the same amount of
Fig. 1. Variation of the production function at company scale after the introduction of a process/product innovation that increases the overall environmental sustainability (i.e. reducing the carbon footprint) (X2). Adapted from De Benedictis and Cosentino, 1979 (p. 258).
169
inputs (x1), since the productivity of the considered input grows (e.g. energy, but also capital or labour). As pointed out by Berkhout et al. (2000), the innovative processes make the resources more efficient from an energy profile perspective, since the same physical amount of resources require a lower quantity of inputs to generate the same initial output. From the producer’s viewpoint, this translates in an increase in the gap between revenues and costs and, thus, higher profits (p) whenever an improved application/modification of the existing technology exists. When a new technology is selected, e.g. the use of a vineyard recycling sprayer for spreading plant protection agents (Pergher et al., 2013), a constraint that should be considered is the possible modification of the current plan of production costs. In this particular case, both the purchasing cost of the machinery and the relative annual replacement’s reserve (used to reproduce the initial value of the capital) will grow, against a saving of purchasing costs in plant protection agents1, water and labour. In fact, this overlapping between economic and environmental sustainability suggests associating and strengthening the environmental performance analysis (i.e. LCA or CF) with economic life cycle methods, such as Life Cycle Costing – LCC (Heijungs et al., 2013). Other examples may relate this overlapping with approaches that aim to include in LCA the physical impact of commonly neglected inputs, such as human labour (Rugani et al., 2012), which are usually considered only from an ‘economic’ and/or ‘social’ value perspective. REs linked to innovative actions may be multiple and strongly dependent on entrepreneurial choices and practices, both regarding the purchase of inputs and the quantity and sale price of the wine, which may lead to a reduction (i.e. partial rebound) or even a disappearance (i.e. full rebound) of the steady-state environmental benefits initially computed (Wei, 2010). Concerning the purchase of inputs, a distinction can be made between process innovation due to i) a better application of the existing productive technique; or ii) the implementation of a new technology (e.g. the use of renewable energy sources or efficient machines, etc.). The former implies a RE caused by the larger amount of a specific good that has become less expensive (e.g. energy), or other inputs or services that may be purchased with retained earnings (Thiesen et al., 2008; Weidema, 2008; Barker et al., 2007; Sorrell, 2007b; Hertwich, 2005; Binswanger, 2001; Berkhout et al., 2000). The latter may induce, instead, the presence of a macro-RE on the rest of the economy due to the proliferation of demand for inputs that enable the reduction of emissions within the winemaking company, due to specific actions such as the increase of photovoltaic panels for energy production, the introduction of new machinery (e.g. recycling sprayer), lighter glass bottles, etc. Therefore, micro- and macro-REs, as well as long-term and short-term REs, are continuously on-going consequences that must be considered when proceeding with the calculation of CF, life cycle impact assessment methods, or other environmental indicators related to the life cycle of wine. More specifically, while their computation may not be necessary for steady-state (i.e. attributional) studies in which the direct environmental improvements and/or impacts are being monitored, REs are essential if the aim of the study is to provide policy support (including business decision making) recommendations. However, beyond the theoretical framework that is depicted in this article, the actual computation of realistic REs and, therefore, more accurate estimations of the efficacy of policies, are subject to extremely high uncertainties. 1 Using a recycling sprayer adapted to vineyards allows a reduction of up to 65% in emissions as compared to conventional spraying machinery. This unequivocally leads to economic and environmental benefits when applying plant protection agents in vineyards (Corradi, 2011; Tamagnone et al., 2013).
170
G. Benedetto et al. / Food Policy 49 (2014) 167–173
Table 1 Selection of possible consequences linked to rebound effects (REs) in the wine sector. Type of RE
Consequences linked to the producer
Raise in productivity
Increase in the use of plant protection agents and other operational inputs that may increase the impacts on the ecosystem (e.g. toxicity, eutrophication, GHG emissions, etc.) Land use changes (LUCs), with consequent effects on the carbon balance of the land and on landscaping Environmental impacts linked to increased infrastructure and operational inputs that may affect a wide range of impact categories, including climate change Interaction between the adopted price policy and consumer behaviour may lead to a reduction or suppression of the REs previously mentioned
Purchase new land Increase in capacity Influence the retail price
Consequences linked to the consumer Increase in the retail price Decrease in the retail price (a) Decrease in the retail price (b) Decrease in the retail price (c)
Decrease in CO2 emissionsa and other environmental impacts due to a higher amount of purchase power destined to consuming wine Decrease in CO2 emissions and other environmental impacts due to a lower amount of purchase power destined to consuming wine. The products that are consumed instead are less carbon-intensive Increase in CO2 emissions and other environmental impacts due to a lower amount of purchase power destined to consuming wine. The products that are consumed instead are more carbon-intensive than wine Decrease in CO2 emissions and other environmental impacts due to a lower amount of purchase power destined to consuming wine. These savings are not used to purchase other products
a Only CO2 emissions are considered for the representative example of wine in this article; the same may hold for any other environmental intervention flow that may cause an environmental impact, e.g. water use, fossil fuel consumption, land occupation, emissions of SO2, NOx, other GHGs, heavy metals, etc.
These uncertainties, as suggested by Vázquez-Rowe et al. (2013), are related to the limitations that researchers find when it comes to applying prediction models that can actually illustrate the complexity of real markets. Consequences of Rebound Effects Additional REs may occur due to the variable availability and fluctuating sale price of wine products (Table 1). In the first place, the costs reduction derived from the introduction of the process innovation may encourage the wine producer to strengthen the production (output effect). For instance, in the case of an integrated enterprise (where grapes are produced and transformed and, thereafter, wine is bottled and distributed) the entrepreneur may decide to increase the wine production in the short-term, especially if the plant does not usually work at full capacity. This may have repercussions outside the wine-making industry, because more inputs are needed (e.g. bottles, labels and other packaging materials, but also fuels associated with increased transportation). However, if the winery already operates at its maximum working capacity, a constraint associated with this type of ‘fixed factor’ exists. Moreover, in the medium- to long-term, the producer may be induced to raise the productivity per hectare (in compliance with law standards and regulations, as well as the quality of grapes to be obtained), or purchase new land for viticulture, with plausible consequences on soil quality and land use changes. Finally, the producer may also decide to increase the capacity of the winery to manage the expected increase in harvest. Thereafter, the entrepreneur can also influence the retail price, but in this case the consumers’ demand and wine purchasing behaviour should be taken into consideration (Corduas et al., 2013; Lockshin and Corsi, 2012; Thrane and Nielsen, 2009), as depicted in Fig. 2. This aspect is of particular importance, because the interaction between the adopted price policy and consumer reaction can again lead to a reduction or suppression of the effects obtained. The options selected by the producer and the possible reactions of the wine consumer can be various. Also in this case it is necessary to distinguish among the introduced innovations: if an improved application of existing technology has been selected, producers may take advantage of the reduced cost gained in different ways, including the selection of the market and/or consumption’s segment in which they want to place the eco-friendly wine. If the eco-wine is sold in a niche segment which is willing to pay
a premium price2 to repay the company for the effort made, the producer may also decide to increase the selling price of the wine, increasing further the margin of profit.3 This is accomplished by the fact that, in addition to reducing the production costs, the company also generates an advantage of differentiation, because the introduction of a technological innovation that lowers CF (directly and/or indirectly) leads to the realization of a ‘new’ product by modifying the attributes of the wine (Giampietro and Mayumi, 2008). In fact, as already pointed out elsewhere (Rugani et al., 2013), indicating CO2 emissions on the product’s label introduces an element of differentiation in the wine marketed, transforming a credence attribute (Darby and Karni, 1973), which cannot be checked either before or after the purchase4 (Grunert, 2002), into a search attribute, which instead can be detected before the purchase by offering the consumer an element of judgment able to reduce the time of selection for a given product. In addition, it is important to highlight the fact that consumers do not react in the same way when interpreting the information contained in the eco-labels (both in general and in specific cases, such as when the eco-label includes CF information). As mentioned in Baddeley et al. (2012), ‘‘carbon labels are most likely to influence the shopping behaviour of younger, better-educated women, the group that tends to do the majority of household grocery shopping, and least likely to influence older, less-educated men’’ (p. 65). Accordingly, the benefit given to the community by implementing the innovative process will provide a feedback in the price, thus internalising the positive externality ascribed to the community. In fact, an increase in the retail price can make the improved wine more eco-friendly than conventional wine, as stated by Thrane and Nielsen (2009) ‘‘not necessarily because it represents a lower environmental burden per kg, but because it is more expensive’’ (p. 2). In this respect, they emphasise that for cheap wine the intensity of GHG per unit of currency is 5 times higher than that of an expensive wine. This price policy, even if practiced in markets that are not sensitive to environmental problems, can adversely affect the environ2 In this respect, an interesting aspect to examine would be to detect the willingness to pay for wines produced with processes that emit less greenhouse gases, contributing to the mitigation of climate change. 3 The difference between revenues and costs increases not only due to a reduction of unit costs but also to an increase in the selling price. 4 The process of adaptation of the company production system towards a reduction in environmental emissions, undertaken with the aim of contributing to the decrease of global warming, represents information that cannot be verified through the consumption of wine, as it is for the taste instead.
G. Benedetto et al. / Food Policy 49 (2014) 167–173
171
Fig. 2. Graphical representation of the expected rebound effects linked to the shift from conventional to organic wine from a consumer perspective.
mental improvement obtained, because direct REs associated with consumer behaviour can influence the market system. More specifically, the substitution effect comes into operation whereby the traditional consumers of wine tend to satisfy their needs in the most economical way, by replacing the wine that has become more expensive with others that fulfil the same utility function (Lange et al., 1998; Lockshin et al., 2006; Sáenz-Navajas et al., 2013). Another opportunity is to focus on the penetration in markets where the ‘‘CF attribute’’ is taken for granted (e.g., UK, USA, New Zealand; respectively; Gadema and Oglethorpe, 2011; Hughey et al., 2005) and where the price’s competitiveness is high. In this scenario the entrepreneur can opt for a reduction in wine price while maintaining constant the earning level defined prior to the innovation. Besides a price reduction of the eco-wine, a demand increase due to the effect of substitution from e.g. conventional to organic wine may occur, as well as a purchase growth by consumers already oriented towards that product category and a retailing expansion to those markets particularly sensible to environmental sustainability issues (Mueller et al., 2010). The action of substitution may not be effective because the demand for wine is, on average, inelastic compared to price (Fogarty, 2008), in a similar way to most agri-food products. Nevertheless, a collection of case studies provided by Fogarty highlights a wide diversity of elasticity coefficients between countries, with cases where the demand is elastic with respect to price (e.g., Ireland, Finland or Spain) (Fogarty, 2008). However, this is a very simple representation of reality, which should be tested
against specific case studies, including those that have been previously provided for other sectors (Thiesen et al., 2008). Indeed, it is questionable that a reduction in the price may afford an increase in the purchase of eco-wine, since consumers who already buy such a wine may decide to spend more money on other goods and services (Binswanger, 2001; Hertwich, 2005), generating in turn other undesired environmental burdens indirectly (see Fig. 2). The dimension of REs is even bigger if looking at the increase in the quantity demanded caused by the income growth (i.e. the socalled income effect): the wine income elasticity estimates a mean value of 1.10 (Fogarty, 2008), considering wine a luxury good rather than a necessity. This is particularly true when observing the income country elasticity (e.g., Ireland, UK or USA), which would give access to categories of goods (other than wine) previously excluded. In fact, this particular phenomenon may potentially be a current key driver in emerging economies (i.e. BRICS), where an increase in luxury product consumption has been observed throughout the middle class segment (Zurawicki and Braindot, 2005), and in traditionally wine consuming nations hit by the recent recession (e.g. Spain or Portugal). Moreover, there are a set of indirect effects related to energy savings that should not be overlooked and which are activated by the pattern of green consumption adopted by consumers to mitigate climate change. A recent research conducted by the EU (Eurobarometer, 2009) observed that among European citizens who affirm to undertake personal actions (63% of respondents) to reduce their contribution to global warming, about one third tend
172
G. Benedetto et al. / Food Policy 49 (2014) 167–173
to buy seasonal food, with an underlying intention to contribute to the reduction in the consumption of food that implies long-distance transport from the production to the consumption site. While some previous studies have shown that these patterns typically reduce energy consumption and CO2 emissions (Alfredsson, 2004), these reductions have shown to be, in most cases, only marginal. In fact, the assessment of the so-called food miles has shown to represent only 11% of the GHG emissions linked to agri-food products in the US (Weber and Matthews, 2008), demonstrating that their sole computation is far from representing the environmental profile of the supply chain analysed. Therefore, it seems evident that the adoption of green consumption patterns in face of a constant raise of total consumptions does not solve the problem of climate change (via reduction of CO2 emissions) or other impacts, but can represent at best a temporary palliative (Alfredsson, 2004).
Conclusions and future outlook The present study attempted to identify and discuss the REs rising from the life-cycle of wine production and consumption. These are generally linked to the inclusion of new technologies throughout the supply chain, and are intended to lower the direct and/or indirect resource use and pollutants release (such as carbon emissions). Therefore, a similar approach to the study of REs could be ideally extended to other food or drink products. However, the characteristics of each product with respect to its market make the list of hypothetic REs vary from product to product. In other words, to identify the REs, the product under study should be considered by tracing back the steps necessary for its production, up to the function of consumption and its elasticity to revenue and price, because not all products categories have the same economic features. Moreover, even within the same category of agri-food products, subcategories may exist that do not show the same behaviour in response to consumption patterns of the ‘macro’-category (e.g. vegetables, bread, wine, dairy products, etc., all of which may have both organic and conventional production methods). The analysis has been made by sharing the viewpoint of those who argue that ignoring REs can lead to over- or under-estimate the environmental burdens of a particular production process aimed at reducing resource consumption and/or emission rates. However, it is evident that the short discussion presented here does not exhaust the wide range of systemic effects associated with the implementation of sustainable technological progress, both from the side of the producer and the consumer. In fact, in line with what has been argued in the literature (Giampietro and Mayumi, 2008; Freire González, 2010; Vázquez-Rowe et al., 2013), a debate on the wide range of actual REs and the way to model and compute them would allow achieving a clear definition and a fair indication of what effects are to be included in the analysis, as well as their role within the system boundaries of the product studied. Further developments are needed to achieve an in-depth analysis of the quality and size of REs, through empirical measurements and appropriate applications to specific case studies. For instance, in the case of the wine sector the conversion of conventional vineyards to organic or biodynamic practices constitutes an appealing field of study, given the important effects that this conversion may have on harvest yield, use of inputs or soil quality (Villanueva-Rey et al., 2014). Therefore, the implementation of these conversion processes at a large scale would imply the existence of new equilibriums in the wine sector worth assessing. As a consequence, it is important to quantify the environmental consequences related to the domino effect that new economic equilibriums may have on consumer behaviour throughout their
purchase power beyond wine consumption. In other words, the use of a consequential perspective (i.e. CLCA) appears as a challenging milestone to monitor the actual environmental benefits of improving the steady-state environmental efficiency (and, thereafter, reducing costs) of wine systems (Rugani et al., 2013). Moreover, it would enable taking the environmental assessment a step further, by analysing how the changes in a given production system interrelate in a wider scope with other (related) production systems. The development of this methodological perspective would allow refining policy and decision making in the wine sector through the identification, if any, of super-conservation REs (i.e. those that reduce the environmental emissions at a higher rate than the actual technological improvements), as previously discussed by Wei (2010). In fact, the identification of super-conservation REs through CLCA would aid in defining which improvement scenarios would actually entail final environmental benefits. The implementation of a consequential perspective in life cycle thinking, through the integration of economic equilibrium models with LCA may constitute an important step forward in obtaining accurate calculations of the GHG emission improvements (or other monitored environmental impacts) that may be actually achieved in practice if REs are considered.
Acknowledgements Authors with affiliation to the University of Santiago de Compostela (Spain) belong to the Galician Competitive Research Group GRC 2013-032. Dr. Ian Vázquez-Rowe wishes to thank the Galician Government for financial support (I2C postdoctoral student grants programme).
References Alfredsson, E.C., 2004. ‘‘Green’’ consumption – no solution for climate change. Energy 29, 513–524. Baddeley, S., Cheng, P., Wolfe, R., 2012. Trade policy implications of carbon labels on food. J. Int. Law Trade Policy 13, 59–63. Barker, T., Ekins, P., Foxon, T., 2007. The macro-economic rebound effect and the UK economy. Energy Policy 35, 4935–4946. Berkhout, P.H.G., Muskens, J.C., Velthuijsen, J.W., 2000. Defining the rebound. Energy Policy 28, 425–432. Binswanger, M., 2001. Technological progress and sustainable development: what about rebound effect? Ecological Economics 36, 119–132. BSI-British Standards Institution, 2011. PAS 2050:2011 Specification for the Assessment of the Life Cycle Greenhouse Gas Emissions of Goods and Services. British Standards Ed., London, UK.
G. Benedetto et al. / Food Policy 49 (2014) 167–173 Gadema, Z., Oglethorpe, D., 2011. The use and usefulness of carbon labelling food: a policy perspective from a survey of UK supermarket shoppers. Food Policy 36, 815–822. Giampietro, M., Mayumi, K., 2008. The Jevons Paradox: The evolution of complex adaptive systems and the challenge for scientific analysis. In: Polimeni, J.M., Mayumi, K., Giampietro, M. (Eds.). The Jevons Paradox and the Myth of Resource Efficiency Improvements. Earthscan, ISBN: 978-18-4407-4624. Grunert, K.G., 2002. Current issues in the understanding of consumer food choice. Trends in Food Science & Technology 13, 275–285. Heijungs, R., Settanni, E., Guinée, J., 2013. Toward a computational structure for life cycle sustainability analysis: unifying LCA and LCC. International Journal of Life Cycle Assessment 18, 1722–1733. Hertwich, G., 2005. Consumption and the rebound effect. An industrial ecology perspective. Journal of Industrial Ecology 9, 85–98. Hughey, K.F.D., Tait, S.V., O’Connell, M.J., 2005. Qualitative evaluation of three ‘environmental management systems’ in the New Zealand wine industry. J. Clean. Prod. 13, 1175–1187. ISO, 2006. ISO 14040:2006. Environmental Management – Life Cycle Assessment – Principles and Framework. International Organization for Standardization, Geneva. Jevons, W.S., 1865. The Coal Question: Can Britain Survive? Macmillan, London, UK, 1906. Lange, C., Rousseau, F., Issanchou, S., 1998. Expectation, liking and purchase behaviour under economical constraint. Food Quality and Preference 10, 31–39. Lockshin, L., Jarvis, W., d’Hauteville, F., Perrouty, J.P., 2006. Using simulations from discrete choice experiments to measure consumer sensitivity to brand, region, price, and awards in wine choice. Food Quality and Preference 17, 166–178. Lockshin, L., Corsi, A.M., 2012. Consumer behaviour for wine 2.0: a review since 2003 and future directions. Wine Econ. Policy 1, 2–23. Mueller, S., Osidacz, P., Leigh Francis, I., Lockshin, L., 2010. Combining discrete choice and informed sensory testing in a two-stage process: can it predict wine market share? Food Quality and Preference 21, 741–751. Pergher, G., Gubiani, R., Cividino, S.R.S., Dell’Antonia, D., Lagazio, C., 2013. Assessment of spray deposition and recycling rate in the vineyard from a new type of air-assisted tunnel sprayer. Crop Prot. 45, 6–14. Point, E., Tyedmers, P., Naugler, C., 2012. Life cycle environmental impacts of wine production and consumption in Nova Scotia, Canada. J. Clean. Prod. 27, 11–20. Rugani, B., Panasiuk, D., Benetto, E., 2012. An input–output based framework to evaluate human labour in life cycle assessment. International Journal of Life Cycle Assessment 17, 795–812. Rugani, B., Vázquez-Rowe, I., Benedetto, G., Benetto, E., 2013. A comprehensive review of carbon footprint analysis as an extended environmental indicator in the wine sector. J. Clean. Prod. 54, 61–77. Sáenz-Navajas, M.P., Campo, E., Sutan, A., Ballester, J., Valenetin, D., 2013. Perception of wine quality according to extrinsic cues: the case of Burgundy wine consumers. Food Quality and Preference 27, 44–53.
173
Samuelson, P.A., Nordhaus, W.D., 2002. Economia. Milano, Mc Graw-Hill. Sorrell S., 2007a. The Rebound Effect: An Assessment of the Evidence for the Economy-wide Energy Savings from Improved Energy Efficiency. UKERC. (last access Oct 2013). Sorrell S., 2007b. UKERC Review of Evidence for the Rebound Effect Supplementary Note: graphical Illustrations of Rebound Effects. REF UKERC/ WP/TPA/2007/014, UK. (last access Oct 2013). Sorrell, S., Dimitropoulos, J., 2008. The rebound effect: microeconomic definitions, limitations and extensions. Ecological Economics 65, 636–649. Tamagnone, M., Balsari, P., Bozzer, C., 2013. Performance evaluation of recycling sprayer in vineyard. Acta Horticulture 978, 199–204. Thiesen, J., Christensen, T.S., Kristensen, T.G., Andersen, R.D., Brunoe, B., Gregersen, T.K., Thrane, M., Weidema, B.P., 2008. Rebound effects of price differences. International Journal of Life Cycle Assessment 13, 104–114. Thrane, M., Nielsen, E.H., 2009. A Quality Strategy for Sustainable Consumption?. Joint Action on Climate Change, 8–10 June 2009. City of Aalborg North Denmark. UNEP, 2011. Global guidance principles for life cycle assessment databases a basis for greener processes and products. ‘‘Shonan guidance principles’’. Life Cycle Initiative, SETAC and United Nations Environment Programme. Vázquez-Rowe, I., Villanueva-Rey, P., Moreira, M.T., Feijoo, G., 2012. Environmental analysis of Ribeiro wine from a timeline perspective: harvest year matters when reporting environmental impacts. Journal of Environmental Management 98, 73–83. Vázquez-Rowe, I., Rege, S., Marvuglia, A., Thénie, J., Haurie, A., Benetto, E., 2013. Application of three independent consequential LCA approaches to the agricultural sector in Luxembourg. International Journal of Life Cycle Assessment 18, 1593–1604. Villanueva-Rey, P., Vázquez-Rowe, I., Moreira, M.T., Feijoo, G., 2014. Comparative life cycle assessment in the wine sector: biodynamic vs. conventional viticulture activities in NW Spain. J. Clean. Prod. 65, 330–341. Weber, C.L., Matthews, H.S., 2008. Food-miles and the relative climate impacts of food choices in the United States. Environmental Science and Technology 42, 3508–3513. Waye, V., 2008. Carbon footprints, food miles and the Australian wine industry. Melbourne J. Int. Law 9, 271–300. Wei, T., 2010. A general equilibrium view of global rebound effects. Energy Econ. 32, 661–672. Weidema Bo P., 2008. Rebound effects of sustainable production, Presentation to the ‘‘Sustainable Consumption and Production’’ session of the conference ‘‘Bridging the Gap; Responding to Environmental Change – From Words to Deeds’’, Portorozˇ, Slovenia, 2008.05.14-16. Zurawicki, L., Braindot, N., 2005. Consumers during crisis: responses from the middle class in Argentina. J. Bus. Res. 58, 1100–1109.
Contents lists available at ScienceDirect
Food Policy journal homepage: www.elsevier.com/locate/foodpol
Rebound effects due to economic choices when assessing the environmental sustainability of wine Graziella Benedetto a, Benedetto Rugani b, Ian Vázquez-Rowe b,c,d,⇑ a
Department of Science for Nature and Environmental Resources, University of Sassari, Via Piandanna 4, I-07100 Sassari, Italy Public Research Centre Henri Tudor (CRPHT)/Resource Centre for Environmental Technologies (CRTE), 6A avenue des Hauts-Fourneaux, L-4362, Esch-sur-Alzette, Luxembourg c Peruvian LCA Network, Department of Engineering, Pontificia Universidad Católica del Perú, Avenida Universitaria 1801, San Miguel, Lima 32, Peru d Department of Chemical Engineering, School of Engineering, University of Santiago de Compostela, 15782 Santiago de Compostela, Galicia, Spain b
a r t i c l e
i n f o
Article history: Received 4 October 2013 Received in revised form 8 July 2014 Accepted 31 July 2014
Keywords: Carbon footprint Consequential LCA Indirect effects Life Cycle Assessment Sustainable consumption
a b s t r a c t The identification and working mechanisms of Rebound Effects (REs) have important policy implications. The intensity of these impacts is crucial when it comes to detecting strategies to promote sustainable consumption of food and beverages, as in the case of wine. In fact, neglecting the occurrence of REs in wine production and delivery leads to under- or over-estimating the effects that novel more sustainable technologies may produce. An in-depth analysis on the ways in which the stakeholders may react to the availability of a new product (e.g. wine produced through a process oriented to the reduction of CO2 emissions) may be particularly useful to allow producers and consumers to target the REs with respect to the overall goals of desired sustainability. In this article, we first provide a definition and a classification of different types of REs and then analyse some exemplificative cases applied to the supply and consumption of wine produced through technologies that reduce environmental emissions or resource consumptions. A final step analyses the methodological tools that may be useful when including REs in life cycle thinking as applied to the wine sector. Ó 2014 Elsevier Ltd. All rights reserved.
Introduction Growth in economic activities originating as a consequence of the increase in production efficiency generates a phenomenon commonly referred to as the Rebound Effect – RE (Hertwich, 2005; Sorrell and Dimitropoulos, 2008). More specifically, the RE describes intensifications of resource or energy efficiency that do not necessarily result in a corresponding decrease in energy or resource use (Binswanger, 2001). While historically associated with the study of energy use, the topic of REs plays a significant role in the debate regarding the quantification of environmental impacts (i.e. resource use, pollutant emissions or generated wastes) using environmental management tools (Chitnis et al., 2013; Druckman et al., 2011). An example of these tools is the Carbon Footprint – CF indicator (BSI, 2011), which originates from the standardized and broadly accepted Life Cycle Assessment (LCA) method (ISO, 2006). Both CF and LCA aim, among other environmental management ⇑ Corresponding author at: Peruvian LCA Network, Department of Engineering, Pontificia Universidad Católica del Perú, Avenida Universitaria 1801, Lima 32, Peru. Tel.: +51 626 2000 4765. E-mail address: [email protected] (I. Vázquez-Rowe). http://dx.doi.org/10.1016/j.foodpol.2014.07.007 0306-9192/Ó 2014 Elsevier Ltd. All rights reserved.
methodologies, at elucidating on whether the introduction of a technical, apparently more sustainable, innovation in the product’s supply-chain may lead to a real environmental improvement of the entire life cycle. In doing so, the product in question is intended to become more ‘eco-compatible’ than its traditional counterpart. In contrast with this steady-state view, which matches the perspective covered by attributional LCA studies (EU, 2010), it is worth considering an evolutionary (dynamic) view in which the possible reactions on the market due to the implementation of this ‘new’ product are quantified and analysed (Giampietro and Mayumi, 2008). In fact, the latter fits in with the strategy followed in consequential LCA (CLCA), a life cycle approach that intends to raise the utility of LCA studies (e.g. policy making) by monitoring the environmental consequences of a change (UNEP, 2011). In addition, the identification of REs and their functionality mechanisms underlies important policy implications. The dimension of these effects is essential when the aim is to establish strategies to implement sustainable production and consumption patterns. In general, neglecting REs may result in an under- or over-estimation of the environmental and economic impacts that new sustainable technologies can provide at a broader scale (Chitnis et al., 2013). An in-depth analysis on the ways producers, on the one
168
G. Benedetto et al. / Food Policy 49 (2014) 167–173
hand, and consumers, on the other, may respond to the availability of a new production technology or a new product is essential to address the overall targets of desired sustainability to understand which might be the activity levels to be expected from this improvement. An interesting example is the wine sector, which has recently experienced a set of development actions addressed to perform a requalification of the supply-chain and labelling through the implementation of sustainable production models. For instance, Commission Regulation (EC) No. 607/2009, which develops Council Regulation No. 479/2008, advances a new framework for the labelling and presentation of certain wine products, which will have a direct effect on the European organisation of the wine market in the revised Common Agriculture Policy (CAP) 2014–2020). This new framework is expected to increase the wine niche markets, by introducing important modifications in the viticulture (e.g., adaptation of vineyards to organic and/or biodynamic practices) and packaging stages (e.g. the use of lighter bottles) along the supply chain. In fact, the implementation at a small scale of some of these actions have led to subsequent variable changes in the costs of winemaking and, therefore, in the final price paid by consumers. For instance, while CF studies on wine production suggest that the associated GHG emissions are lower when using PET bottles rather than glass (Point et al., 2012; Vázquez-Rowe et al., 2012), the related reduction of costs has increased the exportability of wine and, therefore, increased at the same time the overall life cycle carbon emissions caused by transportation, as well as the final price at retailing (Waye, 2008). Based on this background, the main aim of this article is to examine the concept of REs in the context of sustainable wine production (i.e. wine produced with technologies capable of reducing the consumption of resources and the emission of pollutants and wastes), while defining a roadmap to address current open questions about the assessment of REs in CF and LCA of wine through a CLCA approach. Analysing wine rather than other food or drink products that are more essential in the human diet (e.g. dairy or cereal-based products) has been considered effective in this article since wine products currently tend to go beyond national economic boundaries. This circumstance strongly influences price and market worldwide, making wine an interesting example due to its complex REs implications. Nevertheless, beyond the focus on the wine sector presented in this article, discussion attempts to explore the importance of REs in the food and beverages sector from a life-cycle perspective. The structure of the article is centred on the definition and classification of REs and the related economic and environmental implications associated with the inclusion of a possible technological innovation on the micro- and macro-level of the wine market, considering factors that influence the supply and demand of wine and their inter-relationship (e.g. the elasticity of price and income at the consumption’s demand scale).
Rebound Effects: theoretical background In the field of energy economics and savings, the RE (or takeback) refers to specific systemic responses that originate from the introduction of more efficient technologies in the production cycle. As a result, the positive effects attained with the new technology are generally counterbalanced due to the continuous dynamic adaptation of the economy to its own structures (Giampietro and Mayumi, 2008). For instance, Berkhout et al. (2000) state that a RE of 10% implies that 10% of the energy efficiency improvement initiated by the technological improvement is offset by increased consumption (p. 426). Extreme cases occur when the RE is higher than 100% (Jevons’ paradox or backfire) or even when the RE turns
out to be negative (defined as super-conservation) due to larger than expected effective savings (Jevons, 1865; Wei, 2010). In the field of LCA and environmental-economic accounting, Weidema (2008) defines REs as ‘‘[. . .] the derived changes in production and consumption when the implementation of an improvement option liberates or binds a scarce production or consumption factor, such as: (a) money (when the improvement is more or less costly than the current technology); (b) time (when the improvement is more or less time consuming than the current technology); (c) space (when the improvement takes up more or less space than the current technology), or d) technology (when the improvement affects the availability of specific technologies or raw materials)’’ (p. 1). Moreover, he distinguishes between three types of REs: (1) ‘‘specific’’, occurring when production and consumption of the product analysed changes; (2) ‘‘general’’, which takes place when the overall production and consumption changes; and (3) ‘‘behavioural’’, when the organisation of production and consumption changes, affecting both the product under study and other related products. REs are relevant at a producer scale as well as from the point of view of the consumer. Accordingly, it is worth recalling the definition given by Sorrell (2007a; p.5) concerning two other potential targets in which the direct REs can be decomposed: – in the case of producers, REs can be separated in two groups: ‘‘substitution effect REs’’ (whereby the cheaper energy service substitutes for the use of capital, labour and materials in producing a constant level of output) and ‘‘output effect REs’’ (whereby the cost savings from the energy efficiency improvement allow a higher level of output to be produced – thereby increasing consumption of all inputs, including the energy service); – in the case of consumers, REs are also divided in two types: ‘‘substitution effect REs’’ (whereby consumption of the (cheaper) energy service substitutes for the consumption of other goods and services while maintaining a constant level of ‘utility’ or consumer satisfaction) and ‘‘income effect REs’’ (whereby the increase in real income achieved by the energy efficiency improvement allows a higher level of utility to be achieved by increasing consumption of all goods and services, including the energy service). Substitution REs driven by consumer choices are valid for all consumption goods where the substitution effect is the most evident factor to explain the negative slope of the demand through the analysis of indifference curves (Samuelson and Nordhaus, 2002). In other words, the substitution effect shows that when the price of a good increases, consumers tend to choose other goods to satisfy their needs at a lower cost. In contrast, the income effect informs on the impact that a variation in price may have on the demand of goods which results from the effect of price variations on the actual income of consumers. In this respect, companies follow the same behavioural approach: the supply curve is influenced by the costs of production, which in turn are influenced by the prices of inputs and technological progress. In the shortterm, an increase in input prices implies an increase in costs, and thus a reduction in supply; while in the medium- to long-term, the reduction in price for some inputs may induce firms to replace the inputs that became relatively more expensive with those new factors, translating into a supply increase (Samuelson and Nordhaus, 2002). Finally, a ‘‘macro’’ effect also exists and cannot be neglected due to the transition towards a low carbon emissions economy. In fact, this opens many new opportunities of economic expansion, by generating new fast-growing markets (e.g. in the field of renewable energy production) that represent potential sources of development for companies, sectors and entire nations.
G. Benedetto et al. / Food Policy 49 (2014) 167–173
What Rebound Effects should we expect in the wine sector? A preliminary outlook The aim here is to evaluate, in a simplified but straightforward way, the potential REs occurring through the life cycle of wine production and consumption from a conceptual perspective. As an example for the discussion, we assume that the adoption by a wine company of a GHG protocol for analysis and monitoring of the CF (independently or within the LCA framework), which aims at providing technical suggestions to reduce life cycle emissions of CO2equivalent, represents an innovative process (i.e. helping to improve the application of existing industrial practices or defining new industrial strategies) and product (adding new attributes to the wine, making it a ‘new entity’; e.g. a wine bottle with an ecolabel). Moreover, it can induce systemic effects both on consumers and producers that can be associated with the framework of neoclassic economic principles, e.g. income and price elasticity, consumer behaviour, basic principles of demand and supply theory, etc. (Samuelson and Nordhaus, 2002). A first direct RE from the producer side originates from the reduction in costs due to the introduction of new technologies that reduce the CF. In other words, the boost in production and products delivery may arise from improved management and decisional solutions within the company framework and from learning processes that increase the productivity of resources in use. Fig. 1 shows the variation of production function based on a variable factor where the quantity of output (wine) depends on a given input, while other factors remains fixed (De Benedictis and Cosentino, 1979). The production functions related to the pre- and post- introduction of the selected technology, i.e. conventional and sustainable production, respectively, are delineated. In the latter, a reduction of CO2 emissions is assumed to occur due to the implementation of one or more technical innovations. In this case, the same quantity of wine (e.g. output, y1) can be obtained through a decrease in the consumption of inputs (e.g. plant protection agents, water, energy, etc.) and/or a better management of productive factors (e.g. renewal of internal and external logistics, with reference to goods and human resources, improvement of technical efficiency in the use of water for irrigation and of plant protection agents. . .). Similarly, more wine can be produced with the same amount of
Fig. 1. Variation of the production function at company scale after the introduction of a process/product innovation that increases the overall environmental sustainability (i.e. reducing the carbon footprint) (X2). Adapted from De Benedictis and Cosentino, 1979 (p. 258).
169
inputs (x1), since the productivity of the considered input grows (e.g. energy, but also capital or labour). As pointed out by Berkhout et al. (2000), the innovative processes make the resources more efficient from an energy profile perspective, since the same physical amount of resources require a lower quantity of inputs to generate the same initial output. From the producer’s viewpoint, this translates in an increase in the gap between revenues and costs and, thus, higher profits (p) whenever an improved application/modification of the existing technology exists. When a new technology is selected, e.g. the use of a vineyard recycling sprayer for spreading plant protection agents (Pergher et al., 2013), a constraint that should be considered is the possible modification of the current plan of production costs. In this particular case, both the purchasing cost of the machinery and the relative annual replacement’s reserve (used to reproduce the initial value of the capital) will grow, against a saving of purchasing costs in plant protection agents1, water and labour. In fact, this overlapping between economic and environmental sustainability suggests associating and strengthening the environmental performance analysis (i.e. LCA or CF) with economic life cycle methods, such as Life Cycle Costing – LCC (Heijungs et al., 2013). Other examples may relate this overlapping with approaches that aim to include in LCA the physical impact of commonly neglected inputs, such as human labour (Rugani et al., 2012), which are usually considered only from an ‘economic’ and/or ‘social’ value perspective. REs linked to innovative actions may be multiple and strongly dependent on entrepreneurial choices and practices, both regarding the purchase of inputs and the quantity and sale price of the wine, which may lead to a reduction (i.e. partial rebound) or even a disappearance (i.e. full rebound) of the steady-state environmental benefits initially computed (Wei, 2010). Concerning the purchase of inputs, a distinction can be made between process innovation due to i) a better application of the existing productive technique; or ii) the implementation of a new technology (e.g. the use of renewable energy sources or efficient machines, etc.). The former implies a RE caused by the larger amount of a specific good that has become less expensive (e.g. energy), or other inputs or services that may be purchased with retained earnings (Thiesen et al., 2008; Weidema, 2008; Barker et al., 2007; Sorrell, 2007b; Hertwich, 2005; Binswanger, 2001; Berkhout et al., 2000). The latter may induce, instead, the presence of a macro-RE on the rest of the economy due to the proliferation of demand for inputs that enable the reduction of emissions within the winemaking company, due to specific actions such as the increase of photovoltaic panels for energy production, the introduction of new machinery (e.g. recycling sprayer), lighter glass bottles, etc. Therefore, micro- and macro-REs, as well as long-term and short-term REs, are continuously on-going consequences that must be considered when proceeding with the calculation of CF, life cycle impact assessment methods, or other environmental indicators related to the life cycle of wine. More specifically, while their computation may not be necessary for steady-state (i.e. attributional) studies in which the direct environmental improvements and/or impacts are being monitored, REs are essential if the aim of the study is to provide policy support (including business decision making) recommendations. However, beyond the theoretical framework that is depicted in this article, the actual computation of realistic REs and, therefore, more accurate estimations of the efficacy of policies, are subject to extremely high uncertainties. 1 Using a recycling sprayer adapted to vineyards allows a reduction of up to 65% in emissions as compared to conventional spraying machinery. This unequivocally leads to economic and environmental benefits when applying plant protection agents in vineyards (Corradi, 2011; Tamagnone et al., 2013).
170
G. Benedetto et al. / Food Policy 49 (2014) 167–173
Table 1 Selection of possible consequences linked to rebound effects (REs) in the wine sector. Type of RE
Consequences linked to the producer
Raise in productivity
Increase in the use of plant protection agents and other operational inputs that may increase the impacts on the ecosystem (e.g. toxicity, eutrophication, GHG emissions, etc.) Land use changes (LUCs), with consequent effects on the carbon balance of the land and on landscaping Environmental impacts linked to increased infrastructure and operational inputs that may affect a wide range of impact categories, including climate change Interaction between the adopted price policy and consumer behaviour may lead to a reduction or suppression of the REs previously mentioned
Purchase new land Increase in capacity Influence the retail price
Consequences linked to the consumer Increase in the retail price Decrease in the retail price (a) Decrease in the retail price (b) Decrease in the retail price (c)
Decrease in CO2 emissionsa and other environmental impacts due to a higher amount of purchase power destined to consuming wine Decrease in CO2 emissions and other environmental impacts due to a lower amount of purchase power destined to consuming wine. The products that are consumed instead are less carbon-intensive Increase in CO2 emissions and other environmental impacts due to a lower amount of purchase power destined to consuming wine. The products that are consumed instead are more carbon-intensive than wine Decrease in CO2 emissions and other environmental impacts due to a lower amount of purchase power destined to consuming wine. These savings are not used to purchase other products
a Only CO2 emissions are considered for the representative example of wine in this article; the same may hold for any other environmental intervention flow that may cause an environmental impact, e.g. water use, fossil fuel consumption, land occupation, emissions of SO2, NOx, other GHGs, heavy metals, etc.
These uncertainties, as suggested by Vázquez-Rowe et al. (2013), are related to the limitations that researchers find when it comes to applying prediction models that can actually illustrate the complexity of real markets. Consequences of Rebound Effects Additional REs may occur due to the variable availability and fluctuating sale price of wine products (Table 1). In the first place, the costs reduction derived from the introduction of the process innovation may encourage the wine producer to strengthen the production (output effect). For instance, in the case of an integrated enterprise (where grapes are produced and transformed and, thereafter, wine is bottled and distributed) the entrepreneur may decide to increase the wine production in the short-term, especially if the plant does not usually work at full capacity. This may have repercussions outside the wine-making industry, because more inputs are needed (e.g. bottles, labels and other packaging materials, but also fuels associated with increased transportation). However, if the winery already operates at its maximum working capacity, a constraint associated with this type of ‘fixed factor’ exists. Moreover, in the medium- to long-term, the producer may be induced to raise the productivity per hectare (in compliance with law standards and regulations, as well as the quality of grapes to be obtained), or purchase new land for viticulture, with plausible consequences on soil quality and land use changes. Finally, the producer may also decide to increase the capacity of the winery to manage the expected increase in harvest. Thereafter, the entrepreneur can also influence the retail price, but in this case the consumers’ demand and wine purchasing behaviour should be taken into consideration (Corduas et al., 2013; Lockshin and Corsi, 2012; Thrane and Nielsen, 2009), as depicted in Fig. 2. This aspect is of particular importance, because the interaction between the adopted price policy and consumer reaction can again lead to a reduction or suppression of the effects obtained. The options selected by the producer and the possible reactions of the wine consumer can be various. Also in this case it is necessary to distinguish among the introduced innovations: if an improved application of existing technology has been selected, producers may take advantage of the reduced cost gained in different ways, including the selection of the market and/or consumption’s segment in which they want to place the eco-friendly wine. If the eco-wine is sold in a niche segment which is willing to pay
a premium price2 to repay the company for the effort made, the producer may also decide to increase the selling price of the wine, increasing further the margin of profit.3 This is accomplished by the fact that, in addition to reducing the production costs, the company also generates an advantage of differentiation, because the introduction of a technological innovation that lowers CF (directly and/or indirectly) leads to the realization of a ‘new’ product by modifying the attributes of the wine (Giampietro and Mayumi, 2008). In fact, as already pointed out elsewhere (Rugani et al., 2013), indicating CO2 emissions on the product’s label introduces an element of differentiation in the wine marketed, transforming a credence attribute (Darby and Karni, 1973), which cannot be checked either before or after the purchase4 (Grunert, 2002), into a search attribute, which instead can be detected before the purchase by offering the consumer an element of judgment able to reduce the time of selection for a given product. In addition, it is important to highlight the fact that consumers do not react in the same way when interpreting the information contained in the eco-labels (both in general and in specific cases, such as when the eco-label includes CF information). As mentioned in Baddeley et al. (2012), ‘‘carbon labels are most likely to influence the shopping behaviour of younger, better-educated women, the group that tends to do the majority of household grocery shopping, and least likely to influence older, less-educated men’’ (p. 65). Accordingly, the benefit given to the community by implementing the innovative process will provide a feedback in the price, thus internalising the positive externality ascribed to the community. In fact, an increase in the retail price can make the improved wine more eco-friendly than conventional wine, as stated by Thrane and Nielsen (2009) ‘‘not necessarily because it represents a lower environmental burden per kg, but because it is more expensive’’ (p. 2). In this respect, they emphasise that for cheap wine the intensity of GHG per unit of currency is 5 times higher than that of an expensive wine. This price policy, even if practiced in markets that are not sensitive to environmental problems, can adversely affect the environ2 In this respect, an interesting aspect to examine would be to detect the willingness to pay for wines produced with processes that emit less greenhouse gases, contributing to the mitigation of climate change. 3 The difference between revenues and costs increases not only due to a reduction of unit costs but also to an increase in the selling price. 4 The process of adaptation of the company production system towards a reduction in environmental emissions, undertaken with the aim of contributing to the decrease of global warming, represents information that cannot be verified through the consumption of wine, as it is for the taste instead.
G. Benedetto et al. / Food Policy 49 (2014) 167–173
171
Fig. 2. Graphical representation of the expected rebound effects linked to the shift from conventional to organic wine from a consumer perspective.
mental improvement obtained, because direct REs associated with consumer behaviour can influence the market system. More specifically, the substitution effect comes into operation whereby the traditional consumers of wine tend to satisfy their needs in the most economical way, by replacing the wine that has become more expensive with others that fulfil the same utility function (Lange et al., 1998; Lockshin et al., 2006; Sáenz-Navajas et al., 2013). Another opportunity is to focus on the penetration in markets where the ‘‘CF attribute’’ is taken for granted (e.g., UK, USA, New Zealand; respectively; Gadema and Oglethorpe, 2011; Hughey et al., 2005) and where the price’s competitiveness is high. In this scenario the entrepreneur can opt for a reduction in wine price while maintaining constant the earning level defined prior to the innovation. Besides a price reduction of the eco-wine, a demand increase due to the effect of substitution from e.g. conventional to organic wine may occur, as well as a purchase growth by consumers already oriented towards that product category and a retailing expansion to those markets particularly sensible to environmental sustainability issues (Mueller et al., 2010). The action of substitution may not be effective because the demand for wine is, on average, inelastic compared to price (Fogarty, 2008), in a similar way to most agri-food products. Nevertheless, a collection of case studies provided by Fogarty highlights a wide diversity of elasticity coefficients between countries, with cases where the demand is elastic with respect to price (e.g., Ireland, Finland or Spain) (Fogarty, 2008). However, this is a very simple representation of reality, which should be tested
against specific case studies, including those that have been previously provided for other sectors (Thiesen et al., 2008). Indeed, it is questionable that a reduction in the price may afford an increase in the purchase of eco-wine, since consumers who already buy such a wine may decide to spend more money on other goods and services (Binswanger, 2001; Hertwich, 2005), generating in turn other undesired environmental burdens indirectly (see Fig. 2). The dimension of REs is even bigger if looking at the increase in the quantity demanded caused by the income growth (i.e. the socalled income effect): the wine income elasticity estimates a mean value of 1.10 (Fogarty, 2008), considering wine a luxury good rather than a necessity. This is particularly true when observing the income country elasticity (e.g., Ireland, UK or USA), which would give access to categories of goods (other than wine) previously excluded. In fact, this particular phenomenon may potentially be a current key driver in emerging economies (i.e. BRICS), where an increase in luxury product consumption has been observed throughout the middle class segment (Zurawicki and Braindot, 2005), and in traditionally wine consuming nations hit by the recent recession (e.g. Spain or Portugal). Moreover, there are a set of indirect effects related to energy savings that should not be overlooked and which are activated by the pattern of green consumption adopted by consumers to mitigate climate change. A recent research conducted by the EU (Eurobarometer, 2009) observed that among European citizens who affirm to undertake personal actions (63% of respondents) to reduce their contribution to global warming, about one third tend
172
G. Benedetto et al. / Food Policy 49 (2014) 167–173
to buy seasonal food, with an underlying intention to contribute to the reduction in the consumption of food that implies long-distance transport from the production to the consumption site. While some previous studies have shown that these patterns typically reduce energy consumption and CO2 emissions (Alfredsson, 2004), these reductions have shown to be, in most cases, only marginal. In fact, the assessment of the so-called food miles has shown to represent only 11% of the GHG emissions linked to agri-food products in the US (Weber and Matthews, 2008), demonstrating that their sole computation is far from representing the environmental profile of the supply chain analysed. Therefore, it seems evident that the adoption of green consumption patterns in face of a constant raise of total consumptions does not solve the problem of climate change (via reduction of CO2 emissions) or other impacts, but can represent at best a temporary palliative (Alfredsson, 2004).
Conclusions and future outlook The present study attempted to identify and discuss the REs rising from the life-cycle of wine production and consumption. These are generally linked to the inclusion of new technologies throughout the supply chain, and are intended to lower the direct and/or indirect resource use and pollutants release (such as carbon emissions). Therefore, a similar approach to the study of REs could be ideally extended to other food or drink products. However, the characteristics of each product with respect to its market make the list of hypothetic REs vary from product to product. In other words, to identify the REs, the product under study should be considered by tracing back the steps necessary for its production, up to the function of consumption and its elasticity to revenue and price, because not all products categories have the same economic features. Moreover, even within the same category of agri-food products, subcategories may exist that do not show the same behaviour in response to consumption patterns of the ‘macro’-category (e.g. vegetables, bread, wine, dairy products, etc., all of which may have both organic and conventional production methods). The analysis has been made by sharing the viewpoint of those who argue that ignoring REs can lead to over- or under-estimate the environmental burdens of a particular production process aimed at reducing resource consumption and/or emission rates. However, it is evident that the short discussion presented here does not exhaust the wide range of systemic effects associated with the implementation of sustainable technological progress, both from the side of the producer and the consumer. In fact, in line with what has been argued in the literature (Giampietro and Mayumi, 2008; Freire González, 2010; Vázquez-Rowe et al., 2013), a debate on the wide range of actual REs and the way to model and compute them would allow achieving a clear definition and a fair indication of what effects are to be included in the analysis, as well as their role within the system boundaries of the product studied. Further developments are needed to achieve an in-depth analysis of the quality and size of REs, through empirical measurements and appropriate applications to specific case studies. For instance, in the case of the wine sector the conversion of conventional vineyards to organic or biodynamic practices constitutes an appealing field of study, given the important effects that this conversion may have on harvest yield, use of inputs or soil quality (Villanueva-Rey et al., 2014). Therefore, the implementation of these conversion processes at a large scale would imply the existence of new equilibriums in the wine sector worth assessing. As a consequence, it is important to quantify the environmental consequences related to the domino effect that new economic equilibriums may have on consumer behaviour throughout their
purchase power beyond wine consumption. In other words, the use of a consequential perspective (i.e. CLCA) appears as a challenging milestone to monitor the actual environmental benefits of improving the steady-state environmental efficiency (and, thereafter, reducing costs) of wine systems (Rugani et al., 2013). Moreover, it would enable taking the environmental assessment a step further, by analysing how the changes in a given production system interrelate in a wider scope with other (related) production systems. The development of this methodological perspective would allow refining policy and decision making in the wine sector through the identification, if any, of super-conservation REs (i.e. those that reduce the environmental emissions at a higher rate than the actual technological improvements), as previously discussed by Wei (2010). In fact, the identification of super-conservation REs through CLCA would aid in defining which improvement scenarios would actually entail final environmental benefits. The implementation of a consequential perspective in life cycle thinking, through the integration of economic equilibrium models with LCA may constitute an important step forward in obtaining accurate calculations of the GHG emission improvements (or other monitored environmental impacts) that may be actually achieved in practice if REs are considered.
Acknowledgements Authors with affiliation to the University of Santiago de Compostela (Spain) belong to the Galician Competitive Research Group GRC 2013-032. Dr. Ian Vázquez-Rowe wishes to thank the Galician Government for financial support (I2C postdoctoral student grants programme).
References Alfredsson, E.C., 2004. ‘‘Green’’ consumption – no solution for climate change. Energy 29, 513–524. Baddeley, S., Cheng, P., Wolfe, R., 2012. Trade policy implications of carbon labels on food. J. Int. Law Trade Policy 13, 59–63. Barker, T., Ekins, P., Foxon, T., 2007. The macro-economic rebound effect and the UK economy. Energy Policy 35, 4935–4946. Berkhout, P.H.G., Muskens, J.C., Velthuijsen, J.W., 2000. Defining the rebound. Energy Policy 28, 425–432. Binswanger, M., 2001. Technological progress and sustainable development: what about rebound effect? Ecological Economics 36, 119–132. BSI-British Standards Institution, 2011. PAS 2050:2011 Specification for the Assessment of the Life Cycle Greenhouse Gas Emissions of Goods and Services. British Standards Ed., London, UK.
G. Benedetto et al. / Food Policy 49 (2014) 167–173 Gadema, Z., Oglethorpe, D., 2011. The use and usefulness of carbon labelling food: a policy perspective from a survey of UK supermarket shoppers. Food Policy 36, 815–822. Giampietro, M., Mayumi, K., 2008. The Jevons Paradox: The evolution of complex adaptive systems and the challenge for scientific analysis. In: Polimeni, J.M., Mayumi, K., Giampietro, M. (Eds.). The Jevons Paradox and the Myth of Resource Efficiency Improvements. Earthscan, ISBN: 978-18-4407-4624. Grunert, K.G., 2002. Current issues in the understanding of consumer food choice. Trends in Food Science & Technology 13, 275–285. Heijungs, R., Settanni, E., Guinée, J., 2013. Toward a computational structure for life cycle sustainability analysis: unifying LCA and LCC. International Journal of Life Cycle Assessment 18, 1722–1733. Hertwich, G., 2005. Consumption and the rebound effect. An industrial ecology perspective. Journal of Industrial Ecology 9, 85–98. Hughey, K.F.D., Tait, S.V., O’Connell, M.J., 2005. Qualitative evaluation of three ‘environmental management systems’ in the New Zealand wine industry. J. Clean. Prod. 13, 1175–1187. ISO, 2006. ISO 14040:2006. Environmental Management – Life Cycle Assessment – Principles and Framework. International Organization for Standardization, Geneva. Jevons, W.S., 1865. The Coal Question: Can Britain Survive? Macmillan, London, UK, 1906. Lange, C., Rousseau, F., Issanchou, S., 1998. Expectation, liking and purchase behaviour under economical constraint. Food Quality and Preference 10, 31–39. Lockshin, L., Jarvis, W., d’Hauteville, F., Perrouty, J.P., 2006. Using simulations from discrete choice experiments to measure consumer sensitivity to brand, region, price, and awards in wine choice. Food Quality and Preference 17, 166–178. Lockshin, L., Corsi, A.M., 2012. Consumer behaviour for wine 2.0: a review since 2003 and future directions. Wine Econ. Policy 1, 2–23. Mueller, S., Osidacz, P., Leigh Francis, I., Lockshin, L., 2010. Combining discrete choice and informed sensory testing in a two-stage process: can it predict wine market share? Food Quality and Preference 21, 741–751. Pergher, G., Gubiani, R., Cividino, S.R.S., Dell’Antonia, D., Lagazio, C., 2013. Assessment of spray deposition and recycling rate in the vineyard from a new type of air-assisted tunnel sprayer. Crop Prot. 45, 6–14. Point, E., Tyedmers, P., Naugler, C., 2012. Life cycle environmental impacts of wine production and consumption in Nova Scotia, Canada. J. Clean. Prod. 27, 11–20. Rugani, B., Panasiuk, D., Benetto, E., 2012. An input–output based framework to evaluate human labour in life cycle assessment. International Journal of Life Cycle Assessment 17, 795–812. Rugani, B., Vázquez-Rowe, I., Benedetto, G., Benetto, E., 2013. A comprehensive review of carbon footprint analysis as an extended environmental indicator in the wine sector. J. Clean. Prod. 54, 61–77. Sáenz-Navajas, M.P., Campo, E., Sutan, A., Ballester, J., Valenetin, D., 2013. Perception of wine quality according to extrinsic cues: the case of Burgundy wine consumers. Food Quality and Preference 27, 44–53.
173
Samuelson, P.A., Nordhaus, W.D., 2002. Economia. Milano, Mc Graw-Hill. Sorrell S., 2007a. The Rebound Effect: An Assessment of the Evidence for the Economy-wide Energy Savings from Improved Energy Efficiency. UKERC.