Potential demand for certified wood products in the United Kingdom and Norway

Abstract

Representative samples of the British and Norwegian population were surveyed by telephone and asked to make a hypothetical choice between unlabeled wooden furniture and more expensive eco-labeled wooden furniture. Choice behavior was modeled as a random utility model with utility-theoretic restrictions on choice and estimated willingness to pay (WTP). To counteract upward biased hypothetical values, a followup question assessed the certainty of respondents' choices. For those not choosing the eco-labeled alternative, another followup question assessed if these individuals could be regarded as indifferent. Compared to the unlabeled wooden furniture with a price of US$332 in the UK and US$275 in Norway, the extra median WTP for the eco-labeled alternative was estimated to be US$5.16 (1.6%) in the UK and US$2.79 (1%) in Norway, with a censored log-logistic binary choice model. In these estimates only the "absolutely sure" were counted as valid choices of the eco-labeled alternative. The censoring implied that those who indicated indifference between unlabeled and eco-labeled furniture had their estimated WTP adjusted to 0. About 39% of the UK population and 32% of the Norwegian population are predicted to choose the eco-labeled alternative when the price difference is less than 5%.