Is Certification a Promising Way to Ensure Sustainable Resource Use? An Analysis Based on the Concept of 'Self-Enforcing Contracts'

In the past decade several certification schemes have been developed in order to promote sustainable resource use, especially in foreign countries where it is impossible to rely on direct enforcement of process standards. Based on the concept of 'Self-Enforcing Contracts' a model is developed simulating the simultaneous market equilibrium for certified natural resource units and physically identical units produced without observing certain environmental standards. The model along with some empirical evidence from tropical forestry yields that very likely certification will fall short in ensuring sustainable resource use. Basic natural resource management has to be primarily steered by governments and administrations, not by market forces.