Micro-Macro Linking Using System Dynamics Modeling: An Examination of Eco-Labeling Effects for Farmed Shrimp

Eco-labeling has been heralded as a market-based approach useful in addressing environmental issues. While a growing number of eco-labeling projects are found in nations around the world, most models examining eco-labeling effects tend to be focused either on environmental impacts or consumer adoption of eco-labeled goods and do not attempt to link consumer behavior to environmental impact. The current article offers a somewhat different approach by using system dynamics modeling to capture both consumer adoption and environmental conservation for a case example of farmed shrimp. Policy analyses conducted via simulations suggest that consumers' willingness to pay for eco-labeled products is influential on the success of eco-labeling initiatives. Raising willingness to pay by appealing to personal health issues through promoting organic products may be an effective policy lever to lessen environmental impacts at production sites.