ABSTRACT
The popularity of eco-labeled products is primarily based on the market-driven approach to achieving environmental goals. The increased concern of consumers for the environment and food safety, reflected by their willingness to pay relatively higher prices for products that has been produced in an environmentally friendly manner, provides a positive incentive for producers to choose techniques that minimize the adverse effects on the environment and improve the quality of final products. However, this popularity is not without controversy. Many developing countries are afraid of losing market access for their products that often do not meet existing PPMs in developed countries since information about production methods, contained in labels, can shift consumers’ demand away from a country’s product that has not qualified for the eco-label. In view of the resulting adverse terms-of-trade consequences for developing countries, eco-labeling has become a much debated topic within the context of the World Trade Organization (Nordstrom and Vaughan (1999), United Nations (1997), WTO (2000)).
