New Food Labels Promote Sustainable Products

These days it seems everything is going “green,” with varying levels of real environmental benefit. But some green ideas are based on sound economics. According to the Economist, the increased use of FSC (Forest Stewardship Council) and MSC (Marine Stewardship Council) labels on wood products and fish are predicated on basic economic theory. Free markets have trouble accounting for “negative externalities,” in other words, costs that are not borne by the producer or consumer but by either a third party or the community at large. Much pollution is a result of such negative externalities, and finding a way to force the market to account for them is the goal of many environmental policies. The use of FSC and MSC labels alerts customers that these products are environmentally friendly. This not only attracts many consumers but also explains to them why a product may cost slightly more than its cheaper, less eco-friendly rival. The labels have been embraced by numerous large chains, including Wal-Mart, which bodes well for this particular “green” innovation.

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