Voluntary Sustainability Standards and Socioeconomic and Ecological Outcomes – Panel evidence from Rwanda’s Coffee Sector

Voluntary sustainability standards (VSS) provide consumers with the assurance that certified products are produced under more sustainable conditions. While the literature on VSS has expanded considerably, most studies rely on cross-sectional data, thereby providing only a snapshot in time and focus on the effects on single sustainability dimensions, thereby neglecting potential trade-offs between multiple dimensions. In addition, little is known of the extent outcomes are influenced by the duration of participation. Economic gains may accrue in the short to medium term, whereas ecological effects often take longer to materialize. Our study addresses these gaps by using a unique three-wave panel dataset from Rwanda's smallholder coffee sector. We combine household-, buyer- and plot-level data to estimate how in-house certification (C.A.F.E. Practices), third-party certification (The Rainforest Alliance, Fairtrade, Organic, 4C), and certification duration are associated with both socioeconomic and ecological outcomes. Our results suggest that only third-party certification is significantly positively associated with socioeconomic outcomes such as coffee yield, prices, profits and returns to land. Moreover, we find that for both VSS types the socioeconomic outcomes increase, the longer a household is certified. Regarding ecological outcomes, only third-party certification duration shows significant positive associations with shade tree density. In addition, for both VSS types, we do not find any significant associations with outcomes related to animal diversity. Overall, the findings highlight that VSS should be understood as a long-term process where sustainability-related changes materialize over time. The findings also suggest that the environmental requirements - especially of in-house schemes - may be set too low.