Green public procurement: An empirical analysis of the effect of organic food policy on farmland

Promotion of public procurement as a policy instrument is growing stronger. In 2002 the Organization for Economic Cooperation & Development (OECD) adopted a recommendation on green public procurement (GPP) which is defined as a purchasing process where the public authority takes the environment into consideration when buying products, services or works (European Commission 2008). Since then, GPP policies have been implemented in member countries like Sweden, Netherlands, USA, Japan, Australia, and South Korea, but also in countries outside the OECD such as China, Thailand, and Philippines (European Commission 2008). By the use of their purchasing power, public authorities are expected to shape consumption and production trends and thereby increase demand and alter the market structure in favour of more environmental friendly products. (Li and Geiser 2005). We study the case of a demand-side policy implemented by the Swedish government in 2006 and updated in 2017, aiming at increasing public sector’s demand for organic food, in order to incentivize Swedish farmers to convert to organic production. We use municipal procurement panel data including information about organic food purchases from 2003 to 2016, supplemented with county level agricultural data and controls. Based on weighted least square estimations our results indicate that the increase in the share of organic land cannot be explained by indirect policy in the form of public organic food procurement, but rather by direct agricultural policy in the form of subsidies. While concepts of GPP, its adoption, implementation and barriers thereof, are areas which have largely been explored, the lack of conclusive evidential effects of GPP clearly motivates the need to empirically estimate the impact of using GPP as an instrument of environmental policy. This paper adds significant empirical knowledge to this relatively new area of research (Testa, Iraldo, et al. 2012; Cheng, et al. 2018) and is, to our knowledge, the first to empirically estimate the impact of GPP on organic farmland.

Key words: Green public procurement, Agricultural policy, Land use policy, Environmental policy analysis, Organic food, Organic farming.