Food decisions can be crucial not only for our own bodies, but also for the health of the planet. Unfortunately for policymakers, consumer diets have so far proved fairly resistant to public information campaigns. Most economists instead recommend taxes as the most efficient tool for reducing the footprint of our supermarket shopping lists. In a new study featured in ‘The New York Times’ earlier this year, TSE researchers Céline Bonnet, Zohra Bouamra-Mechemache and Tifenn Corre suggest that the best strategy is to focus carbon taxes on beef.
After the energy sector, agriculture is the industry with the greatest impact on the environment. In 2010, agriculture, forestry and other land use accounted for 24% of greenhouse gas (GHG) emissions. As well as climate change, the agricultural sector is also a significant contributor to problems of eutrophication, biodiversity, deforestation, land use, water use, and toxicity. Within agriculture, beef and dairy cattle are major polluters, producing almost two-thirds of global livestock emissions.
Despite the widely demonstrated health and environmental benefits of eating less meat, current trends suggest that global meat consumption will increase by 72% between 2000 and 2030, according to the World Health Organization. Meat consumption is also expected to continue to rise in Europe, with a decrease in the share of red meat in favor of white meat.
Encouraging more sustainable consumption habits and achieving a reduction in meat consumption is a difficult task. For researchers, measuring a policy’s impact is complicated as consumers can substitute the taxed products by others in patterns that are extremely hard to predict. Eating less meat, for instance, might lead to an increase in consumption of fish or dairy. Habits vary within food categories too: consumers may find it harder to give up fresh meat than to eat less processed ham.
In their paper, the researchers analyze the impact of environmental price policies that specifically target the consumption of animal products. Most studies on consumer demand for animal products use data aggregated at the country or regional level, but the TSE study uses a dataset with uniquely detailed information on food purchases by individual French households.
“The idea of taxing the consumption of animal products to guide household decision-making is not new. However, the efficiency of such taxes has not yet been fully investigated. We estimate consumption patterns for the main animal products and a vegetable-based food aggregate, allowing us to study substitution patterns very precisely.”, say the researchers. To meet European Union targets, GHG emissions must be reduced by 20% by 2020, and by 60% by 2050, and the recommended carbon price is €56 per ton for 2020 and €200 per ton for 2050. The Toulouse researchers use these carbon prices to simulate the impact of a carbon tax on the consumption of animal products.
The researchers’ results show that a low tax (€56 per ton of CO²-equivalent emissions) on the consumption of all animal products leads to a very small change in GHG emissions. A high tax (€200 per ton of CO²-equivalent emissions), would lead to a 6% decrease in GHG emissions embedded in all considered food products, and up to a 9% reduction in acidification. Both tax levels would fail to meet the EU target of a 20% reduction in GHG emissions by 2020.
“We find that the GHG impacts are much smaller than those identified in the previous literature based on more aggregated data,” says the researchers. “The reason is that the demand for animal products is less elastic at the aggregated level. A change in the price of animal products generates quite low and partial substitutions with vegetable-based food products. This is because part of the substitutions occurs within the animal product categories.”
The most efficient scenario, says the researchers, is a high tax only on the consumption of beef. Such a tax would achieve a 3.2% decrease in GHG emissions, which represents more than half the environmental benefits from taxing all animal products, but it would generate only 12% of the cost to households.
Considering substitutions between all food items both within and between food categories is a challenging objective for future work. Researchers and policymakers also need to better anticipate the behavior of the meat supply chain when faced with a new tax policy. Céline has previously shown, in a 2013 study with TSE’s Vincent Réquillart, that ignoring firms’ strategic pricing decisions can skew estimates of the impact of a sugar tax on soft drinks.
In the context of growing health and environmental concerns such as obesity and climate change, new methodologies to evaluate public policy will require more detailed information about consumer diets and food suppliers. Economists in Toulouse will have plenty to get their teeth into.
FIND OUT MORE: ‘An environmental tax towards more sustainable food: empirical evidence of the consumption of animal products in France’ by Céline Bonnet, Zohra Bouamra-Mechemache, and Tifenn Corre was published in Ecological Economics in May.
Extract of the TSE Mag #17 Summer 2018