Food production is responsible for more than 25 percent of all greenhouse gas emissions, most of that due to livestock. Yet agriculture has long been excluded from national plans to reduce greenhouse gas emissions. Since it can be challenging to regulate the food production industry’s emissions from the supply side, a viable alternative may be passing on the environmental costs of food production to the consumer.
This strategy is intended to reduce the demand for foods with a large environmental impact while increasing the demand for more sustainable (and typically more affordable) food options. A recent paper published in Nature Climate Change suggests that if tax-adjusted food prices are based on the environmental impact of their production, then the environmental costs of agriculture could be substantially lowered. As a bonus, the money from the tax could be used to lower the cost of foods that are healthier and more environmentally friendly.
The authors of the paper used an environmental-economic analysis of greenhouse gas taxation of food products, embedding it within a health modeling framework. They use this analysis to assess the impact of potential changes on major world regions, including countries at all stages of economic development. The result is the first global analysis of the environmental and health impacts of a greenhouse gas tax on foods.
The authors used a life-cycle analysis to quantify the emissions related to food production. To figure out how much environmental tax should be assigned to foods, they used an assumed emissions price of $52 per metric ton of CO2, a cost calculated to correspond to the present value of future climate damages associated with each additional ton of carbon dioxide or equivalent. They also used a global comparative risk assessment framework that accounted for five major diseases (coronary heart disease, stroke, diabetes, cancer, and other disease risks) as well as the effect of weight (overweight/normal/underweight).
The authors found that a tax on all food commodities would result in 146,000 deaths avoided globally in the year 2020, two-thirds of which would be due to changes in dietary risk. In this model, the authors found that maintaining broad tax coverage—meaning many countries adopt the tax—would maximize the health benefits, particularly in terms of reductions in overweight and obese populations. Additionally, this broad taxation approach was most beneficial in terms of raising the tax revenues—these taxes could then be used to subsidize vegetables and fruits, furthering the consumption of healthier, less environmentally problematic foods. In this sense, it could be similar to the fee-and-dividend approach that's been suggested for carbon emissions.
The authors did raise concerns about potential negative impacts of the tax, such as reductions in food availability and security. They included these potential negative impacts in their model and found that if tax plans were tailored for each region, the negative impacts could be alleviated, and the global health impact would still be extremely positive.
Overall, these models indicate that implementing a greenhouse-gas based tax on food commodities would help both the environment and human health. Contrary to concerns that it would cause increased food prices and reductions in food availability, the authors find that it could result in lower obesity and other health benefits from reductions in red meat consumption. So the tax could benefit people with less income, who would be more likely to eat better diets. Additionally, if people are eating healthier diets, countries would be able to save money on medical costs for their citizens.
The analyses presented in this study focused only on taxes based on greenhouse gas emissions. Though the authors did include potential benefits of an environmental food tax, such as reduced land usage and reduced nitrogen pollution in water, they didn't take into account methane, which is a major byproduct of most livestock operations. Additionally, the work couldn’t account for market adjustments, as it used a comparatively static economic framework, which assumes that the current economic situation will persist.
Still, the study presents a compelling argument that environmental-impact taxes on food products could help both the environment and human health. As we move forward into a less environmentally secure future, these taxes may be an important option for governments to consider.