Taxing food consumption to reduce environmental impacts

The paper models several sets of scenarios, including taxing various sets of food (all products, animal products, beef, or monogastric meat and eggs) based on their greenhouse gas emissions; taxing based on emissions only at the agricultural stage or up to the point of retail; weighting the climate contribution of different GHGs according to either their 100-year Global Warming Potential or an alternative measure, the Global Temperature Potential; taxing based on six environmental impact categories; and changing the value-added tax (VAT) rate for animal products relative to plant-based products.

The main conclusions of the paper include:

• Most of the taxation scenarios modelled reduce both climate and other environmental impacts through an overall reduction in food consumption and particularly a reduction in animal product consumption. The greatest reduction in environmental impacts were found when all food products were taxed, followed by the case in which only animal products were taxed.
• Environmental impacts of food across many impact categories would remain high (compared to the environmental boundaries proposed by the EAT-Lancet Commission) even after taxation, meaning that food taxes alone are not sufficient for transforming the food system to be more environmentally sustainable.
• If VAT on fruit, vegetables and cereals were to be decreased relative to other food categories, overall food consumption would likely increase, causing greater overall environmental burdens in all impact categories. This is in line with the findings of a previous study, which nevertheless noted that greater consumption of plant-based foods could have social benefits such as lower healthcare costs. The authors of the present paper note that simultaneously lowering VAT on plant-based foods and raising VAT on animal products leads to overall lower environmental impacts, and could in theory be more acceptable to consumers because they would be compensated for some of the price increases.
• Taxing only monogastric meat and eggs would likely increase consumption of sheep meat. The biodiversity impacts of this depend on where the sheep would be reared: if in Sweden, this tax scenario would decrease overall biodiversity impacts (because in Sweden many species rely on traditional grazed landscapes); if in New Zealand, which currently provides around 20% of the Swedish demand for sheep meat, then global biodiversity impacts would be negative.
• Many of the tax scenarios decreased beef and sheep meat consumption. While this could be seen as positive from the global perspective since it would limit the expansion of agricultural land use, there could be negative impacts for Swedish biodiversity on traditional grazed landscapes.
• Regarding pesticide use, toxicity impacts could increase in scenarios where more pork and chicken are consumed, if this meat comes from systems that rely on large amounts of soy feed.
• In the scenario with the largest reduction in food consumption arising from food taxation, average energy intake would fall from 2800 kcal per capita per day to 2600 kcal. The scenario with increased food consumption saw a 36 kcal increase. The recommended intake is 1700 to 3200 kcal depending on the individual. Hence, environmental food taxes as modelled in this paper are not likely to lead to either insufficient or excessive caloric intake. Although the paper does not focus on the social justice element, the authors do note that measures should be taken to protect consumers who might be particularly negatively affected by food taxes, such as families with children, or the unemployed.

Abstract

This study analysed the environmental impacts of taxation on Swedish food consumption and sought to identify potential synergies and goal conflicts between environmental aspects. This was done by analysing various taxation scenarios to reduce environmental impacts of food, including taxation based on: climate impact; a score based on weighting of several environmental impacts; and adjusted rates of value-added tax (VAT).

A net decrease in food consumption was seen for most taxation scenarios, resulting in reduced burdens for climate change and most other environmental categories. An exception was found for a scenario simulating reduced VAT rates for plant-based products, where a net increase of food consumption was seen, resulting in an increased burden for all environmental categories. Many of the scenarios resulted in a decrease in beef consumption, and hence a decline in pasture use. This is positive from a global perspective by limiting expansion of agricultural land, but on regional level in Sweden it could cause a goal conflict with maintaining biodiversity-rich semi-natural pastures. To avoid this, beef production on semi-natural pastures could be further incentivised by production-side measures. With regard to biodiversity loss, the overall burden could increase if taxation leads to an increase in products from biodiverse regions.

Reference

Moberg, E., Säll, S., Hansson, P.A. and Röös, E., 2021. Taxing food consumption to reduce environmental impacts–Identification of synergies and goal conflicts. Food Policy, 101, p.102090.

Read the full paper here. See also the TABLE explainer What can be done to shift eating patterns in healthier, more sustainable directions?