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The effect of using consumption taxes on foods to promote climate friendly diets – The case of Denmark

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  • Edjabou, Louise Dyhr
  • Smed, Sinne

Abstract

Agriculture is responsible for 17–35% of global anthropogenic greenhouse gas emissions with livestock production contributing by approximately 18–22% of global emissions. Due to high monitoring costs and low technical potential for emission reductions, a tax on consumption may be a more efficient policy instrument to decrease emissions from agriculture than a tax based directly on emissions from production. In this study, we look at the effect of internalising the social costs of greenhouse gas emissions through a tax based on CO2 equivalents for 23 different foods. Furthermore, we compare the loss in consumer surplus and the changed dietary composition for different taxation scenarios. In the most efficient scenario, we find a decrease in the carbon footprint from foods for an average household of 2.3–8.8% at a cost of 0.15–1.73DKK per kg CO2 equivalent whereas the most effective scenario led to a decrease in the carbon footprint of 10.4–19.4%, but at a cost of 3.53–6.90DKK per kg CO2 equivalent. The derived consequences for health show that scenarios where consumers are not compensated for the increase in taxation level lead to a decrease in the total daily amount of kJ consumed, whereas scenarios where the consumers are compensated lead to an increase. Most scenarios lead to a decrease in the consumption of saturated fat. Compensated scenarios leads to an increase in the consumption of added sugar, whereas uncompensated scenarios lead to almost no change or a decrease. Generally, the results show a low cost potential for using consumption taxes to promote climate friendly diets.

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Bibliographic Info

Article provided by Elsevier in its journal Food Policy.

Volume (Year): 39 (2013)
Issue (Month): C ()
Pages: 84-96

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Handle: RePEc:eee:jfpoli:v:39:y:2013:i:c:p:84-96

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Web page: http://www.elsevier.com/locate/foodpol

Related research

Keywords: Consumption tax; Food; Consumer behaviour; Climate; Greenhouse gas;

References

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  1. Smed, Sinne & Jensen, Jorgen D. & Denver, Sigrid, 2007. "Socio-economic characteristics and the effect of taxation as a health policy instrument," Food Policy, Elsevier, vol. 32(5-6), pages 624-639.
  2. Benjamin J. DeAngelo, Francisco C. de la Chesnaye, Robert H. Beach, Allan Sommer and Brian C. Murray , 2006. "Methane and Nitrous Oxide Mitigation in Agriculture," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 89-108.
  3. Diewert, W E, 1992. "Exact and Superlative Welfare Change Indicators," Economic Inquiry, Western Economic Association International, vol. 30(4), pages 562-82, October.
  4. Schmutzler, Armin & Goulder, Lawrence H., 1997. "The Choice between Emission Taxes and Output Taxes under Imperfect Monitoring," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 51-64, January.
  5. Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
  6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  7. Vieux, F. & Darmon, N. & Touazi, D. & Soler, L.G., 2012. "Greenhouse gas emissions of self-selected individual diets in France: Changing the diet structure or consuming less?," Ecological Economics, Elsevier, vol. 75(C), pages 91-101.
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Cited by:
  1. Fredrik Hedenus & Stefan Wirsenius & Daniel Johansson, 2014. "The importance of reduced meat and dairy consumption for meeting stringent climate change targets," Climatic Change, Springer, vol. 124(1), pages 79-91, May.

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