Global Greenhouse Gas Taxes on Food Products: Economy-Wide, Environmental and Dietary Implications

According to the Intergovernmental Panel on Climate Change, agriculture, forestry and other land use activities contribute approximately a quarter of the global greenhouse gas (GHG) emissions. Demographic changes and increasing income are expected to further push the global diet towards more meat-oriented and emission-intensive, as a result agricultural GHG emissions could significantly increase in the long-run. According to Hedenus et al. (2014), with no shifts in the global diet, food-related emissions could grow from 7.1 Gton CO2-equivalent per year in 2000 to 13 Gton CO2-eq./year in 2070, which would make it almost impossible to keep the global temperature increase well below 2oC, as desired by the Paris Climate Agreement. Therefore, reducing the food-related GHG emissions is a crucial policy component in meeting the stringent climate change targets. The focus of this paper is to provide an assessment of food-related GHG emissions taxation using the Global Trade Analysis Project (GTAP) framework, which we improve and complement in several ways. First, we develop the GTAP 9.2 database (2011 reference year) with updated agricultural production targeting for 133 regions. Second, we develop a GTAP-consistent food balance sheets with dietary and nutritional information covering all 141 regions in the database. Finally, we complement the GTAP-E modelling framework by including the non-CO2 GHG emissions and air pollution accounts, in addition to the CO2 emissions already embedded into the model. Based on the volumes of GHG emissions associated with food production and estimates of the Social Cost of Carbon (SCC), we provide the quantitative assessment of the food-related GHG emissions pricing. We provide new insights into economy-wide, environmental and dietary implications of such policies, with a particular focus on the cost-benefit (welfare) analysis for advanced economies and developing countries – a link that most studies have been missing so far.(This abstract was borrowed from another version of this item.)