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Could a tax on animal-based foods improve diet sustainability?

The global food system is estimated to contribute 30% of total Greenhouse gas (GHG) emissions. In this context, the EU has committed to reducing GHG emissions by 40% relative to 1990 levels by 2030 and by 80% by 2050. Apart from the necessary policies of citizen information and production regulation, could a consumer tax on the most Greenhouse gas-emitting foods be a relevant tool to improve diet sustainability? Could it combine greener and healthier diets with a limited social cost?

Fiscal policies are commonly used in the energy sector to enhance more sustainable options (through a carbon tax in some Nordic countries) or in nutrition to limit the consumption of unhealthy foods . Animal-based products, and in particular livestock, are the highest GHG emitters, and reducing their consumption could bring associated benefits in environment and nutrition. Indeed, red and cooked meat are primary sources of saturated fats, which are related to an increased risk of obesity and cardiovascular disease. Reducing meat consumption also raises a health inequality issue since these risks place a higher burden on lower socioeconomic populations.

To address these questions, we have drawn two hypothetical environmental fiscal policies, one including and one excluding nutritional concerns. The first step consists of relating the food basket purchased to its GHG emitting potential and to a nutritional score expressing its “degree of healthiness”, (see Figure 1.) The second step consists of conducting an econometric study on food-at-home purchase choices. Changes in food purchased were used to compute the implied changes in environmental (i.e. CO2 for climate change, SO2 for air acidification, N for eutrophication) and nutritional indicators, as well as in food cost. The last step relates to measuring, for two tax scenarios, the impact of changes over four income and four age classes, thus considering equity concerns.

Figure 1 by France Caillavet, Adélaïde Fadhuile, and Véronique Nichèle, used with permission.

We used a French nationally representative survey at the household level to analyse food-at-home purchases from 1998 to 2010. Our work shows that consumers are sensitive to the price of  animal products and that a 20% price increase induces them to restrict their consumption, therefore reducing GHG emissions. However the content of the diet in some essential nutrients linked to animal products is also affected. A first scenario taxing all animal products (meats, fish, animal fats, cheese, other dairy products) reduces emissions by 7.5% for CO2, 14.5% for SO2 and 8.4% for N, but simultaneously degenerates diet quality (-0.3%) (see Figure 2.) In a second tax scenario, the diet adequacy score changes are favourable (+1.2%) when fish and dairy products other than cheese are not affected by the price increase. This second scenario still induces a 7.0% CO2 decrease, as well as 13.2% SO2 and 6.6% N reduction. The carbon reduction represents 99kg CO2 eq/year per household, which is close to the emissions produced by a 700km run with a Renault Clio. Therefore, beneficial synergies between environment and nutrition goals may be achieved through the design of a tax.

Figure 2 by France Caillavet, Adélaïde Fadhuile, and Véronique Nichèle, used with permission.

The main counter argument of a tax is its social cost. The second scenario, which improves the quality of the diet, induces a loss of 4% in the budget for food-at-home consumption, i.e. 61 euros/year per household. This relative impact is smaller than the impact on emissions. However, social equity is also affected; such a tax is regressive. For example, we observe that this tax generates higher losses for the two lower-income groups, particularly for households with middle-aged heads. In a cost-benefit analysis, a higher monetary cost of food for some population groups could be acceptable if it were compensated by higher nutritional effects, but this is not the case; the reduction in nutritional inequalities across households is very limited.

Sustainability is a multidimensional concept and taking into account the environment, nutrition, and social equity dimensions leads to the necessity of trade-offs, as illustrated here in the case of a taxation policy applied to animal-based foods. Some environmental benefits must be exchanged for securing nutritional goals, and there will be some extra cost for the consumer. Therefore, a tax scenario needs to involve a compensatory mechanism. Our results raise two further policy issues. First, the trade-off between environment and nutrition could be improved by using proportional tax rates on both levels of emissions and nutritional contents, on the basis of combined healthy and sustainable guidelines. Second, the loss in purchasing power could be compensated by using the revenue of the tax. A fiscal policy combining subsidies with taxes could address differing nutrient needs and purchasing behaviours among households, as well as equity issues. A price policy is among the more persuasive signals to be addressed to consumers to modify their diet, and can fulfil simultaneously environmental, nutritional and equity goals.

Headline image credit: Meat products sausage cutlets by Counselling. Public Domain via Pixabay.

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