Demand for low carbon food products
Chalmers, Neil George
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The emissions associated with food consumption make up approximately 20-30 percent of Scotland’s total greenhouse gas emissions (GHG). Reducing demand for high carbon footprint food products may provide an effective instrument for reducing GHG emissions. However, there is concern that using consumption based taxes may also have negative consequences on nutrition. Therefore, this thesis investigates the likely effect of carbon consumption taxes on GHG emissions and the resulting impact on nutrient consumption. The data used for the analysis are the Scottish part of Kantar Worldpanel data for the UK for the period 2006-2013 along with various sources of carbon footprint and nutrient data. This thesis models a carbon consumption tax which is based on the carbon footprint of the products of interest. The impact of the taxes on demand for food products were measured through the use of demand systems. Two forms of demand systems were used: Almost Ideal Demand System (AIDS) and an Exact Affine Stone Index (EASI) which allow for the estimation of price elasticities based on time series data. These Marshallian price elasticities were then used for estimating carbon footprint and nutrient elasticities which allow for the estimated change in GHG emissions (represented as carbon emissions) and nutrients. The price elasticities were particularly important for identifying the substitutes and complements of the different food products. This is useful as some food products such as poultry have a lower carbon footprint relative to beef products. The results suggest that applying carbon consumption taxes would likely reduce carbon emissions though the reduction is relatively small. The net effect of taxing all major food products would likely reduce emissions by 543,208.75 tCO2e/y which represents approximately five percent of the total emissions in Scotland attributed to food consumption (no land use change considered). However, taxing only meat and milk food products could reduce emissions by approximately 1.6 million tCO2e/y. While this reduction is much larger than when all food products are taxed, it is considered that modelling all the major food products offers a more realistic understanding of how households will change their demand for the different food products. The effect on nutrient consumption with regards to taxing all food products suggests that households with lower socioeconomic status would likely experience some favourable changes in terms of a reduction in sugar and energy. Though a negative distributional effect is likely to occur when considering the decreased consumption of vitamin D and the increased consumption of salt. Therefore, a carbon consumption tax is estimated to reduce food based GHG emissions by a relatively small amount. Despite the mainly positive effect on nutrient intake, policy makers are still likely to be cautious when considering this instrument because of the relatively small (compared to other studies) reduction in GHG emissions.