An environmental tax towards more sustainable food consumption: empirical evidence of the French meat and marine food consumption

Abstract

After fossil fuels, agricultural production and fisheries are industries with the largest impact on the environment in terms of greenhouse gas (GHG) emissions, especially in the production of ruminant meats such as beef, veal or lamb. In order to reduce this environmental impact, consumers can change their food consumption habits to utilize less polluting products such as white meats or vegetable food products. We analyze whether or not a CO2 equivalent (CO2-eq) tax policy can change consumer habits with respect to meat and marine purchases, and using different indicators, we examine the effect of such a tax policy on the environment. We also infer the implications of such a tax on nutritional indicators as well as on consumer welfare. First, to evaluate the impact of a variation in the price of meat and marine products on consumption, we estimate a random coeficients logit demand model using purchase data from the French household panel Kantar Worldpanel. We define 28 meat and marine products, and divide them into eight meat and marine product categories. This model allows us to estimate flexible own- and cross-price elasticities of meat and marine products' demand. Results on the consumer purchase behavior model suggest that the demands for these products are fairly inelastic, and substitutions occur both within and between categories for all products. Moreover, using two levels of a CO2-eq tax (€56 and €200 per tonne of CO2-eq per kilogram of product) applied to either all meat and marine products, only ruminant meats, or only beef, we show that a tax of €56 leads to a very small change in GHG emissions, even if all meat and marine products are taxed. The most efficient scenario would be to tax only the beef category at a high level since it would allow a 70% reduction in the total variation of GHG emissions, and would be responsible for only 20% of the consumer welfare damages generated when all products are taxed.

Keywords

Reference

Céline Bonnet, Zohra Bouamra-Mechemache, and Tifenn Corre, “An environmental tax towards more sustainable food consumption: empirical evidence of the French meat and marine food consumption”, Susdiet, December 2016.