By José A. López
Water pressure, deforestation, risks to human health, and global warming are some of the consequences of meat production. Despite it’s negative impacts, by the middle of the 21st century meat production will increase by 76%. On it’s own, behaviour change cannot be relied upon to limit consumption or production, as people are sceptical about the link between livestock and climate change. The idea of a tax on meat products has been raised as a means to limit consumption and subsequently reduce production and its environmental impact. The question is then what characteristics should a meat tax have?
A Pigouvian tax is a tax levied on each unit of output or emissions of a market activity whose purpose is to correct market failures like pollution. A Pigouvian tax is thus an alternative for meat as the price of it will cover not only the production cost and the benefit margin but also the environmental consequences. Taxing consumption is not a popular idea, but taxing the production is worse as this not only makes national products more expensive, but the environmental degradation is moved outside the borders. The tax could also target the meat or the emissions, but due to difficulties with monitoring emissions from animals, it is simpler to tax the meat. However, the problem with targeting the product is that it does not encourage research on more sustainable farming, and does not make any difference between species. This is an important factor, as there are wide variations in environmental impact between different species (for example, cattle versus kangaroos as shown in the figure below).
The only meat tax precedent to date with the mentioned characteristics belongs to Denmark who imposed a tax on saturated fats in 2011 to improve the health of its citizens. This tax increased the price of minced beef by 13 % and reduced its consumption by 4 %. However, the norm did not last long to see its effects due to the unpopularity of setting taxes on food consumption.
Additionally, not every country needs a meat tax. The greatest benefits would be seen by implementing the tax only in countries with a high per capita consumption or emissions from livestock production (e.g Western Europe, North America, South America, and Oceania). More difficult to evaluate is the case of countries like China, whose high farming emissions come principally from low-carbon emission species like pork and poultry. Rather than a tax, a dietary guideline to cut off meat consumption by 50 % is under discussion.
A Pigouvian tax is being discussed as a viable option to reduce consumption of animal products. The recommendation is to levy an output-based tax at consumption level considering the carbon footprint of different species and reinvest taxes on research and development of the farming sector. A tax makes sense for countries with high beef consumption, but not necessarily for those with high low-carbon meat consumption. However, the popularity and effectiveness of this type of carbon mitigation activity remains to be seen.