ENVIRONMENTAL CONSUMPTION TAXES ON ANIMAL FOOD PRODUCTS TO MITIGATE GREENHOUSE GAS EMISSIONS FROM THE EUROPEAN UNION

Abstract

Livestock cause around 10% of total greenhouse gas (GHG) emissions in the European Union. Despite the large quantities, no economic policy is in place to reduce emissions from the sector. In this paper, we introduce consumption taxes on animal products in the European Union to reduce GHG emissions. Impacts are simulated using the CAPRI model, which was created to analyze the impacts of agricultural policy reforms within the EU. Tax levels of 16, 60 and 290 Euro per ton of GHG emissions are used in the estimations. Our results show that consumption taxes have small mitigation effects, up to 4.9% of total agricultural emissions from the EU-27, mainly due to inelastic demand. The main source of reductions is beef and France is the country where most reductions would take place, given high levels of production and consumption in the country, combined with a large demand elasticity of beef.