Refunding of a climate tax on food consumption in Sweden

Ing-Marie Gren,Lisa Höglind,Torbjörn Jansson

doi:10.1016/j.foodpol.2020.102021

Ing-Marie Gren, Lisa Höglind + Show 1 more

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https://doi.org/10.1016/j.foodpol.2020.102021

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Journal: Food Policy	Publication Date: Jan 13, 2021
Citations: 11	License type: cc-by

Affiliation: Swedish University of Agricultural Sciences

Abstract

This paper examines the implications of imposing a climate tax on food consumption in Sweden combined with refunding of the tax revenues to farmers for selected agricultural activities enhancing ecosystem services: restoration of drained peatland (carbon sequestration), maintenance of grassland (biodiversity), and construction of wetlands (nutrient regulation). A partial equilibrium model of the agricultural sector is used to assess economic and environmental effects. The results show that the introduction of a climate tax corresponding to the existing Swedish CO2 tax of 115 euros per tonne carbon dioxide equivalent reduces total emissions from food consumption by 4.4% without any refunding of tax revenues. Refunding with payments for all ecosystems enhances the carbon sink by an amount equivalent to 57% of CO2e emissions from food consumption, and results in net benefits in the tax refund system for the agricultural sector as a whole, but is regressive where farmers in regions with relatively high incomes receive proportionally much of the net benefits.

Highlights

Estimated emissions of carbon dioxide equivalents, CO2eq, from current food system range between 19% and 29% worldwide (Ver muelen et al, 2012)
Most of the emissions originate from animal products, which can correspond to 18% of global anthropogenic CO2eq emissions (e.g, McMichael et al, 2007; Gerber et al, 2013; Clune et al, 2017)
The results presented in this study rest on a number of different as sumptions related to the construction of the partial agricultural sector model in the CAPRI framework, availability of data and parameter values on included variables

Summary

Introduction

Estimated emissions of carbon dioxide equivalents, CO2eq, from current food system range between 19% and 29% worldwide (Ver muelen et al, 2012). Suggestions have been made to introduce climate taxes on meat consumption in order to reduce demand and emissions (e.g. Nellman et al, 2009; Cederberg et al, 2013; Bajzĕlj et al, 2014; Sall and Gren, 2015). Considerable increases in the price of meat are required if a significant reduction in emissions is to be achieved. Such a tax will create negative welfare effects for consumers, the magnitude of which depends on responses to the tax and consumption shares of CO2eq intensive food products Such a tax will create negative welfare effects for consumers, the magnitude of which depends on responses to the tax and consumption shares of CO2eq intensive food products (e.g. Sall, 2018)

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