Simulating the Impact of a CO2-Equivalent Meat Tax on Grain and Livestock Markets Regan Gilmore University of Nebraska - Lincoln, [email protected]
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University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln UCARE: Undergraduate Creative Activities & UCARE Research Products Research Experiences 8-2017 Simulating the Impact of a CO2-equivalent Meat Tax on Grain and Livestock Markets Regan Gilmore University of Nebraska - Lincoln, [email protected] Azzeddine Azzam University of Nebraska-Lincoln, [email protected] Follow this and additional works at: https://digitalcommons.unl.edu/ucareresearch Part of the Agricultural Economics Commons, Environmental Policy Commons, Environmental Studies Commons, and the Food Security Commons Gilmore, Regan and Azzam, Azzeddine, "Simulating the Impact of a CO2-equivalent Meat Tax on Grain and Livestock Markets" (2017). UCARE Research Products. 151. https://digitalcommons.unl.edu/ucareresearch/151 This Poster is brought to you for free and open access by the UCARE: Undergraduate Creative Activities & Research Experiences at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in UCARE Research Products by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Simulating the Impact of a CO2-equivalent Meat Tax on Grain and Livestock Markets Regan Gilmore with Faculty Azzeddine Azzam CO2-equivalent Tax Rates GHG Emissions Intensies Background 30 Impact on Markets 14% 13.19% 26.83 25 As countries are increasingly recognizing the need to curb 12% The taxes, which have been calculated by Springmann et al., internalize the GHG emissions from the life cycle of greenhouse gas (GHG) emissions in order to mi3gate 10% 20 each meat type and the associated social cost of these climate change, they have begun to look towards -equivalent per lb 8% 7.52% 2 6 industries like agriculture that have previously been 15 emissions . All GHG emissions are expressed in terms of ignored in the climate change discussion. It is es3mated 6% their CO2-equivalents as comparave GHG emissions 3.98% 10 4% intensi3es. Emissions sources analyzed include land use, that 22% of global GHG emissions originate from 5.75 5.33 Pounds (lbs) CO 5 feed produc3on, livestock produc3on, processing, and agriculture, 80% of which can be traced back to the 2% livestock sector1. Global GHG emissions from the livestock transport. The taxes imposed on beef, pork, and poultry 0% 0 sector are es3mated to be equivalent to exhaust are 13.19%, 3.98%, and 7.52%, respec3vely. Beef faces Beef Pork Poultry Beef Pork Poultry emissions from all the vehicles in the world, including the highest tax rate, as the GHG intensity of beef is nearly planes, ships, and land autos2. As developing countries 5 3mes that of pork and poultry, which have similar GHG con3nue to industrialize, the projected growth in intensi3es. In dollars, the tax on pork and poultry is the Market Impact of CO -equivalent Tax worldwide meat consump3on alone is expected to be 2 same. When converted to a percentage of price, however, enough to push global temperatures past the 2 degrees Percent Change in Price Percent Change in Quan3ty the tax on poultry is higher than that of pork due to the relavely lower price of poultry. Celsius danger level that scien3sts concede will be the 6.95 3pping point for catastrophic climate change3. One policy 6.12 With these taxes inpuIed into the EDM, the following recommendaon for reducing GHG emissions from the market impacts result: livestock sector is to implement an environmental tax on 3.67 • Beef – The retail price of beef increases by 6.95%, and meat consump3on4. The objec3ve of the tax is to consump3on decreases by 3.31%. internalize the environmental costs of meat consump3on • Pork – The retail price of pork increases by 3.67%, and and promote more sustainable diets. consump3on decreases by 0.42%. -0.42 -0.38 -0.14 -0.04 Beef Pork Poultry Corn • Poultry – The retail price of poultry increases by 6.12%, and consump3on decreases by 0.38%. Research Question -3.31 • Corn – The price of corn decreases by 0.14%, and corn usage decreases by 0.04%. Corn is included as a What are the poten3al effects of imposing a carbon representave of the U.S. grain market. dioxide (CO ) equivalent tax on meat consump3on, Yearly GHG Emissions Impact from Reduced 2 including beef, pork, and poultry, on United States (U.S.) Meat ConsumpKon 500 livestock and grain markets and GHG emissions? 450 Impact on Emissions 400 -equivalent 2 350 To calculate total U.S. GHG mi3gaon poten3al resul3ng Equilibrium Displacement Model 300 317 306.5 from the tax, I used Springmann et al.’s data on GHG 250 intensi3es of beef, pork, and poultry in combinaon with 200 Beef U.S. Department of Agriculture data on yearly To consider the tax, I have adapted an exis3ng grain and 150 Pork 6,7 livestock equilibrium displacement model (EDM) 100 50.7 50.5 disappearance of each meat type . The total GHG Poultry developed in part by my UCARE advisor, Dr. Azzeddine 50 87.3 87 mi3gaon poten3al resul3ng from the tax is 11 million MT 5 0 Azzam . The EDM is wriIen in matrix form as Ax=b, where Million Metric Tons (MT) CO CO2-equivalent per year. This would reduce total U.S. GHG A is a 43 by 43 elas3city coefficient matrix, x is a 43 by 1 Before Tax Aer Tax emissions by 0.17%, which is the equivalent of taking 2.3 vector of percent changes in the prices and outputs of the million cars off the road each year8,9. grain and livestock markets, and b is a 43 by 1 solu3on vector used to simulate tax rates, such that x=A-1b. In addi3on to capturing the linkages between the beef, pork, References and poultry markets at retail, wholesale, and farm levels, 1. McMichael, A. J., Powles, J. W. Uauy, R. "food, Livestock Produc3on, Energy, Climate Change, and Health." The Lancet 370(2007):1253-263. 6. Springmann, Marco, Daniel Mason-D’Croz, Sherman Robinson, keith Wiebe, H. Charles J. Godfray, Mike Rayner, and Peter Scarborough. the EDM includes the linkages between the corn, soybean, 2. Gerber, P.J., Steinfeld, H., Henderson, B., MoIet, A., Opio, C., Dijkman, J., falucci, A., and Tempio, G. Tackling Climate Change through Livestock: "Mi3gaon Poten3al and Global Health Impacts from Emissions Pricing of food Commodi3es." Nature Climate Change 7, no. 1 (2016): 69-74. A Global Assessment of Emissions and Mi=ga=on Opportuni=es. Rome: food and Agriculture Organizaon of the United Naons (fAO), 2013. doi:10.1038/nclimate3155. dis3lled dry grains, and ethanol markets. The laer 3. Donahue, D. L. "Livestock Produc3on, Climate Change, and Human Health: Closing the Awareness Gap." Environmental Law Reporter 7. "Livestock & Meat Domes3c Data." USDA ERS - Livestock & Meat Domes3c Data. June 28, 2017. Accessed July 23, 2017. hIps:// linkages capture the compe33on between ethanol and 5(2015):25 pages. www.ers.usda.gov/data-products/livestock-meat-domes3c-data/. 4. Säll, S. and Gren I. "Effects of an Environmental Tax on Meat and Dairy Consump3on in Sweden." Food Policy 55(2015):41-53. 8. United States. Environmental Protec3on Agency. Office of Transportaon and Air Quality. Greenhouse Gas Emissions from a Typical Passenger livestock for corn. 5. Dhoubhadel, S. P., Azzam, A. M., Stockton, M. C. "The Impact of Biofuels Policy and Drought on the U.S. Grain And Livestock Markets." Vehicle. May 2014. Accessed July 25, 2017. hIps://www.epa.gov/sites/produc3on/files/2016-02/documents/420f14040a.pdf. Journal of Agricultural and Applied Economics 47(2015):77-103. 9. "Sources of Greenhouse Gas Emissions." EPA. April 14, 2017. Accessed July 23, 2017. hIps://www.epa.gov/ghgemissions/sources-greenhouse- gas-emissions. The University of Nebraska–Lincoln is an equal opportunity educator and employer. © 2014 The Board of Regents of the University of Nebraska. All rights reserved..