Simulating the Impact of a CO2-Equivalent Meat Tax on Grain and Livestock Markets Regan Gilmore University of Nebraska - Lincoln, [email protected]

Simulating the Impact of a CO2-Equivalent Meat Tax on Grain and Livestock Markets Regan Gilmore University of Nebraska - Lincoln, Regan.Gilmore@Yahoo.Com

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 migate 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 esmated 6% their CO2-equivalents as comparave GHG emissions 3.98% 10 4% intensies. Emissions sources analyzed include land use, that 22% of global GHG emissions originate from 5.75 5.33

Pounds (lbs) CO 5 feed producon, livestock producon, 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 esmated to be equivalent to exhaust are 13.19%, 3.98%, and 7.52%, respecvely. 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 mes that of pork and poultry, which have similar GHG connue to industrialize, the projected growth in intensies. In dollars, the tax on pork and poultry is the Market Impact of CO -equivalent Tax worldwide meat consumpon 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 Quanty the tax on poultry is higher than that of pork due to the relavely lower price of poultry. Celsius danger level that sciensts concede will be the 6.95 pping point for catastrophic climate change3. One policy 6.12 With these taxes inpued 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 consumpon4. The objecve of the tax is to consumpon decreases by 3.31%. internalize the environmental costs of meat consumpon • Pork – The retail price of pork increases by 3.67%, and and promote more sustainable diets. consumpon 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 consumpon 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 potenal effects of imposing a carbon representave of the U.S. grain market. dioxide (CO ) equivalent tax on meat consumpon, Yearly GHG Emissions Impact from Reduced 2 including beef, pork, and poultry, on United States (U.S.) Meat Consumpon 500 livestock and grain markets and GHG emissions? 450 Impact on Emissions 400 -equivalent 2 350 To calculate total U.S. GHG migaon potenal resulng Equilibrium Displacement Model 300 317 306.5 from the tax, I used Springmann et al.’s data on GHG 250 intensies 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 exisng 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 migaon potenal resulng from the tax is 11 million MT 5 0 Azzam . The EDM is wrien 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 elascity 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 soluon vector used to simulate tax rates, such that x=A-1b. In addion 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 Producon, 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., Moet, A., Opio, C., Dijkman, J., Falucci, A., and Tempio, G. Tackling Climate Change through Livestock: "Migaon Potenal and Global Health Impacts from Emissions Pricing of Food Commodies." Nature Climate Change 7, no. 1 (2016): 69-74. A Global Assessment of Emissions and Migaon Opportunies. Rome: Food and Agriculture Organizaon of the United Naons (FAO), 2013. doi:10.1038/nclimate3155. dislled dry grains, and ethanol markets. The laer 3. Donahue, D. L. "Livestock Producon, Climate Change, and Human Health: Closing the Awareness Gap." Environmental Law Reporter 7. "Livestock & Meat Domesc Data." USDA ERS - Livestock & Meat Domesc Data. June 28, 2017. Accessed July 23, 2017. hps:// linkages capture the compeon between ethanol and 5(2015):25 pages. www.ers.usda.gov/data-products/livestock-meat-domesc-data/. 4. Säll, S. and Gren I. "Effects of an Environmental Tax on Meat and Dairy Consumpon in Sweden." Food Policy 55(2015):41-53. 8. United States. Environmental Protecon 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. hps://www.epa.gov/sites/producon/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. hps://www.epa.gov/ghgemissions/sources-greenhouse- gas-emissions.