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The Role of Fossil Fuels in the U.S. Food System and the American Diet, ERR-224, U.S

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United States Department of Agriculture Economic Research The Role of Fossil Fuels in the Service Economic U.S. Food System and the Research Report Number 224 American Diet January 2017 Patrick Canning, Sarah Rehkamp, Arnold Waters, and Hamideh Etemadnia United States Department of Agriculture Economic Research Service www.ers.usda.gov Access this report online: www.ers.usda.gov/publications Download the charts contained in this report: • Go to the report’s index page • Click on the bulleted item “Download err224.zip” • Open the chart you want, then save it to your computer Recommended citation format for this publication: Canning, Patrick, Sarah Rehkamp, Arnold Waters, and Hamideh Etemadnia. The Role of Fossil Fuels in the U.S. Food System and the American Diet, ERR-224, U.S. Department of Agriculture, Economic Research Service, January 2017. Cover images: istock.com Use of commercial and trade names does not imply approval or constitute endorsement by USDA. To ensure the quality of its research reports and satisfy government-wide standards, ERS requires that all research reports with substantively new material be reviewed by qualified technical research peers. This technical peer review process, coordinated by ERS' Peer Review Coordinating Council, allows experts who possess the technical background, perspective, and expertise to provide an objective and meaningful assessment of the output’s substantive content and clarity of communication during the publication’s review. For more information on the Agency’s peer review process, go to: http://www.ers.usda.gov/about-ers/peer-reviews.aspx In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are pro- hibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident. Persons with disabilities who require alternative means of communication for program information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal Relay Service at (800) 877-8339. Additionally, program information may be made available in languages other than English. To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at How to File a Program Discrimination Complaint and at any USDA office or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture, Office of the Assis- tant Secretary for Civil Rights, 1400 Independence Avenue, SW, Washington, D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: [email protected]. USDA is an equal opportunity provider, employer, and lender. United States Department of Agriculture Economic The Role of Fossil Fuels in the U.S. Food Research Service System and the American Diet Patrick Canning, Sarah Rehkamp, Arnold Waters, and Economic Research Hamideh Etemadnia Report Number 224 January 2017 Abstract The food system accounts for a large share of fossil fuel consumption in the United States, and energy accounts for a substantial and highly variable share of food costs. This intersec- Errata tion between food and energy markets suggests that public and private decisions affecting one market will have spillover effects in the other. For example, would increasing the share of popu- On March 8, 2017, ERS corrected a few lation having diets that align with Federal dietary guidance reduce fossil fuel use in the U.S. errors made in the food system? Would a carbon dioxide (CO2) tax improve diet quality? To address these issues, calculation of data we use the most recent data available to integrate the material-flows accounting framework reported in Figure adopted by the United Nations Statistical Commission into the existing food-system accounting 14 (p. 32) and in the structure of the ERS Food Dollar accounts. Then, we use mathematical optimization to model calories columns healthy diets. Our research indicates that U.S. agri-food industries are more sensitive to energy in Table 5 (p. 34). References to these price changes than nonfood industries. We find that in 2007, fossil fuels linked to U.S. food data were updated in consumption produced 13.6 percent of all fossil fuel CO2 emissions economywide. Our study of the text on pages 31- alternative diets shows there are many ways to meet the Dietary Guidelines for Americans. If 33 and p. 42. Also, a Americans made a minimal dietary shift to eat healthy, we find food-system energy use would superscript on q on decrease by 3 percent. By making greater changes from current consumption, we find food- p. 89 was changed system energy use could be reduced by as much as 74 percent. A tax on CO emissions from from a 1 to 0. 2 fossil fuels would increase the cost of a typical meal by an average of 1.7 percent, with estimates ranging between 0.2 and 5.4 percent. Keywords: Carbon emissions tax, Dietary Guidelines for Americans, energy prices, environ- mental input-output model, food policy, fossil fuels, food prices, greenhouse gases, healthy diet, sustainability, U.S. food system Acknowledgments The authors thank Lisa Mancino, Tim Park, Ron Sands, Jay Variyam, and Shelly Ver Ploeg of USDA’s Economic Research Service; Naglaa El-Abbadi of Tufts University; Stephan Goetz of Pennsylvania State University; TusaRebecca Schap of USDA’s Center for Nutrition Policy and Promotion; Elizabeth Sendich of the U.S. Department of Energy’s Energy Information Administration; and an anonymous referee for their reviews, comments, and assistance. Thanks also to Mark Farrell, Dale Simms, and Curtia Taylor of USDA’s Economic Research Service for editorial and design assistance. Co-author Hamideh Etemadnia worked on this project through a cooperative agreement with Pennsylvania State University. Contents Summary . iii Abbreviations . v Introduction . 1 Background . 3 Energy in the U.S. Food System ..................................................3 Sustainable Diets ..............................................................4 Taxing Carbon Emissions .......................................................6 Role of Fossil Fuels in the U .S . Food System . 8 Trends Over Time ............................................................10 Drivers of Change ............................................................12 Is Energy Intensity in the U.S. Food System Sensitive to Energy Prices? ..................15 How Much of U.S. CO2 Emissions From Fossil Fuels Is Linked to American Diets? . .19 Evaluating Nutrition Promotion and a CO2 Emissions Tax . 26 Would Adherence to the Dietary Guidelines for Americans Reduce Food-System Energy Use? ...............................................26 Would a CO2 Emissions Tax Influence Dietary Choice Through Cost and Price Effects? ................................................35 Conclusion . 42 References . 44 Appendix A: Underlying Detailed Tables . 50 Appendix B: Food Environment Data System (FEDS) . 64 Multiregional Input-Output Model ................................................68 Material Flow Accounting ......................................................71 Indexing Annual Time-Series Data ...............................................75 Appendix C: Diet Model . .. 77 Mathematical Optimization. 77 Data .......................................................................79 Constraints. .82 Extended Model Results ........................................................84 Maximum-Likelihood Properties of the Realistic Healthy Model. .88 ii The Role of Fossil Fuels in the U.S. Food System and the American Diet, ERR-224 Economic Research Service/USDA Summary United States Department of Agriculture A report summary from the Economic Research Service January 2017 The Role of Fossil Fuels in the U.S. Food System and the American Diet Patrick Canning, Sarah Rehkamp, Arnold Waters, and Hamideh Etemadnia Find the full report at www.ers.usda.gov/ publications What Is the Issue? The consumption of fossil fuels, nuclear power, and renewable energy by the U.S. food system was on par, in 2002, with the entire national energy budget for India and exceeded the combined energy budgets of all African nations. In addition, energy costs are a substantial and highly variable share of U.S. food costs. This intersection of food and energy commodity markets raises questions about how changing food choices (such as through nutrition promotion) and changing energy prices (such as through a CO2 emissions tax on fossil fuels) relate. Our research addresses limitations of previous studies by examining the relationship between energy prices and food-system energy use over time and measuring the CO2 emissions associated with fossil fuel use in the food system. With this information, we analyze whether potential outcomes of
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