Bonnet et al. (2020) on Regulating Meat Consumption

Céline Bonnet, Zohra Bouamra-Mechemache, Vincent Réquillart, and Nicolas Treich, “Viewpoint: Regulating Meat Consumption to Improve Health, the Environment and Animal Welfare.” Food Policy 97 (101847), December 2020.

• Regulations are perhaps advisable to counter meat impacts on human health, the environment, and animal welfare.

• Many of the health effects are not externalities, in that they come in the form of increased health risks for people who consume a lot of meat.

• Some external health effects present themselves in the form of zoonoses (like Covid-19?) and antibiotic resistance. 

• On the environmental front, animal agriculture involves significant greenhouse gas emissions, along with nasty air and water pollution and deforestation.

• CAFOs could have lower per-animal greenhouse gas emissions than less intensive farming methods. Free-range settings might also undermine some dimensions of animal welfare, too, perhaps by reducing protection against predators.

• Globally, on the order of three-quarters of land used for agriculture is devoted to animal agriculture (pastures, grazing, and the growing of animal feed).

• Major animal welfare concerns include: brief lifetimes spent exclusively in close confinement; lopping off of sensitive body parts without anesthesia; and, quick disposal of male chicks for laying hens, calves for dairy cows. And the numbers of animals affected are immense. 

• "In any case, the immense challenge of evaluating animal welfare does not provide a good enough reason to ignore animal welfare, and may instead warrant a precautionary approach"

• Regulations could target producers as opposed to meat – but such approaches often are hard to implement or are ineffective.

• Meat taxes are one way to try to address environmental, health, and animal welfare concerns; better information provision is a second method. Finally, behavioral interventions, such as establishing meatless Mondays, or altering the placement of vegetarian options on menus, or even making vegetarian the default setting in some circumstances, might hold some promise.

Hubbard, Clark, and Harvey (2020) on Markets and Animal Welfare

For various presentations I have prepared bullet-point notes on animal welfare articles. I thought I would migrate some of them to the Animals and Econ blog. These notes are not meant to constitute a summary of the article, but they do convey some of the flavor of the publication, as well as, at times, my own reaction/commentary -- though which bits are which remains a closely guarded secret. Without further ado...

Hubbard, Carmen, Beth Clark, and David Harvey, “Farm Animal Welfare: Do Free Markets Fail to Provide It?” Chapter 2, pages 30-52, in B. V. Ahmadi, D. Moran, and R. D’Eath, eds., The Economics of Farm Animal Welfare, CABI, 2020.

• Many (or most) people say that farm animal welfare means a lot to them, and that they are willing-to-pay for improved animal welfare.

• These expressed preferences do not seem to be widely reflected in purchase decisions for meat, eggs, and other animal products.

• Do the markets for animal products deliver the “socially optimal” amount of farm animal welfare? 

• The authors take the “no direct standing for non-human animals” approach to efficiency – only human interest in animal welfare, not the animals’ own interest, is considered.

• Is animal welfare a public good? (No, with respect to the usual economics sense of the term.) "Clearly, cruelty to animals is a public bad, at least as far as most modern societies are concerned [p. 37]."  Enforced regulations that provide higher welfare do have public good qualities, in that once society establishes higher animal welfare standards, everyone in that society "consumes" it, no individual is excluded, no one consumes products with low animal welfare.

• Consumption externalities might be common with respect to animal products: your consumption of animal products might offend me; nonetheless, those who are offended by what other people consume might have a zero willingness to pay for any animal product, so their preferences for more-humane products will not be expressed within the animal products market per se.

• Animal welfare might be a “credence attribute” -- you can't reliably judge the welfare quality of animal products even after you have consumed them, much less in advance of purchase.

• If I realize that my own choices will have essentially zero impact on animal welfare levels, I might not be willing to pay for higher-welfare products. However, if I know that others are contributing, then I might be willing to pay. That is, a person’s willingness to pay for better animal welfare might depend upon other people paying, too.

• Is more information helpful/desirable? Distrust of current information might be one reason that preferences for higher welfare are not expressed fully in the market -- though surely some people would prefer not to have more animal welfare information directed towards them.

Espinosa and Treich (2020) on Lives Worth Living

Espinosa, Romain, and Nicolas Treich, "Animal Welfare: Antispeciesism, Veganism and a 'Life Worth Living'”. Social Choice and Welfare, 2020; available at https://doi.org/10.1007/s00355-020-01287-7.

The Espinosa and Treich article examines issues right at the heart of this blog's theme, that there is a continuum (from none to equal) of the potential "valuation" of nonhuman animals relative to humans in judging aggregate costs and benefits or overall welfare. Espinosa and Treich build upon Blackorby and Donaldson (1992), offering a model where humans utilities enter the social welfare function at full (unit) weight, while farm animals enter with weight α, 0≤α≤1. (Complete "antispeciesism" is where α=1.) The social planner maximizes social welfare by choosing the quality of life of the animals (better animal welfare costs humans more) and the number of animals raised for human consumption. Humans value eating animals and don't like to pay for better animal welfare, but humans do not directly care about the level of animal welfare. A key feature of the model is that, if animal lives are "worth living" in the sense that, thanks to decent welfare, the lived utility of animals exceeds the baseline nonexistence utility of zero, then humans might end up eating more animals, as the socially optimal number of animals is higher when animal lives have positive value. That is, better animal welfare might lead to less veganism. The higher alpha, then (equivalently, the less human-centric speciesism), the higher optimal animal welfare, and possibly, the greater the eating of animals. 

Espinosa and Treich supplement their theoretical analysis with a survey in which respondents are given capsule summaries of various living conditions for broiler chickens, and asked to indicate whether they believe if, under the specified conditions, the chickens' lives are worth living. The four lowest-welfare scenarios provided in the surveys correspond to French industrial farming conditions, and most respondents do not find the broilers' lives worth living under those conditions. Therefore, the theoretical case for veganism remains secure, at least if our factory farms are not replaced with something offering worthwhile lives for our proto-food!

Funke et al. (2021) on Optimal Meat Taxation

Franziska Funke, Linus Mattauch, Inge van den Bijgaart, Charles Godfray, Cameron Hepburn, David Klenert, Marco Springmann, and Nicolas Treich, "Is Meat Too Cheap? Towards Optimal Meat Taxation," March 9, 2021; available at https://ssrn.com/abstract=3801702 or http://dx.doi.org/10.2139/ssrn.3801702.

The descriptive phrase adorning the Animals and Econ blog is "Notes on animal welfare policy, with a somewhat economics-style sensibility," and the Funke et al. paper fits our little motto to a tee, while homing in on one topic we have recently been featuring: meat taxes. So here are some notes/observations concerning Funke et al. (2021)...

There are a host of externalities and internalities connected to the production and consumption of meat. Many of these issues in theory could admit direct, first-best solutions -- charge directly for the greenhouse gas emissions or alter the production method to curtail pollution, say -- but in their absence a tax on the consumption of meat pushes things in the right direction along many dimensions. Taxes imposed at the consumption stage also sidestep the problem that policies that raise domestic production costs can incentivize production to move abroad, in particular to jurisdictions with fewer protections against pollution or animal abuse. But a meat tax motivated by animal welfare concerns will not specifically target the worst abuses -- it might even apply to lab-grown meat, the production of which would entail little or no animal suffering.

The authors argue that, given the externalities, meat is severely underpriced. They recognize the usual wide range of externalities, and add one, biodiversity loss, that now is making its Animals and Econ debut. The health costs (in terms of increased mortality risk) from red and (especially) processed meat are staggering (for processed meat, more than $100 per kilogram), though the extent to which they are taken into account by meat eaters is unknown.

Some meat eaters prefer to avoid truthful but troubling information about farm animal welfare; higher prices (perhaps as a result of meat taxes) directly decrease meat consumption, with a knock-on effect of reducing the incentive to self-deceive.

Subsidies for meat substitutes can hasten and sustain the movement away from meat consumption. Among other dynamic effects, such subsidies can provide a commitment device for future policymakers. 

As for the appropriate size of meat taxes, the authors restrict themselves to accounting for global environmental externalities. (Local pollution, biodiversity loss, and animal welfare, therefore, are among the omitted dimensions.) These environmental effects alone suggest taxes that would increase the retail price of meat by some 20 to 60 percent in wealthy countries. Including health costs associated with beef consumption would triple the appropriate tax for beef. 

Now to go back to the Meat Tax Literature Summary post to include Funke et al. (2021)...

Taxing Meat 3 -- A Synopsis of the Literature

In this post I will attempt to characterize various analyses of a tax on meat, at least for for those analyses that already have received a post on Animals and Econ. For each of the contributions I will note their coverage, that is, whether they address externalities, and of what type (greenhouse gasses, water pollution, and so on); potential internalities (health costs from excessive meat consumption); the distinctions among externalities, budgetary externalities, and internalities; and animal welfare. I also will indicate any quantitative guidelines they make for the size of an appropriate meat tax, as well as any recommendations for alternative or supplementary policies.

Meatonomics (2013), by David Robinson Smith: Coverage: externalities, budgetary externalities, and internalities, without distinction, and for meat, eggs, and dairy. Tax suggestion: 50% ad valorem on all animal products. 

Springmann, Mason-D'Croz, Robinson, et al. (2018): Coverage: health internalities (treated as externalities), for red and processed meat. Tax suggestion: about 20% ad valorem on red meat, and 100% ad valorem on processed meats.

Forero-Cantor, Ribal, and Sanjuán (2020): Coverage: greenhouse gas emission externalities for pork, beef, chicken, turkey, lamb, eggs, and fish. Tax evaluation (not suggestion, really): 10% ad valorem tax on fish works well in reducing greenhouse gas emissions, and a 20% tax on beef, too. Taxes on turkey, chicken, and pork are not helpful in reducing greenhouse gasses. 

Katare, Wang, Lawing, Hao, Park, and Wetzstein (2020): Coverage:  "social cost of CO2, health costs, animal cruelty, and natural resource degradation;" the animal cruelty is about human willingness-to-pay for better animal welfare, not about any intrinsic value of animal well-being. Tax evaluation: an ad valorem meat (beef) tax of about 69% looks about right. The analysis involves a comparison with a labelling mandate, which might be OK in combination with a meat tax, but holds little promise on its own.

PETA: Coverage: health and environmental internalities and externalities (without making the distinction), and budgetary spillovers. Tax evaluation: about a 5% ad valorem tax? PETA notes that the serious costs of the current system are borne by the non-human animals. 

Funke et al. (2021): Coverage: on the quantitative side, the authors focus on global environmental effects (greenhouse gas emission); on the qualitative side, they cover the full range of externalities and internalities. Tax evaluation: a tax that raises retail prices by 20 to 60 percent internalizes the examined environmental externalities; it is highest for beef. Serious attention is paid to animal welfare concerns.

Taxing Meat 2 -- Alternatives?

The previous post outlines some of the externalities associated with meat consumption. One way to correct for externalities, and thereby to lead private decision makers (producers and consumers) to make decisions that serve the social interest, is to impose a corrective tax (a so-called Pigovian tax). A meat tax, whether of the sales or excise variety, for instance, might internalize the existing externalities and bring us to that economics nirvana of the socially optimal amount of meat consumption. Nonetheless, there might be other and better paths that land us in that happy place.

The direct subsidies to animal agriculture could be cut back or eliminated, for instance, as opposed to having them offset with a meat tax. For example, the fees charged for livestock grazing on public land could be raised considerably, and the subsidization rates for price protection could be reduced -- both of these subsidies were increased during the Trump era, so rollbacks to the situation of five years ago would themselves cut the current levels of taxpayer support. We can hope that the huge Covid and trade war payouts will become devoid of their raison d'etre. What is very unlikely is an elimination of the direct (to animal agriculture) and indirect (to corn, soybeans, etc.) government subsidization of animal agriculture. Farm subsidies are now longstanding, and not just in the US. WTO rules have served as a bit of a barrier on the extent of those subsidies, though they seemed to have no effect on either the trade war or Covid tranches. Still, eliminating the source of the market distortion seems to be the first route to explore, to the extent it is feasible, before adding a countervailing (taxation) program. The checkoff system would seem to be a good candidate for a feasible elimination of a distortionary program.

The environmental externalities (such as greenhouse gas emissions) associated with meat production also might be handled by aiming directly at the pollution, as opposed to implementing a meat tax. A meat tax in itself, for instance, will reduce the animal agriculture sector by raising retail prices and thereby curtailing demand, but it will not encourage cleaner methods of production for the meat that is processed. A direct anti-pollution policy might similarly reduce demand through higher prices, while also providing an incentive to produce with less pollution. (The large methane emissions associated with the production of meat from ruminants could be cut drastically without reducing the amount of animal agriculture, if the promise of a new seaweed-based feed supplement is fully realized.)

The overuse of antibiotics in animal agriculture also could be curtailed directly through stricter controls on production methods -- and as with greenhouse gasses, the global nature of the problem suggests a global intervention (pdf here). The health effects of overconsumption of meat might not be fully taken into account by the eaters themselves, so there is a potential "internality" case to be made for a meat tax -- but there also are alternative (or supplementary) policies, such as providing better information or subsidizing non-animal foods, that could work as well as a tax. These internalities, however, do present a situation in which the cause of the harm -- eating too much meat -- is addressed quite directly via the tax.

The animal welfare problems are not addressed most directly by a meat tax. As with the environmental effects, while a tax will reduce the animal welfare problems through reduced meat consumption and hence fewer suffering animals, the tax does not provide a spur to production methods that are less cruel. And if animals have direct standing in the social cost-benefit analysis, then the tax that would be requisite to internalize the harms imposed upon animals would amount to a prohibition of, at a minimum, current CAFO practices.

Taxing Meat I -- Externalities

My intention is to develop a series of posts on meat taxation, summarizing and building on earlier posts. This is the first in this exciting new series. (Warning: series not actually exciting.)

In the US, meat is subsidized fairly heavily, and in various senses. First, meat is an ultimate beneficiary of subsidies provided to crops: most of the corn grown in the US is fed to non-human animals or converted into ethanol, and the majority of the soybean harvest is used for animal feed (pdf here). So, any policies that support corn or soybeans provide substantial subsidies to meat agriculture, for which these crops are major inputs. Irrigation subsidies also promote corn and soybeans, so these are part of the indirect boost to animal agriculture, too.

Livestock husbandry receives various forms of direct subsidies, too. The USDA offers farmers insurance against livestock price decreases at significantly subsidized rates. Various disaster assistance programs are in place to help livestock producers when disease leads to excess morbidity or mortality, or grazing areas are undermined by bad weather, and so on (Congressional Research Service pdf here). Grazing fees for livestock on federally-owned lands are significantly subsidized. The Trump-era trade war with China led to substantial payments to the dairy and pork industries, while animal agriculture has received massive federal assistance during the Covid crisis (CRS report here). 

The animal agriculture sector features various "checkoff" programs; here's the website introducing the checkoff system for beef. The checkoff system sets up a scheme of mandatory contributions from producers for marketing purposes, which might be hard to understand as a subsidy. (That is, checkoff payments sound a lot like a tax.) Nevertheless, the checkoff system certainly can act as a subsidy, in that it allows the industry to act in concert (like a cartel) to provide industry-wide services -- a unified front which in other circumstances might violate antitrust rules or at least be undone by free-riding on the contributions of others. Checkoff programs have brought us well-known ads such as "Got Milk?" and "Pork. The Other White Meat." If you have noticed that your pizzas have gotten cheesier in recent years, you also might want to thank a checkoff program; indeed, the very existence of Domino's Wisconsin 6 Cheese Pizza owes a debt of gratitude to the dairy checkoff.

Beyond such direct and indirect subsidies, meat production involves some environmental externalities, costs that the meat industry imposes but does not have to pay for. The emission of greenhouse gasses is one major environmental externality: just how major is a subject of much controversy, of course, but the existence of the greenhouse gas externality is not controversial. Other environmental externalities, including soil and water pollution, also are associated with animal agriculture. (Incidentally, factory fish farming is no friend to the environment, either.) 

The build-up of resistance to antibiotics is yet another source of externalities connected to animal agriculture. (A nice five-minute video on some of the applied science of antibiotic resistance in animal agriculture can be found here.) As with greenhouse gasses, there's a global public bad feature of antibiotic and antimicrobial resistance.

Meat consumption (and production) is associated with some serious health problems. But it is at least arguable that these (or some of these) are not externalities -- people understand the risks, say, but eat meat (or work in a meat packing plant) anyway, the story might go -- and hence do not generate a rationale for applying a corrective tax. Negative health effects combined with some social subsidy to health care is a sort of budgetary spillover, but one that, once again, may not justify a Pigovian remedy.

The theme of the Animals and Econ blog must needs make an appearance here: as soon as you grant nonhuman animals any direct standing in cost-benefit analyses or evaluations of economic efficiency, then the externalities from industrialized animal agricultural appear to be prohibitively large.