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)...