Utrecht University: The real price of meat

“For many reasons, meat is too cheap and people consume far too much of it,” says Inge van den Bijgaart external linkof the Utrecht University School of Economics (U.S.E.). “If you look at the real price of meat, you also have to include the effects on climate change, nitrogen emissions, and the negative consequences for biodiversity, health and animal welfare. If we were to do that, for example by imposing a tax on meat, it would mean an average price increase of at least 20-60 per cent.” Van den Bijgaart analysed the ‘real’ price of meat with researchers from various universities in Europe.

The harmful effects of meat (production)

Livestock is known to play a significant role in climate change and to negatively impact global nitrogen cycles and biodiversity. Evidence suggests the environmental impacts are so large that without a reduction in the consumption of meat, especially in high-income countries, climate goals cannot be met and vital ecosystems cannot be maintained. A change in consumption patterns, away from meat and towards plant-based proteins and meat replacements will thus be required. Alongside other measures, consumption taxes on meat help accomplish this transition.

In their paper “Is Meat Too Cheap? Towards Optimal Meat Taxation” researchers from several European universities, including Inge van den Bijgaart, review the empirical basis for the ‘social costs of meat’ and study rationales for regulatory efforts to tax meat in high-income countries from the perspective of public, behavioural and welfare economics. They conclude that meat is significantly underpriced and provide preliminary estimates of the environmental social costs associated with meat consumption. They also identify several directions for future research towards optimal meat taxation, while stressing that taxing meat is a simple tool, to be used if more targeted policy options, such as extending carbon pricing to the livestock sector, are not available. This could be the case when implementation is strongly debated or too sensitive politically, or when regulation is too complex or expensive.

Tax on meat: price increase of 20-60 per cent

“First of all, our article gives an overview of the actual prices,” says Van den Bijgaart. “They would mean an average price increase of 20-60 per cent. The prices we came up with, are a first estimate of the main environmental costs (climate change and nitrogen emissions), and do not yet include the costs of biodiversity loss, health effects of meat consumption and animal welfare. Nevertheless, such a price increase for beef, for example, would already amount to 5 to 8 euros per kilo. That is considerable. If you levy a tax on meat, it will hit people hard financially – and to be honest: that is actually the intention. The whole point of pricing is that people will consume less.

Realistic pricing of meat, whether or not through taxation, can certainly contribute to improving our environment

Inge van den Bijgaart
Inge van den Bijgaart
In such a case, we propose to use the revenues to compensate low incomes and help farmers to become more sustainable. For example, by reducing the VAT on food in general or on fruit and vegetables in particular. Or by returning the revenues via the income tax.

A price correction on meat will not solve all the problems. That would be too naive,” says Van den Bijgaart. “It will not directly improve animal welfare, for example. Perhaps it will result in less chicken being eaten, but the chickens are still in the same small coop. So, additional regulation is needed.

What can we achieve and what can’t we achieve? Given the current political climate and the interests of the meat industry, it is questionable whether a tax on meat will be introduced in the near future,” Van den Bijgaart thinks. “But there are strong arguments for doing so anyway, even though it may not be the ultimate solution. Because realistic pricing of meat, whether through taxation or not, can certainly contribute to improving our environment.”

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