Meat the Future - A Cost-Benefit Analysis of a Pigouvian Tax on Meat in Sweden

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: This thesis considers a hypothetical Pigouvian tax on meat in Sweden. The theoretical framework regards controlling for externalities and previous empirical research of excise duties on food, which end up in a Cost-Benefit Analysis (CBA) with a policy recommendation. Food production contributes up to as much as 26% of all GHG emissions and increasing meat consumption are positively correlated with the risk of colorectal cancer. This leads to a distorted market due to existing negative externalities. Imposing a tax on meat consumption in Sweden will have direct effects on both consumer and producer levels, which leads to consequences in terms of lost utility of not eating meat respectively lost revenues due to less sold meat. Nonetheless, there are also gains from an environmental perspective and reduced health care costs. Hence, the purpose is to analyse whether the accompanied costs outweigh the benefits or if a vice versa connexion prevails. The conducted CBA with succeeding empirical results suggests that a Pigouvian tax on meat cannot, under the assumptions of this thesis, come with improved net social benefits (NSB), despite lower costs from an environmental as well as from a health care cost perspective.

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