A pigovian tax on beef - consumption effects and consequence analysis

Abstract: Meat production accounts for approximately 18 per cent of the total GHG emissions in the world and beef is the kind of meat associated with the highest emissions. This paper derives the beef demand and elasticities in Sweden using regression analysis. Further, it calculates the effects of a hypothetical pigovian consumption tax on beef to reduce beef consumption and the associated emissions. The short (long) run own-price elasticity was estimated to: -0,69 (-1,74) and the short (long) run income elasticity to 1,41 (3,58). When assuming a tax level of 28,1% the short run consumption reduction was 19,25% or 2,44 Kg per person per year. The reduction was illustrated to depend not only on own-price elasticities but also on assumptions made of the costs of environmenal problems in the future affecting the optimal tax level. In the second part of the paper potential use of the tax revenue was discussed. The conclusion was that a lowering of the tax on green substitutes to meat was likely to be more efficient than a lowering of the tax on labour.