Seunghoon Lee, PostDoctoral Associate at MIT’s Sustainable Urbanization Lab, will present the EEEP Seminar Series presentation, “The Benefits and Costs of a Small Food Waste Tax and Implications for Climate Change Mitigation” on February 1, 2023.
Abstract: Given that life-cycle greenhouse gas (GHG) emissions from wasted food is comparable to that of road transport, managing excessive food demand is essential for achieving climate change mitigation goals. A textbook solution is levying a corrective tax on food waste, but limited evidence exists on the benefits and costs of these taxes. By exploiting plausibly exogenous expansions in a small food waste tax—on average 6 cents per kg—in South Korea, I document three main findings. First, the tax reduces annual food waste by 20% (53kg) and grocery purchases by 5.4% (46kg), worth $172 for an average household, without compromising household nutritional needs. These estimates suggest that the program cost of reducing 1 ton of carbon dioxide is only $18, or even negative when savings on the waste treatment budget is considered. Using the household production model, I then explore abatement strategies and corresponding costs and find that an average household increases their time spent on meal production by 7%, or 68 additional hours per year. Finally, the demand elasticity of groceries implies that the price effect explains only 5% of the reduction in grocery purchases. Instead, the tax seems to affect household behavior via non-pecuniary channels, in particular, by raising attention to food waste. The findings indicate that a small tax on food waste can be a powerful and cost-effective climate change mitigation tool by inducing environmentally advantageous changes in household behavior.
Read full paper: https://www.dropbox.com/s/xewt2bdy10x344o/Foodwaste_SL.pdf