Food Security and Environmental Implications of Carbon Pricing in High-Income Regions

Elbedawi, Mohamed

Undergraduate Honors Thesis

Food Security and Environmental Implications of Carbon Pricing in High-Income Regions Público Deposited

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Citeable URL: https://scholar.colorado.edu/concern/undergraduate_honors_theses/3x816p046

Abstract

Food and agriculture contribute approximately one-third of global GHG emissions, but also provide a basic human necessity: food. A recent study projected that global food systems alone could prevent the world from achieving the United Nations’ target of limiting warming to 1.5C by 2100, and thus illustrates the need to mitigate GHG emissions in global food systems. Carbon taxes are an approach proposed by economists to incentivize emissions reductions, but they can also cause prices to increase, which would be a concern in food systems. However, the food insecurity concern is greatest in poorer countries, while the emissions from food systems are greatest in richer countries. This raises the question: what if a carbon tax was imposed only on rich countries? Could this both meaningfully reduce emissions and lower global food prices, thereby reducing food insecurity in poor countries? To model the effects of a carbon tax placed upon food in rich countries, I used both a simple analytical model of supply, demand, and trade in two hypothetical countries, and a computer-based simulation model calibrated to real-world data: the Simplified International Model of agricultural Prices, Land use and the Environment (SIMPLE). I found that carbon taxes on food in rich countries have the desired effects on GHG emissions and food security when they target consumers (demand), but, surprisingly, they worsen food insecurity and have ambiguous effects on GHG emissions when they target producers (supply). Previous pollution pricing theories not accounting for trade found supply and demand taxes to have identical effects. My results have important implications for climate change mitigation, environmental justice, and environmental economic theory.

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