Effects of an environmental tax on meat and dairy consumption in Sweden

- We estimate a demand system of meat and dairy products in Sweden.
- We introduce damage costs of meat and dairy in Sweden as an environmental consumption tax.
- Beef is most important to regulate for all emission reductions.
- Meat and dairy taxes in Sweden could reduce emissions of GHG, nitrogen and phosphorus up to 12% from the sector.

This study evaluated the environmental impacts of introducing an environmental tax on meat and dairy consumption in Sweden. Three meat products (beef, pork and chicken), four dairy products (milk, fermented products, cream and cheese) and four pollutants generating environmental damage (greenhouse gases (GHG), nitrogen, ammonia and phosphorus) were included in the analysis. The unit tax applied corresponded to between 8.9% and 33.3% of the respective price per kg product in 2009. Consumer response to the tax was calculated by econometric estimates of the almost ideal demand system (AIDS) for meat and dairy products, using per capita consumption data and prices. The results indicated relatively inelastic own price elasticities and high income elasticities for all meat products and slightly lower for dairy products. Simultaneous introduction of a tax on all seven products decreased emissions of GHG, nitrogen, ammonia and phosphorus from the livestock sector by up to 12%.