Distributional Impacts of Green Taxes on Food Consumption in Catalonia

Spain is likely to miss it Kyoto target in 2020 if it does not shift emphasis from labor taxes towards environmental taxes. Compared to supply-side measures, demand-side measures have proven to be more efficient in reducing GHG emissions. We assess demand-side Pigovian/CO2-eq tax on food CO2-eq reduction, welfare and diet quality in Spain based on different social costs and discount rates. Elasticities for simulations are calculated from a complete EASI demand system. Results show CO2-eq reduction are proportional to taxes. Though, taxes affect diet quality positively, it lowers household welfare indicating a trade-off between emissions goals and household´s welfare.