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Small Corrective Tax, Household Production, and Climate Change Mitigation: Evidence from a Food Waste Tax

Date: Wednesday, Oct 26, 2022, 10:00 ~ 11:15
Speaker: Seunghoon Lee (MIT)
Location: Zoom을 통한 비대면 세미나
Seunghoon Lee 교수님의 세미나가 있을 예정입니다. 

* 주관: 서울대학교 경제학부, 경제연구소 한국경제혁신센터, SSK, BK21

* 본 세미나는 졸업요건(2022-2학기) 및 BK21+(2022-2학기) 세미나 참석으로 인정됩니다.

세미나 참석인정을 원하는 학생은 세미나 참석 시 학번_성함 으로 들어와주시길 바랍니다. (2021_11111 홍길동)
* ZOOM link :  (회의 아이디 : 935 659 6776, 암호: 9679)

Small Corrective Tax, Household Production, and Climate Change Mitigation: Evidence from a Food Waste Tax

Seunghoon Lee

 Abstract:  Given that lifecycle greenhouse gas (GHG) emissions from wasted food are comparable to that of entire road transport, managing excessive food demand is essential for climate change mitigation. This paper studies whether imposing a small corrective tax on food waste induces more efficient food use, what are corresponding abatement strategies, and why households make such behavioral changes. By exploiting two waves of plausibly exogenous food waste tax expansions due to the central government’s mandates, I first show that the policy reduces per household annual food waste quantity by 53KG. Further, using micro grocery shopping data and food intake data, I find that annual grocery purchases per household decline by 46KG (or $172) without compromising biological needs. Using these empirical estimates, I find that the policy is highly cost-effective—the fiscal cost of per ton CO2 reduction is only $13. Next, I investigate household abatement strategies building on the insights from the household production model a la Becker (1965). Using time use survey data, I find that households spend 50 additional hours per year, which is worth $122, on food production to compensate for a lower grocery input. I rule out alternative explanations like productivity increase and input quality change. Lastly, I explore why such a small tax has such a dramatic impact on household behaviors. Using the demand elasticity of groceries, I show that non-pecuniary incentives explain 95% of the tax effect. The findings of this paper indicate that a small tax on food waste can be an effective climate change mitigation tool by inducing environmentally advantageous household behavior changes.

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