Evaluating the Cost of Food in a Carbon Constrained Economy

Although consensus has not been reached regarding the most efficient mechanism to curb anthropogenic greenhouse gas emissions, rising concern over the consequences of global climate change and consequent shifts in public and political sentiment suggest that carbon legislation will be instituted in the US in the near future. The recent climate change bill passed in the House of Representatives titled The American Clean Energy and Security Act of 2009 (HR 2454) includes provisions for a cap-and-trade system intended to reduce the nation’s greenhouse gas emissions 83% by 2050. Consequently, it is likely that some means of carbon pricing will take effect that will make it more expensive to emit greenhouse gases. In a carbon constrained economy, it will become increasingly important to consider every stage of food production and consumption in order to evaluate the potential opportunities for emission reductions. This analysis uses Life-Cycle Assessment to estimate the social cost of food production by quantifying the associated negative externalities under a range of potential carbon prices, using meat and grain as examples. It concludes that 0.42 and 16.0 kg of lifecycle CO₂e are embedded in 1 kg of grain and beef production, respectively. Consequently, the marginal cost associated with the emissions caused by grain production under a carbon price range of $10 and $85 per t CO₂e is estimated to be between $.004 and $0.036 per kg of grain. By comparison, the estimated marginal cost associated with beef production over the same range of carbon pricing is $0.16 and $1.36 per kg of beef. Considering that the US produces 12 billion kg of beef per year, this range indicates that the carbon cost of beef production alone might fall anywhere between $1.9 and $16.3 billion per year, depending on whether and how a carbon price is applied. This uncertainty and potential carbon price could significantly impact the cost of carbon-intensive foods.