Epsilon Archive for Student Projects

Abstract

The aim of this paper is to investigate the potential possibilities of reducing water scarcity, by targeting the water intensive consumption of nuts. Therefore, the research question is if consumption-based policies can decrease the consumption of nuts in Sweden, in order to reduce water scarcity in sensitive areas. This is of particular importance as Swedish health authorities promote nuts as a substitute to meat, creating a conflict between global sustainability goals, when aiming to curb food consumptions climate footprints, hence risk overlooking the rapidly growing issue of water scarcity. To answer the question an instore dataset was used, which provided information on snack products including nuts, and products similar to nuts. Nuts are currently seen as mainly a snack, though the risk of nuts being viewed as a main course is prevalent, as consumption is increasing. Using the Quadratic Almost Ideal Demand System model, consumers’ price sensitivity was estimated. The elasticities were further used to calculate demand curves for the included products. The last step was linking consumption to the environmental impact in order to examine the effect of consumption sided policies. Two scenarios were simulated to test the possible effect of policies targeting nut consumption. Scenario 1 allowed for a 10% tax on nuts, and an additional 5% subsidy was introduced on legumes in Scenario 2. The results indicate a reduced water scarcity in both scenarios, with about 5%. Implementation of a tax on nuts can be through increasing the VAT rate. However, an implementation of a subsidy on legumes may be difficult to implement because of the partly complicated nature of the policy instrument, and possible leakage. To conclude, a dietary transition away from nuts is possible by the use of consumption sided taxation.