Socially optimal levels for diets and ecosystem services related to agriculture

The optimal level of red and processed meat intake is about 275 g/week when public health benefits and ecosystem services are valuated in monetary terms in an economic model for Norwegian agriculture.

While dietary change can improve public health and reduce environmental impact, it may also conflict with agricultural ecosystem services, cultural landscapes, and food security. The study examines the balance between dietary choices and ecosystem services in Norway’s agricultural sector using a partial equilibrium model. The model balances food markets in a way that maximizes social welfare including the monetary valuation of public health benefits and ecosystem services provided by agriculture. It thus determines within the model the socially optimal level of dietary choice, greenhouse gas (GHG) emissions, biodiversity, landscape aesthetics, and recreational value attached to agricultural land use. As part of the optimization, it also estimates necessary food taxes and subsidies to achieve socially optimal dietary and environmental outcomes.
The study employs Jordmod, a partial equilibrium model of Norway’s agricultural sector. The model includes (1) a farm module that optimizes farm activities for 13 farm types in 32 regions based on given input and output prices, subsidies and other regulations, and a flexible production technology, (2) food processing modules for dairy and meat that transform raw commodities into food products purchased by consumers, and (3) a market module that balances food supply and demand, and accounts for trade.
The valuation of pubic health benfits is based on Global Burden of Disease (GBD) data. The valuation of ecosystem services such as GHG reduction, biodiversity conservation, landscape esthetics, and recreational value is based on existing literature on the willingness to pay for these ecosystem services. We focus particulary on the uncertainty present in the underlying data.
Key findings are that (1) mean and high valuation of health benefits leads to reduced red meat intake (275 g/week), while low valuations results in higher intake (525 g/week), (2) less meat production lowers GHG emissions (-10%), but also decreases national food production (-30%), (3) prioritizing health benefits can reduce agricultural land to 7 mill daa, (4) optimal intake of plant-based food and dairy products remains below the new national recommendations, and (5) the estimated taxes to achieve this outcome are 55-57% on meat, 8-9% on dairy products other than milk, while subsidies are 9-15% on fruits/vegetables, and 10-11% on milk.
The study highlights that uncertainty in the valuation of public health benefits may lead to significant different results for the agricultural sector so that a valuation of health benefits becomes crucial. Reducing meat consumption benefits public health and the environment. A balanced approach including taxation, subsidies, and ecosystem incentives can promote a more sustainable agricultural sector.