Page 151 - Ecuador's Banana Sector under Climate Change

chapter 6: climate change policies and their potential impact on ecuador’s banana sector - an economic analysis
Table 50 Change in the relative price of bananas due to a USD30/tCO2e emission tax
Total expenditure kg-CO2e/USD
Average emission tax rate
Banana retail price USD/kg
Bananas kg-CO2e/USD
Banana emission tax rate
Change in relative banana price*
..............................................................................%..............................................................................
United States
European Union
Japan
1.40 4.20 1.35 0.89 2.67
0.98 2.94 2.35 0.51 1.53
0.70 2.10 2.30 0.52 1.57
-1.47
-1.37
-0.52
Source: Retail price data from FAO: Prices for France and the United States relate to March 2013; those for Japan relate to December 2012
* The last column divides the banana tax rate by the average tax rate and subtracts one (tax on bananas/tax on all goods)
be subject only to a portion of the full levy that has been assumed in the analysis, resulting in a price drop beyond what has been calculated (Table 50). This would lead to a larger percentage increase in the demand for the fruit.
Second, if some products or sectors are taxed at a lower rate - or are exempt from an emission tax - the relative price effects assumed above would need to
be modified. The dairy sector in virtually all developed countries, for example, benefits from significant producer support. Should the dairy sector be provided its usual preferential treatment, the tax on emissions would reduce the price increase that is assumed above and consumers, therefore, would have less incentive to reduce their consumption of dairy products and switch to lower-taxed foods.
Third, the analysis assumes that the emission tax is fully refunded so that aggregate household income is unchanged. However, because households differ in energy consumption, rebates to individual households will generally not equal the tax paid, resulting in a net aggregate income effect.
Fourth, the calculations in Table 50 relate only to changes in demand: the analysis does not take into consideration the supply response to an emission tax. Should humans reduce their consumption of animal products, the question that arises is how should the pasture and grazing land - as well as the arable land - that was used to produce the feed and fodder in relation to the animal products be reused? Changes on the supply side will alter relative prices and contribute to a change in demand.
3. Post-purchase emissions
The LCA of food items ends at the point of sale to the consumer, while other LCAs include the transportation from the point of sale to the home, as well as household storage, preparation, waste and disposal. In the case of the banana, it is usually eaten raw and is usually stored at room temperature to facilitate ripening, thus requiring minimal energy. Transport from retail store to the home, on the other hand, is the principle post-purchase contributor to the carbon
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