Editing IPCC:AR6/WGIII/Chapter-12 (section)

==== 12.4.4.1 Market-based Instruments ====

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'''Taxes and subsidies:''' Food-based taxes have largely been implemented to reduce non-communicable diseases and sugar intake, particularly those targeting sugar-sweetened beverages ( [[#WHO--2019|WHO 2019]] ). Many health-related organisations recommend the introduction of such taxes to improve the nutritional quality of marketed products and consumers’ diets ( [[#Wright--2017|Wright et al. 2017]] ; [[#Park--2019|Park and Yu 2019]] ; [[#WHO--2019|WHO 2019]] ), even though the impacts of food taxes are complex due to cross-price and substitution effects and supplier reactions ( [[#Cornelsen--2015|Cornelsen et al. 2015]] ; [[#Gren--2019|Gren et al. 2019]] ; [[#Blakely--2020|Blakely et al. 2020]] ) and can have a regressive effect ( [[#WHO--2019|WHO 2019]] ). Subsidies and taxes are found to be effective in changing dietary behaviour at levels above 20% price increase ( [[#Cornelsen--2015|Cornelsen et al. 2015]] ; [[#Niebylski--2015|Niebylski et al. 2015]] ; [[#Nakhimovsky--2016|Nakhimovsky et al. 2016]] ; [[#Hagenaars--2017|Hagenaars et al. 2017]] ; [[#Mozaffarian--2018|Mozaffarian et al. 2018]] ), even though longer-term effects are scarcely studied ( [[#Cornelsen--2015|Cornelsen et al. 2015]] ) and effects of sugar tax with tax rates lower than 20% have been observed for low-income groups ( [[#Temme--2020|Temme et al. 2020]] ).

Modelling results show only small consumption shifts with moderate meat price increases; and high price increases are required to reach mitigation targets, even though model predictions become highly uncertain due to lack of observational data ( [[#Mazzocchi--2017|Mazzocchi 2017]] ; [[#Bonnet--2018|Bonnet et al. 2018]] ; [[#Fellmann--2018|Fellmann et al. 2018]] ; [[#Zech--2019|Zech and Schneider 2019]] ; [[#Latka--2021|Latka et al. 2021]] b). Taxes applied at the consumer level are found to be more effective than levying the taxes on the production side ( [[#Springmann--2017|Springmann et al. 2017]] ).

Unilateral taxes on food with high GHG intensities have been shown to induce increases in net export flows, which could reduce global prices and increase global demand. Indirect effects on GHG mitigation therefore could be reduced by up to 70–90% of national results ( [[#Fellmann--2018|Fellmann et al. 2018]] ; [[#Zech--2019|Zech and Schneider 2019]] ) ( ''limited evidence, high agreement'' ). The global mitigation potential for GHG taxation of food products at USD52 kgCO 2 -eq –1 has been estimated at 1 GtCO 2 -eq yr –1 ( [[#Springmann--2017|Springmann et al. 2017]] ).

Studies have shown that taxes can improve the nutritional quality of diets and reduce GHG emissions from the food system, particularly if accompanied by other policies that increase acceptance and elasticity, and reduce regressive and distributional problems ( [[#Niebylski--2015|Niebylski et al. 2015]] ; [[#Hagenaars--2017|Hagenaars et al. 2017]] ; [[#Mazzocchi--2017|Mazzocchi 2017]] ; [[#Springmann--2017|Springmann et al. 2017]] ; [[#Wright--2017|Wright et al. 2017]] ; [[#Henderson--2018|Henderson et al. 2018]] ; [[#Säll--2018|Säll 2018]] ; [[#FAO--2020|FAO et al. 2020]] ; [[#Penne--2020|Penne and Goedemé 2020]] ) ( ''robust evidence, h'' ''igh agreement'' ) ''.''

'''Trade:''' Since the middle of the last century, global trade in agricultural products has contributed to boosting productivity and reducing commodity prices, while also incentivising national subsidies for farmers to remain competitive in the global market ( [[#Benton--2019|Benton et al. 2019]] ). Trade liberalisation has been coined as an essential element of sustainable food systems, and as one element required to achieve sustainable development, that can shift pressure to regions where the resources are less scarce ( [[#Wood--2018|Wood et al. 2018]] ; Traverso and Schiavo 2020). However, [[#Clapp--2017|Clapp (2017)]] argues that the main economic benefit of trade liberalisation flows to large transnational firms. Benton and Bailey (2019) argue that low food prices in the second half of last century contributed to both yield and food waste increases, and to a focus on staple crops to the disadvantage of nutrient-dense foods. However, global trade can also contribute to economic benefits such as jobs and income, reduce food insecurity and facilitate access to nutrients ( [[#Wood--2018|Wood et al. 2018]] ; Hoff et al. 2019; Traverso and Schiavo 2020; [[#Geyik--2021|Geyik et al. 2021]] ) and has contributed to increased food supply diversity ( [[#Kummu--2020|Kummu et al. 2020]] ). The relevance of trade for food security, and adaptation and mitigation of agricultural production, has also been discussed in [[#Mbow--2019|Mbow et al. (2019)]] .

Trade policies can be used to protect national food system measures, by requiring front-of-package labels, or to impose border taxes on unhealthy products ( [[#Thow--2019|Thow and Nisbett 2019]] ). For example, in the frame of the Pacific Obesity Prevention in Communities project, the Fijian government implemented three measures (out of seven proposed) that eliminated import duties on fruits and vegetables, and imposed 15% import duties on unhealthy oils ( [[#Latu--2018|Latu et al. 2018]] ). Trade agreements, however, have the potential to undermine national efforts to improve public health ( [[#Unar-Munguía--2019|Unar-Munguía et al. 2019]] ). GHG mitigation efforts in food supply chains can be counteracted by GHG leakage, with a general increase of environmental and social impact in developing countries exporting food products, and a decrease in the developed countries importing food products ( [[#Fellmann--2018|Fellmann et al. 2018]] ; [[#Sandström--2018|Sandström et al. 2018]] ; [[#Wiedmann--2018|Wiedmann and Lenzen 2018]] ). The demand for agricultural commodities has also been associated with tropical deforestation, though a robust estimate on the extent of embodied deforestation in food commodities is not available ( [[#Pendrill--2019|Pendrill et al. 2019]] ).

'''Investment into research and innovation:''' [[#El%20Bilali--2019|El Bilali (2019)]] assessed research gaps in the food system transition literature and found a need to develop comparative studies that enable the assessment of spatial variability and scalability of food system transitions. The author found also that the role of private industry and corporate business is scarcely researched, although they could play a major role in food system transitions.

The InterAcademy Partnership assessed how research can contribute to providing the required evidence and opportunities for food system transitions, with a focus on climate change impacts and mitigation ( [[#IAP--2018|IAP 2018]] ). The project builds on four regional assessments of opportunities and challenges on food and nutrition security in Africa ( [[#NASAC--2018|NASAC 2018]] ), the Americas ( [[#IANAS--2018|IANAS 2018]] ), Asia ( [[#AASSA--2018|AASSA 2018]] ), and Europe ( [[#EASAC--2017|EASAC 2017]] ). The Partnership concludes with a set of research questions around food systems, that need to be better understood: (i) how are sustainable food systems constituted in different contexts and at different scales? (ii) how can transition towards sustainable food systems be achieved? and (iii) how can success and failure be measured along sustainability dimensions including climate mitigation?

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