Pricing, Subsidy and Taxation Policies

The costs and benefits of incorporating environmental safeguards into livestock production and processing systems can be difficult to forecast and measure. In part, this is because they often occur over a relatively long period and the benefits of environmental management are inadequately appreciated and poorly understood. In many countries, the natural environment and the services it provides (e.g. water flow patterns, breakdown of pollutants, recycling of wastes) are viewed as public goods. Their value is often overlooked and they are not priced in the market place. Damage to them can be difficult, if not impossible, to quantify particularly in relation to water and air pollution. People’s willingness to pay is often used for measurement purposes, but the poor, who suffer most from environmental damage, invariably cannot meet the costs of protection. More sophisticated measurement techniques are being developed to overcome these problems. Quantifying the cost of irreversible environmental damage and the foreclosure of future options or the benefits accruing to future generations from environmental protection measures remain very difficult tasks.

Nevertheless, economists believe that, overall, the most efficient policy is to try to internalise all the environmental costs into the consumer price. To achieve this, a wide variety of financial instruments can be used such as levies on waste discharge, taxes on excess animals or phosphate loads, removal of subsidies favouring concentrate-intensive production, the provision of subsidies to encourage investment in emission control technologies, the removal of import restrictions on materials and equipment that improve feed efficiency, and the adoption of a system of tradable emission permits.

> > [Livestock & Environment Toolbox Home]