Table of Contents
Livestock farming and greenhouse gas emissions are interrelated. Livestock farming contributes around six billion tons of greenhouse gases to the natural atmosphere; some projections reflect that the quoted figure is around eighteen percent of total global emissions (Herrero, 2016). This situation poses a direct threat to the economic stability of Australia and other parts of the world if it is allowed to remain the same because climate change has serious ramifications for the global economy and the Australian economy as well. For example, seasonal pattern is highly linked to crop production and other agricultural needs. More specifically, there are 20 billion animals and more than 1.3 billion farmers providing half of the total economic output to global economy (Herrero, 2016). This also means around 1.3 billion farmers rely on natural weather condition for producing agricultural products along with feeding their 20 billion animals. In other words, if the climate change negatively affects the seasonal weather conditions, this could severely affect the lives of 1.3 billion farmers (Department of Agriculture, 2013). Therefore, it is highly essential to take into account the effects of greenhouse gases and develop effective policy measures for reducing the carbon footprint of livestock farming.
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The Economic Theory of Externalities
Externality is related to favorable and unfavorable effects on neutral or unassociated person; additionally, it also highlights that externality hinders economy to perform less efficiently and effectively (Bohi & Toman, 1996). For example, air pollution is an appropriate example for understanding the economic concept of externalities. Factories emit greenhouse gas emissions, and they negatively affect the health of nearby local communities.
Theoretical Market and Efficient Equilibrium and Diagram
The graph 01 clearly represents market efficiency equilibrium. Equilibrium takes place when demand and supply are in a state of balance; and this means quantity demanded has been appropriately supplied. And that situation is reflected by the cross interaction of both demand and supply curves where price and quantity also intersect as well.
In the above mentioned graph, it can also be seen that if the demand and supply are not in a state of balance, this would create a deadweight loss, which is a form of economic loss caused by the inefficient utilization of resources. More clearly, there are various forms of deadweight loss including, taxation, price ceiling and other relevant factors. For example, taxes discourage purchasing as above average cost is paid by consumer when purchasing takes place. As a result, reduced purchasing brings economic loss for producers who experience reduced demand for their products due to increased taxation.
Critical Analysis: Livestock Methane Tax
Sheep and cattle contribute around 70 percent of total Australian agricultural greenhouse gas emissions (Beavan, 2017). Based on this perspective, it looks reasonable to indicate that the contribution of sheep and cattle remains the highest when their contribution to greenhouse gas emissions is compared with other livestock farming. Under this situation, it is highly essential that methane taxation should be implemented on the related farmers. This taxation has both benefits and drawbacks. First, for the government of Australia, imposing methane tax would generate additional government revenue and that could be used for improving the efficiency of the economy.
On the contrary, this policy would reduce the number of farmers who own cattle and sheep farms because increased taxation would directly affect their revenue and that would certainly increase their cost of doing farming activities. At the same time, this would also negatively affect the exports of the livestock as Australia is one of the leading exports of the livestock, especially sheep. In other words, this would negatively affect the export sector of the Australian economy. On the contrary, this would also reduce demand for sheep and cattle meat. Subsequently, this would reduce economic reliance on both cattle and sheep.
New Production Technology
New production technology has both positive and negative effects on economy. For example, government would be required to provide additional incentives to potential producers willing to invest in new production technology relating to meat. On the contrary, this would reduce reliance on livestock, especially sheep and cattle and that would be highly beneficial in the long run because demand for meat produced through the support of new production technology takes time to gain its market share.
Non-Livestock Meat Consumption Increase
Non-livestock meat or laboratory meat is another alternative to livestock meat. Currently, meat consumption trend is directly linked to the greenhouse gas emissions relating to sheep and cattle. For instance, sheep and cattle farmers increase their farm yield as soon as they experience increase in demand for sheep and cattle meat. This consumption trend must be discouraged because it is directly linked to the farming and the supply of cattle and sheep. Under this situation, it is highly essential that meat consumers must be willing to change their meat eating tendency.
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This graph clearly hallmarks the future trend in meat eating. Amazon Mechanical Turk survey highlights that more than fifty 31.1 percent of total respondents (673) agreed that they would be willing to eat vitro meat; subsequently, 34.2% said that “probably yes” they would be more inclined to eat vitro meat. Overall, the results indicate that the majority of the respondents were willing to test the vitro meat. Based on this, it looks reasonable to suggest that more production of vitro meat should be encouraged. For this purpose, the government should incentivize and provide additional subsidy, easy loans, and other benefits to potential producers willing to invest in the production of vitro meat. However, there are drawbacks relating to the production of vitro meat. First, it is difficult to say that the lab meat is a perfect substitute to livestock meat because both are produced very differently. For example, cattle and sheep and other animals are the main sources for meat.
On the contrary, vitro meat is produced in laboratory. Therefore, it looks risky to fully rely on the use of vitro meat. However, the use and increase in demand for vitro meat offer environmentally beneficial as the reliance on cattle and sheep would be diminished as soon as enough quantity of vitro meat is available in the market. Subsequently, this would reduce carbon footprint and greenhouse gas emissions as well.
Cattle and sheep farming severely affect the natural environment. It has been reported that the majority of livestock greenhouse gas emissions is contributed by cattle and sheep. Therefore, it is highly essential that new measures to reduce the carbon footprint must be introduced. For this purpose, taxation on methane emission should be imposed as this would discourage cattle and sheep farming. At the same time, this would also decrease demand for meat which is also indirectly damaging the natural environment. However, imposing new taxes would increase tax revenue for the government of Australia. At the same time, new production technology should also be incentivized as it would encourage investors to put their money in new methods. Additionally, the production of artificial meat should also be increased as this would also decrease demand for livestock meat. In other words, reducing demand for livestock meat would mean decreasing greenhouse gas emissions. However, health risk of artificial meat (i.e. vitro meat) and other similar factors should also be considered as they may pose any threat to health.
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- Beavan, K. (2017, Nov. 22). Australian red meat sector sets 2030 carbon neutral target at Alice Springs producer forum. ABC News.
- Bohi, D.R., & Toman, M.A. (1996). The Economics of Energy Security. London: Kluwer Academic Publishers.
- Department of Agriculture, (2013). Australian agriculture: reducing emissions and adapting to a changing climate key findings of the climate change research program.
- Economics online, (n.d.). Market Equilibrium.
- Herrero, M. (2016, 22 March). To reduce greenhouse gases from cows and sheep, we need to look at the big picture. The Conversation.
- Phillips, C., & Wilks, M. (2017, Feb. 22). No animal required, but would people eat artificial meat? The Conversation.