Given that food security and affordability are at stake, we must tread our climatic waters very carefully
It’s tax season. Of course, when it comes to the environment it’s always tax season. The carbon tax, which was raised to $65 a metric ton on Apr. 1, is impacting the economy in many ways.
As the implementation of a higher carbon tax moves forward, a new baseline for costing is set for all sectors of our economy. By 2030, our carbon tax will be at $170 a metric ton; therefore, we need to be ready.
To be clear, supporting the carbon tax is, essentially, supporting the lesser of all evils. Based on the last budget, Ottawa is all in on clean tech, and these investments will have an impact on making our economy greener … eventually.
Climate change is real, and we need to act. But food, or the food industry, should be treated differently. Given that food security and affordability are at stake, we must tread our climatic waters very carefully.
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The Smart Prosperity Institute, funded in part by the federal government and which supports the carbon tax policy, is housed at the University of Ottawa. Universities are intended to be safe places for sound and balanced debates about important social and economic issues we face as a country. However, most of the work released by the Institute on the carbon tax has been one-sided. Furthermore, the Institute has barely examined how the carbon tax would impact food prices over time.
In 2021, Jennifer Winter and Kent Fellows from the University of Calgary, and Brett Dolter from the University of Regina, released a working paper about carbon pricing costs for households. As many economists point to it as a reference, Carbon Pricing Costs for Households and the Progressivity of Revenue Recycling Options in Canada – revised and published in 2022 in Canadian Public Policy – is now considered the benchmark to understand how the carbon tax impacts Canadian households. The paper does a reasonable job explaining what is at stake for energy costs. Yet, when it comes to food prices and affordability, that paper has some serious shortcomings.
To begin with, the paper ventures to say that the methodology uses ‘rich synthetic microdata” from Statistics Canada’s Social Policy Simulation Database and Model. Specific data sets, any data sets, or analyses may have limitations, and it is crucial to understand context, methodology, and limitations of any statistical data. As climate change is borderless by nature, comparing some data from outside of the country with Canada’s economic reality would have been helpful and given more depth to the paper.
Furthermore, the study doesn’t account for changes in consumption behaviour, nor does it looks at how carbon pricing impacts the growth rate of incomes. The paper also doesn’t mention that the world has just experienced a global pandemic. These are serious oversights.
The paper also does not examine how the entire economy can restructure or shift due to a higher carbon price. To date, only 46 countries have prices on carbon emissions. Canada’s carbon tax is currently the seventh highest in the world.
Higher commodity prices due to the invasion of Ukraine is also neglected, making forecasting even more challenging.
While helpful, these studies have a tendency to become gospel as no one is allowed to challenge them. As soon as the data used or methodology is questioned, the entire pro-carbon tax mob violently pummels anyone who dares to criticize any of the questionable science that supports these costly policies for Canadians.
The Smart Prosperity Institute could have at least acknowledged that some papers suggesting that the carbon tax negatively impacts food prices, such as T. Wu and P.J. Thomassin’s The Impact of Carbon Tax on Food Prices and Consumption in Canada, exist. While many studies do suggest that the impact of the carbon tax on food prices is minimal (after all, both Quebec and British Columbia have had carbon taxes for more than a decade now, and food prices have not behaved differently in either province), most studies only look at a tax set at $50 a metric ton, not at $170. The Institute needs to get serious about forecasting how the tax will impact our food economy using strong data science practices through artificial intelligence.
Academic discourse requires debates, exchange and, yes, criticism, especially when the carbon tax is involved. Ottawa will collect over $8 billion in carbon taxes this year alone from Canadian companies. That sum will impact our economic competitiveness while we wait for clean-tech investments to reap long-term benefits.
Again, the carbon tax is an important piece of policy for a greener economy. But we can’t afford to leave the fate of our food future in the hands of a few scholars who think they know best and whose work supports potentially reckless policies for the rest of us.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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