A Golden Age for Green Investment?
Some green projects are enjoying a boost thanks to unconventional cost-of-capital calculations.
A Golden Age for Green Investment?As climate change intensifies, more people are eyeing food systems as a source of carbon emissions. Many people have moved to a more plant-based diet, which has a lower carbon footprint than meat and dairy.
“However, such extreme dietary change may be unrealistic,” write Purdue PhD student Li Song and Purdue’s Hua Cai and Ting Zhu. Their analysis of household grocery purchases in the United States suggests other culprits besides meat and dairy, including food sold in small sizes.
Song, Cai, and Zhu cite a number of studies that calculate that switching to a vegetarian or vegan diet could lower the food carbon footprint by 20 to 60 percent. But they point out that these studies tend to focus on the US national average regarding diet, even though food choices vary widely depending on a household’s socioeconomic characteristics such as income and education level, as well as race. Some research also relies on individuals’ one-day accounts of their food choices, which change over time.
Taking a different tack, Song, Cai, and Zhu analyzed data reflecting the grocery-shopping habits of nearly 58,000 US households for one year. Using the NielsenIQ Consumer Panel Data housed at Chicago Booth’s Kilts Center for Marketing, they looked back at the grocery choices made in 2010, when food delivery and online shopping were less prevalent.
The data set included more than 200,000 food products organized into 653 modules (for example, two sizes of milk containers are both in the dairy-milk-refrigerated category). The researchers further classified the modules into 83 food items. They also built a life-cycle assessment model with which they calculated a cradle-to-gate carbon footprint for each item.
By comparing the carbon footprint of items purchased to that of a benchmark diet recommended by the US government’s 2015–2020 Dietary Guidelines for Americans (DGA), the researchers calculated a carbon-footprint-reduction potential for each of the nearly 58,000 households. Their analysis indicates that there is plenty of room for improvement. In 2010, had these households followed dietary guidelines, their collective C02 emissions would have been cut by 26,228 tons a year. Replicated across the US, that would have led to a 31 percent cut in total household food carbon emissions, the researchers conclude.
Consumers could cut their carbon footprint by eliminating meat and dairy, but the researchers argue that there are more practical steps, particularly in small households, that could be even more efficient. These households, of one or two people, tend to have a larger per-capita purchase volume, food cost, and environmental impact, according to the data. Bulk packages are cheaper on a per-unit product basis than smaller packages, thus small households that buy in bulk to obtain better pricing end up overbuying, according to the analysis. This group could realize two-thirds of the overall potential carbon reduction, although for it to happen, food producers and retailers would need incentives to provide more cost-effective options on smaller-quantity items, and consumers would need to be educated and motivated to buy and throw away less, the researchers write.
All households buying fewer snacks could also shrink the carbon footprint, write Song, Cai, and Zhu, who find that 87 percent of the total carbon-footprint-reduction potentials in the study could come from less consumption of what they call “nonrecommended” foods, such as snacks, ready-made items, and drinks. The size of this potential carbon savings surprised the researchers, but they note that, just as many people may be reluctant to give up meat and dairy to benefit the environment, they may be similarly unwilling to forgo snacks.
There could be a way to lower carbon emissions for certain popular items such as bakery products, whose carbon intensity is relatively low on a per-item basis but quickly adds up. To reduce the environmental impact of these items, the researchers suggest reducing emissions on farms by improving fertilizer efficiency or using cleaner fuels. They also suggest policy makers offer tax breaks for food suppliers to improve technology in food production.
Li Song, Hua Cai, and Ting Zhu, “Large-Scale Microanalysis of U.S. Household Food Carbon Footprints and Reduction Potentials,” Environmental Science and Technology, November 2021.
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