Lifestyle choices of wealthy and middle-class consumers

The COP26 negotiations focused on green technologies and finance. Governments pledged money, businesses pledged net zero output, and ordinary citizens… did nothing! Individual activists have made a lot of noise, but there has been no systematic effort to organize the shift in consumption patterns necessary to achieve our common goal of keeping global warming below 1.5 degrees Celsius. The Chichester Festival Theater has organized a host of eco-activists to spell ‘get involved’ and commit to reducing food waste etc., but the lifestyle and behavior changes of individuals, especially consumers. of the middle class and the wealthy, have received far less attention than warranted. The richest 10% of consumers are responsible for 44% of carbon emissions linked to consumption.

A few facts can provide context. About two-thirds of global greenhouse gas (GHG) emissions are linked to household consumption. This is why the United Nations Environment Program (UNEP) Emissions Gaps Report 2020 concluded that major lifestyle changes will be needed. Consumers will need to reduce their carbon footprint from a global average of around 6 tonnes of CO2 equivalent (C02eq) per person to 2 to 2.5 tonnes by 2030 and 0.7 tonnes by 2050. Part of this happens automatically when companies produce more sustainably. manners. For example, when utility companies substitute renewable sources for fossil fuels, consumers’ indirect emissions when heating and cooling their homes with electricity automatically decrease. The consumer is not being asked for anything other than, perhaps, to switch to electrical appliances. They can keep their consumption pattern. But that will not be enough. Lifestyle changes are needed. This is why Sustainable Development Goal 12 is responsible consumption and production.

The richest 10% of consumers are responsible for 44% of carbon emissions linked to consumption.

Every little bit counts given the scale and urgency of reducing emissions, but when it comes to consumers, there is a flood of suggestions and recommendations that generate more confusion than actionable information. Research into how consumers’ lifestyle choices affect overall carbon emissions is behind schedule.

We know something about the differences between countries. The average consumer in the United States, for example, emits around 17.6 tonnes of CO2 equivalent per capita, more than double that of the European Union and the United Kingdom (7.9 tonnes) and 10 times more than India (1.7 tonnes). What we don’t know with any degree of robustness is to what extent this is simply due to higher levels of income and spending in the United States (the rich emit more than the poor). this is due to temperature and other natural conditions, and how much of it is due to political choices.

A just transition would address all of these issues (and unsurprisingly, the available research identifies North America as a positive emissions outlier). It would also help identify policy actions that could encourage consumers to reduce their emissions.

Avoid-Shift-Improve

A simple framework for thinking about lifestyle changes, developed by Felix Creutzig and others, is Avoid-Shift-Improve. Avoidance is best understood as reducing the overall level of consumption. For example, one of the main consumer ‘demands’ is to avoid long and medium haul flights, as these are associated with significant carbon emissions. Smaller homes, reductions in food waste, and a car-free life (thanks to the availability of carpooling through companies like Uber) can be added to this list. When it comes to travel, using public transportation, changing diets to reduce beef and lamb consumption, and purchasing local produce are part of the answer. When it comes to improving energy efficiency, the shift to electric cars and the purchase of sustainably manufactured products are the main drivers.

In each of these cases, there is a public policy reason to encourage changes in consumer behavior, and this is most easily achieved through differentiated taxes. There is a lot of talk about taxing carbon, but a uniform carbon tax is not an effective or fair solution. Applying Ramsey’s optimal tax rule would suggest that the appropriate tax rate on a good is proportional to that good’s unit contribution to carbon emissions, and inversely proportional to the elasticity of demand for the good in question. It is the set of taxes that would minimize the deadweight loss of welfare resulting from taxation.

With that in mind, there are three priorities for lifestyle changes:

  1. Impose a tax on the main areas where “avoidance” is the priority: air flights, beef and lamb are huge sources of carbon. In today’s world, they should be viewed as a luxury and taxed accordingly. As these industries reduce emissions (for example, adding kelp to animal feed shows promise in reducing methane emissions), the optimal tax rate should drop.
  2. Use the income to subsidize the choices consumers should turn to: public transport and local producers of vegan products.
  3. Set standards and encourage commercial research to develop efficient devices, especially electric cars, trucks, and buses.

Ramsey’s rule tells economists how to define relative tax rate on goods. The absolute level of taxes depends on the amount of revenue to be raised. Likewise, the level of Ramsey carbon taxes described above depends on the overall carbon budget which must be respected. Concretely, it largely depends on the world population. I have written before about how the best investment in reducing carbon emissions is to invest in secondary education for girls in countries with high fertility. This remains true from afar. It is disappointing that at COP26, even at the special session on climate change and health, there was no mention of education.

COP26 missed an important opportunity to highlight the role that lifestyle changes can play and to pave the way for policies that will surely need to be implemented to make these lifestyle choices acceptable to the population. People have accepted cigarette taxes as a tool to reduce smoking and increase life expectancy. They need a similar effort to understand why stealing and eating meat deserve similar treatment. In addition, they need to understand that the demographic impact on all of us of lower population growth in poor countries is significant. This is why combining climate finance and development finance makes so much sense.

So let’s not forget what each of us can do to consume more responsibly. Let’s also understand the big picture. Reducing food waste is good, but small compared to avoiding a single theft. Reducing your meat consumption is as important as giving up your car. At the time of the COP27, where more ambitious objectives and actions are expected, we must seek proposals to encourage low-carbon lifestyle choices. And we must redouble our efforts to accelerate the enrollment of girls.

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