Health Risks and Consumer Response to Pesticide Regulation

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Can tax policies help trim the Canadian obesity
epidemic? The Role of Food Price Interventions
Sean B. Cash, Ph.D. Department of Rural
Economy University of Alberta Integrated Chronic
Disease Prevention Building It Together, Annual
Meeting of the Chronic Disease Prevention
Alliance of Canada Ottawa, Ontario, November 6,
2006
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So Whats New?

• Western countries are increasingly concerned
  about a perceived epidemic of obesity and
  dietary-related disease
• Popular (and pop culture) concern
• Producers providing new products (and new spins
  on old products)
• Consumers demanding them?
• New pressures for policy responses

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Fat is the New Tobacco
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WHO Recommendations

• Limit energy intake from fat and shift
  consumption from saturated and trans-fats
• Increase consumption of fruits, vegetables, whole
  grains, legumes, nuts
• Limit consumption of free sugars
• Limit salt and ensure that it is iodized
• Achieve energy balance for weight control
• Engage in adequate physical activity

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Price per CalorieBy Food Group in Edmonton
Supermarkets
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Health-Conscious Consumers A Dairy Example
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Health-Conscious Consumers???
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If consumers dont want to buy health

• Can we force it on them with new policies?
• New labeling requirements
• Ingredient bans
• Social marketing
• Price interventions (We KNOW they respond to
  price!)
• Should we?

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A Role for Government?

• Market failures
• Imperfect markets
• Imperfect information
• High external costs
• Special roles
• Protection of children
• Regulation of broadcast media
• Belief that health is an important part of
  societal well-being

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Policy Instruments

• RD policy
• Advertising and social marketing
• Marketing restrictions
• Process restrictions
• Taxes and Subsidies
• Agricultural Policy

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Taxes and Subsidies

• Dr. Collins Nakai, former CMA President, called
  for taxes on junk food earlier this year
• Dietitians of Canada statement last month that
  it is premature to endorse taxation as a
  solution
• House Standing Committee on Health looking at
  economic interventions to combat childhood
  obesity
• Failed Ontario proposal to extend PST to
  restaurant meals under 4.00
• New York couch potato tax proposal

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Taxes and Subsidies

• Double dividend argument
• Regressive taxation
• Could provide thin subsidies on healthier
  foods, such as fresh fruits and vegetables

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Problems with Fat Taxes

• Consumers are responsive to price so can indeed
  decrease consumption
• Unlike addictive products (e.g., nicotine), snack
  foods can be safely consumed in moderation
• Involves a reduction in real consumer income
• Regressive distributional effects

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The Problem of Targeting(Spot The Soft Drink!)
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Fruit and Vegetable Subsidy Study Results

• A one-percent subsidy of all fruits and
  vegetables can save 10,000 lives for US 1.3
  million each
• Value of a statistical life estimated to be
  between US 4 and 9 million (passes benefit-cost
  test)
• Compare to 65 million per cancer case for (U.S.)
  toxics and pesticide programs

Source Cash, Sunding and Zilberman. 2006. Fat
Taxes and Thin Subsidies Prices, Diet, and
Health Outcomes. Food Economics 2 167-174.
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Agricultural Policy

• We have policies to
• increase fluid milk prices
• increase poultry prices
• grade beef on fat content
• reduce export of grains
• subsidize sugar beet production
• encourage corn syrup production

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Toward Better Policy

• Western governments subsidize many things that
  arent healthy why not put a health filter on
  programs?
• Sensible health information policies may help,
  but only to a point
• Taxing in the absence of market failures causes
  other problems

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Toward Better Policy

• Subsidies are progressive and may be easier to
  target, but require outlays
• As we learn more about diet-health links, we
  should factor them into our regulatory
  decision-making process