A Better Approach

It is reasonable to expect producers, or organizations that serve producers, to encourage the consumption of locally produced goods, even under the pretext of improving the environment or achieving social objectives. On the demand side, the food miles idea is a concept driven by private groups, such as environmental organizations and consumers, rather than by governments. Consumers should be aware, however, that buying locally produced goods may have a detrimental effect on local and global environments (The Observer 2008).

What can governments do? One possibility is for them to provide objective information to consumers and producers about the direct and indirect effects of encouraging the consumption of locally produced food. Rather than merely looking at energy use or emissions resulting from the transport of products to its borders, more comprehensive information should include other inputs such as labor and capital used in the production process (that is, a lifecycle approach), and alternative uses to which these inputs could be put. These factors should also be reflected in the price of goods, with increased scarcity indicated by higher prices. Importing of goods would then occur when exporting countries could deliver goods for a lower price due to a comparative advantage (Vanzetti and Wynen 2002).

To the extent that some inputs (e.g., fuel) are underpriced, or that some emissions are not taken into account (the lack of which therefore distorts the true cost of the product), the appropriate policy would be to price these factors accordingly. This implies increasing taxes on energy to combat waste, or taxing road-use if congestion, noise, or accidents are an issue. One pertinent example is the tax treatment of aviation fuel. Currently, there is no tax on aviation fuel in Europe or in numerous other countries, as agreed in the 1944 Chicago Convention governing the international airline industry, resulting in aviation not being on equal footing with other transport services (European Commission 2008). Although imposing a fuel tax in the airline industry would contravene existing international agreements and have adverse competitive effects, such inconsistencies do not represent sound policy.

Imposing a fuel tax to compensate for negative externalities, or developing a market for carbon credits, would increase the prices of goods produced with relatively high carbon emissions. Although fuel taxes, carbon credits, food miles, and lifecycle analysis all send the same message to the consumer, that is, that carbon emissions are undesirable, the last two (food miles and lifecycle analysis) rely on the voluntary actions of consumers. With taxes or a carbon market, all consumers are involved as the message is conveyed via the market in which everybody is involved.

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