Optimal Food Waste: Taxes and Government Incentives

In 2010, 21% of the total U.S. food available for consumption was wasted at the household level. In response to this waste, a number of counties and U.S. localities have instituted policies (disposal taxes) directed toward reducing this waste. However, currently, there is no federal food-waste disposal tax. The aim of this paper is to establish a theoretical foundation for household food waste, and based on this theory, determine an optimal food-waste (disposal) tax along with government incentives. The theory unravels the interrelation between social food insecurity and external environmental costs, not generally considered by households when they waste food. An optimal disposal tax and government incentives involve Pigovian mechanisms and government benefits. For a zero level of food waste, the optimal disposal taxes and government incentives approach infinity.

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JEL Codes:
D11; D62; H21; H23; I18; I31; Q51

 Record created 2017-04-01, last modified 2020-10-28

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