Four options for how the food system transition is paid for
- stephanielwalton
- Aug 29
- 9 min read
Updated: Sep 1
Hello! How was your summer? The first half of mine was spent in Texas and the Colorado Rockies - nothing but swimming pools and K-Pop Demon Hunters for three weeks straight. (I would be lying if I said my kids forced me to watch/listen on repeat rather than the other way around.)
The second half was spent reading The Problem of Social Cost by Coase and thinking about this pesky 'who pays' question for a session at the Royal Geographical Society Conference session on creative destruction and food systems transformation.
The session was so fun! It was creative! One presenter played the ukelele and sang! My 'creative' contribution was to take the room through a little game of Coasean bargaining (inspired, again, by The Kind Economist) on various food systems pollution scenarios, drawn from parts of the system we need to phase down.
There is much more thinking (and a paper!) to be done on this topic. But to guide the game, I structured this framework (basically Coase, distilled) to outline the option space for who pays.
We already got a full day (more K-pop!) so let's jump straight to it.
There are four options for how this is (or is not) done done done (done).
The Reciprocal Nature of the Problem
So we need to talk about one important presupposition that Coase established - the reciprocal nature of the problem of stopping pollution. I talked about this here but for those who don't like Matthew McConaughey or stories about my kids, here's a bullet re-cap.
✅ Pollution is expensive and creates all kinds of (financial) costs. (Externalities!)
✅ Those (financial) costs should either (1) be paid for or (2) stop accruing.
✅ However, pollution is also a byproduct of things that create (financial) benefits. (Jobs! Certain foods people really like!)
✅ If you stop the pollution, it stops the (financial) benefits. Put another way, it generates lots of costs. (Stranded assets!)
🤷🏼♀️ So what you wanna do - pay for the costs from polluting? Or the costs from stopping polluting?
I know - feel - that there is something particularly annoying about hearing this from a neoclassical economist like Coase. It feels like you're being set up for the next line which is usually "...and nothing is more important that maximizing economic welfare! And markets obviously do that best so government shouldn't do anything." (This isn't what Coase actually said, but it's what people later said he said.)
However, Coase isn't wrong about the reciprocal nature of the problem. Even for those who would always say, every time and without hesitation, that the costs of stopping pollution are always worth it - even they can't deny the reciprocal nature of the problem. It's the same as talking about trade-offs or (as political ecologists describe it) 'winners and losers.'
IMPORTANT POINT! To say the nature of the problem is reciprocal is not to say that the harms are equivalent. It carries no implicit stance on who is in the right or wrong or who should be allowed to do something to whom. It's just a statement that polluting creates costs and to stop polluting will create costs. From this premise, two questions then arise.
Question #1: Which costs do we want to pay?
This is the two rows of the framework. In economic terms, the question is - are the benefits from pollution greater than the benefits of not polluting? Or vice versa?
If polluting is considered more valuable than not polluting, left alone, the pollution will continue. If not polluting is considered more valuable, pollution would/should stop. The top row is our business-as-usual. This bottom row is our 'phase down.'
Now, I've put ££'s here - money - which I know is easy to criticize. I criticize it myself. I don't like ascribing a dollar amount to things like access to clean water or a livable planet - things that should be a human right (but sadly aren't yet! More on that below...). However, I have put ££ because what we are, after all, talking about is costs and who pays them.
So how do we answer this question? We could go the route of trying to do a classic cost-benefit analyses or true cost accounting to actually put a dollar amount on this. Indeed, such environmental econ frameworks like this are largely what leads to exercises that try to prove that the monetary benefits of NOT polluting are > the monetary benefits of polluting. To go this route is to accept and to play nicely with the economic premise (which there is a role for!).
Alternatively, you could perhaps say, "You can't put a price on nature. It is literally priceless." Or even go further and say, "To even engage in the exercise of trying to 'value' nature in a financial sense is corrosive." Alright then - the cost you would then ascribe to losing nature is infinite and you sit on the bottom row. You're basically saying that literally nothing, no financial gain or social benefits, is worth what we are losing and will lose if we let this pollution continue.
The harder thing to wrap our environmentalist minds around might be the top row - where the benefits of polluting are considered greater than the benefits of not polluting. This is the equivalent of when a big polluting company responds with, "But look at all the jobs we create!" Or, say, someone on the carnivore diet says they need beef to hit their protein targets because they're listening to too much Andrew Huberman. They value the benefits that comes out of the pollution more than the benefits of not polluting. And they don't wanna lose those benefits.
"But calculations are a waste of time. This is a political process!" Yes, it certainly is! To lay out the choice is not to de-politicize it. Quite the opposite. It clarifies it. Determining economic winners and losers is nothing if not a political process - which means the reciprocal nature of the problem is a political challenge. If there's one thing you gotta do with losers, it's deal with them. And that isn't done very effectively by ignoring or rejecting the legitimacy of the relative value they ascribe to things. You have to contend with it, even if you don't agree.
And I don't think we need to go so far as to try to ascribe dollar amounts to these things to know intuitively how these things are currently being valued. At the moment, plenty of people around the world are looking or sensing implicitly the (personal and macroeconomic) costs to stop polluting and essentially saying, "No f-ing way."
"We need a change in values then!" Absolutely! Would love that. Researchers are doing very important work on how we might, at a societal level, move from the top row to the bottom row. If we can achieve that, change the calculus, it changes the pathways before us.
Question #2: Who is entitled to what? Who has the right to do what? Who has the power to do it?
Is the polluter entitled to pollute? Or are the polluted entitled to live free from pollution?
For Coase, this is a legal question. An 'entitlement' is a legal right - either a property right, liability right or inalienable right, granted proactively by the government, to something. If I buy a piece of land, the government gives me the right to pollute it up if I want to. My property rights also protect me from being sued by someone else for doing it on my land. If I pollute someone else's land (or air or water) though, it's certainly more complicated. If courts get involved, the outcome is decided on a case-by-case basis - and not always in the way we'd like. (If you want to ruin your day, go read Coase's recounting of cases where courts decided in favour of the polluter.)
However, I don't think we need to restrict this to only legal entitlements. In situations where the courts haven't legally decided on an entitlement or right, the default might be that 'might makes right'. A polluter could feasibly be found to not have the 'right' to pollute if they were to be sued - but because of the transaction costs of suing (dammit, Coase), this is a pretty costly thing to figure out and doesn't guarantee a favourable outcome. So many times, people are left living with the default.
"Well we need to change rights and institute an environmental human rights framework!" Again, absolutely! I don't think the fact that this could/should happen changes the reality of this framework though - and the need for careful consideration of which options we're facing. Laws and courts are slow-moving and expensive. So is changing social values. And sometimes the outcomes might flip-flop. Or we might lose a lawsuit. This framework just shows, again, what the possible outcomes could be.
Alright, so the combos of these two choices create four options.
"Polluter Pays": This is the bottom right option and the one that many hope for. Here, the polluter bears the costs of not polluting. This can be the costs of stranded assets, both real and financial, as well as the opportunity costs of not making money from something they otherwise could.
This outcome is only likely if (1) the polluter is legally liable for pollution AND (2) the money to be made from polluting is less than the value of not polluting. If a company finds that there is just so much money to be made from polluting even after paying for the pollution, they'll just... "Pay to Pollute": This is the top right. This would be a situation where, say, a carbon tax is in place but the tax isn't so high as to make it unprofitable to pollute.
The challenge with this one is grappling with how even people who are victims of pollution may have their price. Meaning they could, in theory, be incentivized (i.e. paid) by the polluter to be polluted on or let the pollution happen. This might happen in a situation, say, where JBS wants to open a new swine facility near a local community but is liable for the pollution from it. Local families are mad because it's going to tank their property values, but their property values are less than how much money JBS could make from operating the swine facility. So, if they're liable for pollution but could still make a profit, they could just buy the houses from the families - and the families would accept.
However, more likely, JBS isn't liable which would mean...
"Living with it": This is our business-as-usual scenario. If the polluter has the right to pollute and there is money to be made from pollution and no one is really deeming that pollution to be not worth the environmental costs, then we live with it.
However, if we're unhappy with this situation, there's the option to...
"Pay the polluter": If the polluter has the right to pollute, but people value not polluting more than the money (or jobs or products or other benefits) from polluting, that leaves them the option to pay the polluter not to pollute.
There are 'pay the polluter' scenarios we can all conceive of that don't seem too problematic - like paying farmers a subsidy to not use pesticides or paying coal miners when they're jobs are wiped out. Much of this is lumped under a very vague heading of a 'just transition.' However, my research interest is on scenarios where payments to not pollute are flowing to companies or people for which it just feels unfair and unnecessary. There are plenty of these scenarios in real life (let me know if you want to see some stuff written on them.)
But the real head spinner for me in mapping this out has been that, according to this framework, technically, if we say that nature is priceless and more valuable than anything, then, ironically, we're kind of saying that we'd be willing to pay whatever it takes to the polluter to stop them from polluting...
I should probably clarify that I am not advocating for paying the polluter by any means, or really any of these positions. I'm just saying this is the option space for answering the question of "Who pays to stop pollution from food systems?" Because it will be costly. And someone's gotta pay it. And no one really wants to.
However, I'll venture a guess that seeing the options laid out like this, and considering a situation where a polluter would actually be paid to stop polluting, might elicit......feelings?
That was some feedback that I received after the session from an attendee who said they had a 'visceral reaction' to my presentation and then proceeded, with impressive emotional intelligence, to interrogate the source of that visceral reaction.
Something similar emerged when I threw out the phrase "Pay the polluter" on LinkedIn and asked people to respond with their reaction. Interesting to see how responses were mixed though!
Exploring the root of this emotional reaction - and the justice implications of these various options which that emotional reaction points to - is quite interesting and something I plan to dig into more. The Coase negotiation game we did in the session was a particularly interesting way to explore these various options and the feelings we have in response to them. (I'd love to do more of these sessions with different audiences, so if you're interested in doing one - let me know!)
It isn't surprising to me that people have very strong attachments to whatever row they sit on. The rows equate to our values and people tend to hold strongly to those. However, whilst I understand where it comes from, it is interesting to reflect on why we might have such strong attachments to the columns. If the rows are the 'what' and the columns determine the 'how,' visceral emotional reactions seem to indicate we're not only interested in stopping pollution. It matters that we stop it in a certain way.
