[496] Of (maybe) green food

Some days ago, a report was published by the Food Policy journal. An archive of the journal can be found at ScienceDirect. According to BBC, the authors of the paper argue that buying food locally is “greener than organic”. I’ve heard the idea of ‘buying locally grown food is better than buying imported food’ a long time ago but never really gave it a thought.

The rationale behind this is externality – some cost of food distribution is not internalized into the price and thus, the food price doesn’t reflect the true cost of the food. According to one of the authors:

“The price of food is disguising externalised costs – damage to the environment, damage to climate, damage to infrastructure and the cost of transporting food on roads,” Professor Lang told the BBC News website.

One problem I have about the concept of buying food locally is the idea of opportunity cost and comparative advantage. The cost of growing food locally might be higher than the cost of growing food abroad. To describe this, borrowing the rose example from Krugman’s International Economics text:

He took the occasion to make a speech denouncing the growing imports of flowers into the United States, which he claimed were putting American flowers growers out of business.The case of winter roses offers an excellent example of the reasons why international trade can be beneficial. Consider first how hard it is to supply American sweethearts with fresh roses in February. The flowers must be grown in heated greenhouses, at great expense in terms of energy, capital investment, and other scarce resources.

He, in the example refers to 1996 Republican presidential candidate Patrick Buchanan.

Now, replace roses with some food that can’t be grown during wintertime without the help of greenhouses. The same idea still applies and hence, again, the cost of growing food locally might be higher than the cost of growing food abroad.

Moreover, I do believe, if, hypothetically, we were to buy food locally, prices would differ across areas. Different places do have differing supply and demand and thus, differing prices. Difference in prices would later lead to arbitraging opportunity. Arbitrage leads to trade and thus, the exportation and the importation of food, all over again. It’s merry-go-round. Unless of course, if some entity were to standardized the prices, than it would not be a problem. However, standardizing the prices doesn’t sound like a bright idea.

Before the two issues are resolved, I will not readily accept the idea of buying food locally is necessarily better than buying food originated from somewhere else just because it seems green.

At the same time, it also takes energy to transport food from one place to another. But, if price in town A is lower than price in town B with the cost of transporting the food from town A to town B is higher than the difference in prices, trade wouldn’t happen anyway.

Further:

“It is going to need some sophisticated policy solutions,” Professor Pretty said. “You could say we should internalise those costs in prices, so that it affects people’s behaviour. That might be economically efficient but it lacks on the social justice side because it will affect rich people much less.”

If we could internalize all the costs, the problem would indeed be solved. The greenest and the most efficient way to buy food would be to consume the cheapest one (ceteris paribus, definitely).

However, given the externalities, I really don’t think we know which food is greener than the other, or the cheapest if all cost were to be internalized – the green bean originating from somewhere in the US or the red bean grown somewhere in Latin America. Then again, green bean and red bean are not really substitutes but I suppose you’ll get the idea clearly, one way or another.

p/s – been migrating past comments from Haloscan to Blogger. The time stamp will be incoherent but what the hell.

pp/s – NYT (reg. req.) on World of Warcraft. (Via)