Social-Optimal Household Food Waste: Taxes and Government Incentives

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In 2010, 21% of the total food available for consumption in the United States 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, to determine the social-optimal food-waste (disposal) tax, along with a government incentive. The theory unravels the interrelation between social food insecurity and external environmental costs, which is not generally considered by households when they waste food. A social-optimal disposal tax and government incentive involve Pigovian mechanisms and governmental expenditures. For a zero level of food waste, the social-optimal disposable tax and government incentive approach infinity.

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