Economic Impacts of Better Food and Nutrition Policy

Paul J. Thomassin McGill University McGill Centre for Health and Economic Convergence Meeting of the Minds on Nutrition Impacts of Food Systems United Nations Standing Committee on Nutrition Geneva, Switzerland March 25-28, 2013

Integrated Modelling Approach

• Data and models can be used to provide better information concerning private, public and household decision making concerning food and nutrition.

• Can lead to improved public policy decisions.

• Context, Scale, Space, Time, and Distribution.

• Two Modelling Approaches: – System Dynamics

– CGE Modelling

System Dynamics: Nutritional Market Transformation (NTM) Model by Jeroen Struben

• SD incorporates the dynamics of complex systems and how transitions may succeed or fail.

• NMT model traces the interaction between nutritious food supply, consumer food choice, population health, and government intervention over time.

• Simulates the impact of alternative pathways brought about by changes in government and industry policies.

Supply Value Chains

Profits; Resource Allocation to: Categories,

Marketing & R&D (Cost,

Availability, Taste, Nutrition); Nutrition Initiatives;

Coordination Attribute/Category

Capabilities

Demand

Consumer Cohorts by Age, Demographics

Peer Pressure Habitualization

Consumption choices Consideration of

Categories

Nutritional Quality of

Consumed Food

Population Health

Population Cohorts by Age, Demographics,

Gender

Caloric Intake

BMI

Government

Health Policies Industry Policies

Coordination

Category Attributes

Population Health Trends Marketing

Cohort Information

Marketing Regulation

Other Drivers

Fostering

Innovation

Principal Feedbacks Driving High Nutrition Market Formation

Supply Chain Demand

AgriFood

Built Environment

Policy/NGO’s/Media

• health • nutrition • landuse

Glo

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Fo

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(e.

g. T

rad

e A

gree

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ts);

Dem

ogr

aph

ics

(Urb

an/R

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l, Ec

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• transnational • global • local

Results Summary: Adult BMI for Selected Policy Mixes Adult BMI - Selected Intervention Scenarios

41

34.25

27.5

20.75

14

2012 2016 2020 2024 2028 2032 2036 2040

Time (year)

per

son

*k

g/(

m*

m)

BaserunfMAR

fNRDgTAX

fgiWoS1

iINN

40

32.5

25

17.5

102012 2020 2028 2036 2042

Year04/04/2013

Struben et al. - Nutrition Market Transformation

6

Study 2: Problem and Intervention (by Kakali Mukhopadhyay and Paul J. Thomassin)

• Changes in food consumption patterns and lifestyle have been identified as risk factors in the prevalence of obesity and NCDs in Canada.

• A potential solution is the promotion and adoption of a “healthier diet” in Canada.

• Traditionally, health economists have focused on microeconomic impacts and cost effectiveness – this analysis will focus on the macroeconomic impacts.

Macroeconomic Impacts of a “Healthy Diet”

Research Agenda • Work in collaboration with Health Economists at PHAC and the WHO

Collaborating Centre.

• Steps in Research:

Phase 1. Impact of changes in food consumption patterns. (Completed)

Phase 2. Impact on household expenditures and food consumption patterns (Almost Ideal Demand Model) ongoing .

Phase 3. Increased working productivity and income from better health.

Phase 4. Impact of changes in Public Health Expenditures.

Phase 5. Portfolio of policies to obtain healthy diet results.

Phase 6. Dynamic macroeconomic analysis.

Macroeconomic Impacts of a Healthy Diet • Macroeconomic models can be used to evaluate the

impact on the economy of changes in the health of Canadians.

• Macroeconomic estimates include: GDP, industrial output, employment, trade, etc.

• Provides decision makers with an economic indication of their policy choice.

• CGE Models include multiple industrial sectors, household sector, government sector, and different countries linked together through trade.

Required Changes in Diet

• A comparison was made between the actual and the required consumption of three food categories: fruits and vegetables, dairy products, and meats.

• Scenario 1. fruit and vegetable consumption increases by 35%, dairy product consumption by 46%,and meat consumption decreases by 43% (Garriguet, 2006).

• Scenario 2: fruit and vegetable consumption increases by 50%, dairy increases by 41% and meat consumption decreases by 20% (Statistics Canada, 2010).

Adoption of the Healthy Diet Guidelines: Change of GDP (%) Due to a Change in Diet

Scenario 1 Scenario 2

Garriguet, 2006 Statistics Canada, 2010

Canada 0.1217 0.3411

USA 0.005 0.0046

Brazil 0.001 0.0014

Chile -0.0001 -0.0003

Mexico 0.0249 0.0286

Rest of LACs 0.0064 0.0073

Rest of OECD -0.0005 0.0001

Rest of Asia 0.0034 0.0047

ROW 0.0008 0.0012

Changes in Sectoral Output (%) in Canada as a Result of Changes in Consumption of Fruits and Vegetables, Dairy Products, and Meat Products.

Sector Scenario 1 Scenario 2

Wheat -3.10 -4.60

cereal grains nec -0.15 -1.39

vegetables fruits nuts 19.85 12.76

Oilseeds -1.44 -2.52

plant based fibre 0.03 0.25

crops nec -0.58 -2.92

cattle, sheep, goats and horses -13.42 -27.79

Animal products nec -10.16 -20.76

raw milk 7.19 11.60

Livestock and Meat Products -17.78 -33.09

Fishing -0.11 -0.15

vegetable oils and fats -0.29 -1.88

dairy products 32.12 22.00

Exports Exports Imports Imports

Scenario 1 Scenario 2 Scenario 1 Scenario 2

Canada 0.054 0.524 0.055 0.601

USA 0.013 0.061 0.014 0.043

Brazil 0.035 0.040 0.029 0.055

Chile -0.081 -0.050 -0.030 -0.021

Mexico -0.182 -0.137 0.025 -0.027

Rest of LACs -0.004 0.034 0.024 0.057

Rest of OECD 0.006 0.005 -0.002 -0.004

Rest of Asia 0.008 0.004 0.013 0.006

ROW 0.003 0.004 0.003 0.002

Changes in Total Exports and Imports (%) by Country/Region with the Adoption of a Healthy Diet

Welfare Implications of Adopting a Healthy Diet in Canada (Million USD)

Scenario 1 Scenario 2

Canada 328.2 748.03

USA 1345.79 880.33

Brazil 37.41 20.53

Chile -29.74 -45.06

Mexico 111.23 155.8

Rest of LACs 125.44 84.03

Rest of OECD -105.07 115.07

Rest of Asia 174.6 283.66

ROW 139.55 172.64

Summary

The overall economic impact on the economy from adopting a healthy diet strategy is positive.

The impact on individual industrial sectors will vary.

In healthy diet strategy, almost all countries benefit from Canada adopting a healthier diet.

Integrated Modelling Approach

Conclusions

• Multiple models can be used to provide diverse information to improve public policy decision making.

• Expands the policy dimension of health beyond simple “health policy.”

• Models can account for public, private and household decision making.

• System Dynamics model can be used to simulate policies and impacts over time and population.

• Information on the time path from the SD model and OECD/WHO Choice model can be used in the CGE Macroeconomic model to estimate the economic impact of policy across sectors and time.