Stephanie Walton herds the arguments around how stranded assets might be handled were the world to rein in its rampant carnivorousness to the point where the planet isn’t slaughtered.
Over two grey, rainy days in early October, hundreds of scientists, food and environmental activists, industry representatives, investors and government ministers descended on Stockholm for the launch of The EAT-Lancet Commission on healthy, sustainable and just food systems. This was the second iteration of a landmark 2019 report that – suffice it to say – caused a stir. It was the first major report of its kind to say plainly that the world must consume substantially less beef and pork to stay within planetary boundaries.
There was drama in the run-up. Days before the launch, the Changing Markets Foundation released Meat vs. EAT-Lancet: The dynamics of an industry-orchestrated online backlash, presenting evidence that representative bodies of the meat industry – ranging from farmers and cattle ranchers to multinationals like Cargill, Tyson and JBS – coordinated an astroturf campaign to discredit the original report’s findings and recommendations. An industry representative I spoke with denied any coordination. Yet other research has likewise traced industry involvement across academic funding, industry events and public-facing campaigns to counter work that indicates the need to reduce meat and dairy consumption.
While the arguments are nuanced, Stockholm became a meeting place for two increasingly distinct camps: those who argue that livestock production and consumption must go down, and those who do not – or cannot – envision that ever happening.
The second report includes some refinements, but the dietary recommendation remains essentially the same: 7-14g of beef/pork per person per day – far below average intake in wealthy countries. That may explain why questions from a livestock rep to the Commissioners were laced with anxiety and barely-contained indignation. The implications are existential for the industry, equating to roughly a 30% reduction in global production.
It’s common to pin the politics on “greed” or an “insatiable thirst for profits.” That isn’t necessarily wrong, but it doesn’t explain why polluting companies don’t just transition to other profitable products.
If there is one thing we’ve learned from attempts to phase out fossil fuels, it’s that setting a target doesn’t mean we achieve it. Policymakers still lack a playbook for navigating the political economy created by the inevitable asset stranding that follows from sticking to such targets.
Stranded assets are assets that lose value – or the ability to generate revenue – sooner than anticipated and are written off. They can be physical (a meatpacking plant), intangible (R&D) or financial (loans, equity). Any policy that meaningfully curtails meat and dairy production to the levels implied by planetary boundaries would strand assets across the value chain—an outcome the industry will go to great lengths to avoid.
It’s common to pin the politics on “greed” or an “insatiable thirst for profits.” That isn’t necessarily wrong, but it doesn’t explain why polluting companies (here, firms that generate negative environmental or public-health externalities) don’t simply transition to other profitable products. Cargill could pivot to processing legumes, for instance, and spend its substantial marketing budgets building demand while supporting policies for a fair phase-down.
The implicit assumption in most policy debates is that the polluter pays.
This, of course, isn’t happening. But the reason isn’t profits; it’s costs. Not the build-up costs of new businesses – costs that can be recouped – but the costs of stranding the assets being phased down. Those include the expense of prematurely retiring plants and, larger still, the opportunity cost of choosing decline over continued operation.
“Consumer demand” is often cast as the only force powerful enough to deliver “creative destruction,” and is usually treated as exogenous – outside an industry’s control. But firms don’t merely respond to demand; they shape it. That short-circuits any “organic” creative destruction that might arise from educating consumers about the harms these products cause.
Reports on leveraging finance for sustainability transitions are multiplying. The question “who pays for the transition?” is typically asked in the context of “mobilising financing” to scale alternatives. Financing alternatives are necessary, but they are not sufficient. The “who pays” question is more critical with respect to the costs of asset stranding, because those costs determine whether pollution stops.
The implicit assumption in most policy debates is that the polluter pays: with enough political will, civil society pressure and strategic litigation, producers will both stop polluting and bear the losses. Normatively, that is satisfying. Empirically, it’s been hard to deliver. If it were straightforward, fossil fuels would be well on their way out.
Costs are unavoidable; the real question isn’t who should pay but who will pay.
Here, a mid-century economist offers an alternative frame. Ronald Coase – one of the Chicago school’s founding figures – published The Problem of Social Cost in 1960, a paper that has elicited more hair-pulling and hand-wringing than most economics papers can boast. It also challenges the less-neoliberally inclined among us. Yet it helps us think clearly about stranded asset costs.
Unlike Pigou, who assumed polluters would pay for the externalities they generate, Coase starts from a simple observation: pollution imposes costs, and abating pollution imposes costs. Costs are unavoidable; the real question isn’t who should pay but who will pay.
Who pays, Coase argues, depends on two things: (1) who has more to lose, and (2) who is legally entitled to what. Perhaps a meatpacking plant has a right (explicit or de facto) to discharge wastewater into a local river. The public may have a right to clean water. Perhaps the financial benefits generated by not treating effluent (and thus the costs of stopping) exceed the benefits of cleaner water – or perhaps the reverse. The point stands: the costs are inevitable; the cost allocation is not a foregone conclusion.
Coase’s framework is normatively unsatisfying but politically clarifying. It lays all the cost-allocation options on the table. There are four in total – two, if we believe that the costs of continuing to pollute far exceed the costs of stopping. Yet most debates fixate on one option: polluter pays.
Who ultimately bears the costs of asset stranding from reducing beef and pork production remains to be seen and will vary by geography and politics.
When cattle ranchers or multinationals see a headline like “30% reduction in meat production” coming out of Stockholm – and they sense implicitly that they would be the ones to bear the cost of all those stranded assets – they bring all their efforts to bear on ensuring this doesn’t happen. They publish their own reports, mobilise their own finance, fund their own research, and launch their own campaigns. Scientists and activists then tend to respond without louder calls for more policy. To which industry then responds with more astroturfing. And round and round it goes.
Who ultimately bears the costs of asset stranding from reducing beef and pork production remains to be seen and will vary by geography and politics. However, the question isn’t being engaged critically and pragmatically. Most actors are practising their own forms of cost avoidance – refusing to face the costs they impose and to discuss, in plain terms, how to allocate them. The result is political gridlock we can no longer afford.
We need to widen the set of options we’re willing to consider. If we want pollution to stop, we will have to grapple with the financial realities of phase-downs. Targets tell us where we need to go. Costs determine whether we get there.
