As incoming president of the Agricultural and Applied Economics Association, I would have loved to have seen one of our food or agricultural economist members featured at the New York Time's Food for Tomorrow conference that focused on food policy earlier this week. That didn't happen, but at least they did have a prominent general economist on program. Paul Krugman's remarks are below.
He talked a bit about externalities. I wrote on that topic in this paper. I also brought it up when recently discussing nutritional guidelines:
“But, what about externalities? To the extent beef production uses a lot of corn or land, that’s already reflected in the price of beef. But, does the price of beef reflect water use and potential (long run) impacts of greenhouse has emissions? Probably not fully. So, the key there is to try to get the prices right. Well functioning water markets would be a start. Greg Mankiw recently had an interview on getting the price of carbon right. Once the prices are right, then “recommendations” regarding resource use are somewhat meaningless: you’re either willing to pay (and able) the price to buy the items you like to eat or not. ”
He argues that if the externalities were properly priced organic would be no more expensive and "industrial" food would be more expensive. I'm not so sure about that and he doesn't cite any actual evidence to support the claim. But, here's the thing. Let's say we had a carbon tax or carbon market. Now we wouldn't need to answer that question or cajole people about eating organic or non-organic. I think that was basically his answer to the 1st question that was asked.
I was also happy to hear him say at some point, "I'm not an expert on any of this" because at a few points he seemed a bit out of his depth on the subject matter and was pandering to the audience. That being said, I'm at least happy a good economist was in the room contributing to the debate. His answer to the last question (at about the 22 minute mark) was pretty much right on target.