Demand offsetting

Commenters pointed out two examples of this that are already done in practice:

• Luis Costigan says that this is done with cage-free credits in Asia, and links to 00:17:19 in this podcast.
• Florian H says this is how sustainable energy credits work in the EU in this comment [LW(p) · GW(p)].

In retrospect I think I should have called this post "Demand offsetting" to highlight the fact that you are offsetting the demand for eggs that you create (and hence hopefully causing no/minimal harm) rather than causing some harm and then offsetting that harm (the more typical situation, which is not obviously morally acceptable once you are in the kind of non-consequentialist framework that cares a lot about offsetting per se).

There's a bit of a wrinkle here in that humane eggs aren't completely fungible with non-humane eggs. Healthier and happier chickens tend to produce better quality eggs that are distinguishable from factory-farmed eggs. This approach seems plausible for offsetting demand but leaves the consumer with an inferior product at a higher cost. This isn't a big deal for a croissant but would be for, say, an omelet.

I really like this idea of moral fungibility.

By cutting out the need for a separate "ethical" packaging, marketing, and distribution system, you vastly lower the costs for new entrants into the market. More, there would be additional benefits since you could cut other costs like the impact of long-range transportation (how do I weigh the environmental costs of shipping ethically sourced eggs from Maine to California vs buying local factory?).

I worry that consumers derive as much value from the act of buying the ethically sourced product as the actual reduction in harm, but maybe there's ways to market around that. Not sure, but it seems worth finding out :).

This is a very elegant idea, but I am doubtful about whether it will work.

Suppose humane egg producers switch over to doing this. Initially, I bet few people will buy the certificates, because they'll be new and unfamiliar and most people mostly default to not doing new things. So, to whatever extent raising chickens humanely is more expensive than raising them inhumanely, the humane egg producers will only be able to afford to do what they do if the certificates are really expensive. Which will mean that few people buy the certificates even once everyone knows about them. Which probably means that the system doesn't work.

So, to make it work, there shouldn't be that sort of sudden switchover. Instead, humane egg producers start selling some of their eggs on the generic-egg market and procuring certificates for those. Now the certificates are not only new and little-heard-of, they aren't even the main way the humane egg producers are making money. So not many will get sold, so either again they're super-expensive and demand is low or the humane egg producers continue mostly selling their eggs separately rather than commingling them with everyone else's and getting certificates.

Maybe a bigger problem is that I suspect many many people who currently buy humanely-produced eggs will not be satisfied with offsets. Imagine that (for the same cost) you can buy (1) an egg that was probably produced inhumanely, plus a thing that is somehow supposed to indicate that you've arranged for another egg to be produced humanely instead of inhumanely ... or (2) an egg that you know was produced humanely. If you're an explicitly-calculating utilitarian who trusts Economics 101, then #1 is just as good as #2. Most people aren't. I'm an explicitly-calculating utilitarian who's generally pretty positive about economics, and I would prefer #2, because with #1 there is extra uncertainty about whether the certificate-issuing process is careful enough, whether the economic incentives really work out to have the effects they're alleged to, etc. Even if you're confident that those things work out OK, #2 just feels more as if you're doing good than #1 does, don't you think?, and for a lot of people that will make a big difference.

This is very similar to how the electrical energy market promotes sustainable energy in Europe: Certificates for sustainable generation of energy are traded alongside the actual energy (e.g. wind or solar certificates). Utilities / companies and by extension households can then buy the certificates alongside the energy to fulfil individual sustainability demands.

That concept is successful to a large extend, there is high demand for certain kinds of certificates and a sizeable market has formed around it.

documented here: https://causeprioritization.org/Moral_economics

Just came across an article from agricultural economist Jayson Lusk, who proposes something just like this. A few quotes:

"Succinctly put, a market for animal welfare would consist of giving farmers property rights over an output called animal well-being units (AWBUs) and providing an institutional structure or market for AWBUs to be bought and sold independent of the market for meat."

"Moreover, a benefit of a market for AWBUs, as compared to process regulations, is that an AWBUs approach provides incentives for producers to improve animal well-being at the lowest possible cost by focusing producer and consumer attention on an outcome (animal well-being) rather than a particular process or technology (i.e., cages, stalls, etc.). Those issues for which animal activists can garner the largest political support (e.g., elimination of cages) may not be those that can provide the largest change in animal well-being per dollar spent. By focusing on outcomes and letting producers worry about how to achieve the outcome, markets could enable innovation in livestock production methods and encourage producers to seek cost-effective means of improving animal well-being."

"Animal rights activists often decry the evils of the capitalist, market-based economy. Greedy corporate farms and agribusinesses have enslaved and mistreated billions of animals just to earn a few more dollars—or so the story goes. Market forces are powerful and no doubt the economic incentives that farmers have faced in the last 50 years have contributed to a reduction in animal well-being. But markets are only a means, not an end. Rather than demonizing the market, animal advocates could harness its power to achieve a worthwhile end."

I have major concerns with this class of ideas [EA(p) · GW(p)], but just wanted to share Lusk's proposal in case anyone looks into it further.

Put differently, buying eggs only hurt hens via some indirect market effects, and I’m now offsetting my harm at that level before it turns into any actual harm to a hen.

I probably misunderstand but isn't this also true about other offsetting schemes like convincing people to go vegetarian? They also lower demand.

Wow. This brings me hope we can effectively fight factory farming in the near future. It's just such a good strategy.

I think this form of offsetting is acceptable on a very broad range of moral perspectives (practically any perspective that is comfortable with humane eggs themselves).

Within the EA / adjacent crowd. I suspect a lot of normal people will be averse to egg offsets because "you're still participating in the system".

What would happen if many people tried to use this offsetting strategy?

One additional effect: egg offsets would increase the fungibility of humane eggs (within each certification level). I can imagine this switching the business model of some humane chicken farmers from "find a restaurant willing to buy my eggs at the price it costs me to produce them" to "gain some extra money from humane egg certificates, then sell my eggs in the global egg wholesale market".

As a side note, wouldn't the easiest fix for this be to genetically modify chickens so they don't mind being crowded?  

IIUC, this exposes the high-welfare egg co to more risk. It's hard to sell 1 million eggs for one price, and 1 million for another price. So they probably have to choose to sell at the low welfare price constantly. But this means they build up a negative balance that they're hoping ethical consumers will buy them out of.

An important point (somewhat overlooked in the comments) is that it is not necessary to sell the humane eggs at the same price as factory eggs for this to work. You can start issuing certificates straight away, not changing anything in the distribution process!

It is even better, because it will provide incentive for competition between humane eggs producers. And also, having humane eggs still labeled as "humane", it will help them to drive factory eggs out of the market, by allowing them to have a lower profit margin. In a sense, it is similar to tax reliefs for an industry we want to stimulate, just organized in a perfectly libertarian way.

I think the largest issue with the general concept of moral fungibility is the following:

• Moral consequences cannot be reliably predicted - "what if that chicken solved cancer" is an obviously spurious but relevant example.
• Moral consequences cannot be reversed - one cannot make chickens out of chicken nuggets, and new chickens are not the same as the old ones.
• Morality does not necessarily sum - "two wrongs do not make a right" - I cannot necessarily justify the torture of billions through the ectasy of other billions.
• Most people optimize for price, not morality - anyone with the financial capacity and moral freedom to not buy the cheapest or most available eggs is probably already doing so.

The "free-range chicken" scenario does place some nice constraints on this. The slaughter of a single chicken may never be the thing which prevents a medical miracle. Though, at the same time, I very much doubt that the original architects of the poultry market foresaw the long-term consequences of rapid growth, for instance in ecological damage.

But I think the final point is the most significant - you are substantially increasing (doubling!) the number of decisions I need to make when buying an egg. An average person's default response to any new, non-impactful choice is going to be "no". Anyone who has a moral system within which they do buy an offset would probably already be seeking to minimise their ecological impact. The issue is not people being unwilling to minimise their impact - it is that minimizing their impact is not the optimal solution. So, this system would likely just preach to the choir and not really substantially impact the amount of damage we're doing to our world. Anyone who cares enough to alter their decision already is - so if you want to have more people care more, then you need to make those decisions easier, not harder.