Retrofitting fiscal policies to reduce the double burden of malnutrition in Peru: A system dynamics modelling study

Peru faces a double burden of malnutrition, characterised by the co-existence of overnutrition and undernutrition. Although several fiscal policies have been implemented to address nutrition challenges, these have been designed and implemented separately, limiting their potential for synergistic impact. This paper investigates the potential impact of retrofitting unhealthy food and beverage taxation for 'double-duty' action by allocating revenues towards welfare transfers and fruit and vegetable subsidies on overweight and stunting in Peru.

We developed a system dynamics model to simulate overweight and stunting in children and adults of reproductive age, using secondary data sources and published effect estimates. We modelled several fiscal policy scenarios, informed by WHO recommendations and Peru's policy landscape. We performed several tests to build confidence in the model. Fiscal policy scenarios can have beneficial effects on overweight compared to business-as-usual, mainly through the impact of additional unhealthy food and beverage taxes, which would reduce cumulative person-years lived with adult overweight between 2024 and 2040 by -58.6 (95% Uncertainty Interval [UI] [-77.7, -37.9]) million, mainly among the richest. Reinvesting tax revenue to increase the amount of cash offered through Peru's existing conditional cash transfer could reduce cumulative person-years lived with child stunting by up to 876 thousand (95% UI [-1,139, -567]) by 2040, with 82% of these being among the poorest. This study relies on several assumptions regarding policy impacts and responses and does not incorporate cost-effectiveness analysis due to its exclusion of older age groups.

Retrofitting unhealthy food and beverage taxation to reallocate revenue towards targeted welfare programmes, such as cash transfers, has substantial potential for 'double-duty' impacts on overnutrition and undernutrition in Peru.