Can true cost accounting lead to sustainable food systems?

The Food and Agriculture Organization estimates that 3 billion people globally lack sufficient income to purchase the lowest-cost form of healthy diets recommended by national governments. But food experts argue that the current price mechanisms used within our food systems do not reflect the true cost of food, as prices are based solely on economic costs and fail to account for the social, environmental, and health impact of food systems. “It is increasingly argued that a transformation to more sustainable food systems will require changes in food price mechanisms that reflect these costs,” said FAO Chief Economist Máximo Torero Cullen, speaking at the annual Forum for the Future of Agriculture Tuesday. He pointed out that unsustainable agri-food system practices deplete the soil, pollute air and water, reduce biodiversity, and contribute to climate change — and that those environmental impacts, along with the large health cost of unhealthy diets and impacts of social inequalities throughout the system, are not reflected in the price paid for artificial inexpensive food. Healthy diets are far more expensive than the international poverty line of $1.90 and are unaffordable for over 57% of the population in sub-Saharan Africa and Southern Asia. Meanwhile, a 2017 study estimated that poor diet is a factor in 1 in 5 deaths globally. The real price of food would reflect all assets used in food production, as well as the harmful effects of social practices such as child labor, Cullen said. But measuring the value across the four dimensions — economic, environmental, social, and health — requires a lot of information and many assumptions. “To calculate the cost of food across the environmental domain means estimating the underlying cost … related to the greenhouse emissions, soil loss, water use, biodiversity loss, soil, water and air pollution,” he said. Though the true cost accounting framework for food seems to be gaining prominence, Cullen said there is still no global standard for calculating food’s real value. Cliona Howie del Río, CEO at Foundation Earth, a nonprofit that issues environmental scores on food products, said accurate data on all areas affected by the food system is needed in order to calculate this true cost. “To be able to understand the true cost we have to have the true calculation of impact,” she said. “We have to broaden out what we are measuring. Carbon counting is not enough: We have to look at biodiversity impacts, we have to look at water impacts — water pollution, water contamination.” A study by The Rockefeller Foundation found that in 2019, American consumers spent an estimated $1.1 trillion on food. But that figure only included the cost of producing, processing, and selling the food — not the cost of health care for diet-related diseases and the present and future costs of the food system’s contributions to water and air pollution, reduced biodiversity, or greenhouse gas emissions. Once those costs are factored in, the cost of the U.S. food system went up to $3.2 trillion per year. But Pavan Sukhdev, founder and CEO at sustainability consulting firm GIST Advisory, said better information alone may not be enough to motivate changes in production and consumption and government interventions may be needed. “It is about changing subsidies, aligning them better to public goods and their provision and aligning them to human health and its implications,” he said. Cullen added that most of the subsidies are currently going to staple commodities rather than improved access to healthy diets, but that a true cost approach could reshape the way governments create food policy and mechanisms, as well as provide more information for investors. Additionally, he said, “it can provide consumers with transparency and information about their food choices and provide an understanding as to why they should be willing to pay at least in part through the higher food prices.”