A new United Nations Food and Agriculture Organisation (FAO) report based on Oxford research has found that hidden social, environmental and health costs from agrifood systems globally were up to $12 trillion in 2020. Significantly, costs from limited productivity and lifestyle disease associated with unhealthy eating represented almost 75% of total costs.
Hidden environmental costs, including nitrogen pollution and greenhouse gas emissions, accounted for 20%. Social costs related to poverty represented 4% of hidden costs. The report features analysis by a senior researcher in food system economics with Oxford’s Environmental Change Institute (ECI), Dr Steven Lord, which importantly breaks down the distribution of these costs.
Health costs linked with unhealthy diets were mostly found in high-income countries, such as the UK and Germany, whilst environmental and social costs were more prevalent in low-income countries. Dr Lord highlighted an important discrepancy: “The majority of the quantified hidden costs are generated in high- and upper-middle-income countries, in particular in the United States and the BRIC countries. However, the greatest economic burden falls on low-income countries.”
Indeed, future hidden costs could account for over a quarter of low-income countries’ gross domestic product.
The FAO report aimed to address uncertainties in quantifying pollution and future costs to better inform policy, utilising a model developed at the ECI. Potential damage of these costs indicates how pressing their consideration in future policy is. Dr Lord reflected how “$12 trillion is about 33 billion 2020 PPP dollars per day, which is equivalent to a June 2022 Pakistan flood every day or a September 2022 Hurricane Ian every four days.”
Costs identified by the study were measured by the reduction in welfare associated with a decline in purchasing power, with all currencies treated equally by the measure of purchasing power parity (PPP) dollars in 2020.
The report comes weeks before the next UN Climate Change Conference COP28 in December, which will for the first time place a major focus on agrifood systems. However, agrifood systems pose a unique set of specific challenges beyond carbon dioxide emissions, such as nitrogen pollution and methane emissions, which must be addressed with different policies.
Dr Lord has said: “For policymakers, reducing the increasing economic risk posed by agrifood systems activities…requires policies characteristically different to the decarbonization pathway required of other sectors.”
The economic discrepancy identified between which countries shoulder agrifood costs also comes ahead of a crucial moment at COP28 for establishing a working loss-and-damage fund after initial COP27 agreement, to assist lower-income countries often at the forefront of climate change. COP28 provides an opportunity to develop policies to mitigate against risks from agrifood systems that recognise the unequal weight of their hidden costs.
