True cost accounting takes into consideration every possible expense involved in an activity. In the case of agriculture, two recent true cost accounting reports show there are many hidden costs in the food supply around the world. They were a topic of discussion at the UN Climate Change Conference, COP28, this week in Dubai. Sara Farley, Vice President of the Rockefeller Foundation moderated a panel discussion on the issue.
“I’ll say for my own institution, the Rockefeller Foundation, we’ve been really leaning into this approach … true cost accounting or true value accounting for a number of years now because we think it’s tremendous, if not irreplaceable, in its way to elucidate the full rainbow of externalities that we need to be contending with when we confront food,” she said.
In-depth studies and a report by the United Nations’ Food and Agriculture Organizations and the Food System Economics Commission found more than $10 trillion in hidden costs of the global food system. That is more than the current estimates of the food system’s contribution to the global economy. And the results may not be what you expect. The report says, “Globally, the dominant quantified hidden costs are those arising from dietary patterns which lead to diseases and lower labor productivity. These health-related costs exhibit considerable variation across countries but are most prominent in high- and middle-income countries.”
The report next lists environmental costs and says, “The environmental hidden costs, while not exhaustive, constitute over 20 percent of the quantified hidden costs and are equivalent to almost one-third of agricultural value added.” Those costs are primarily related to greenhouse gas (GHG) and nitrogen emissions and the report states they are relevant across all country income groups.
The full report is available on the FAO website.
