Speaker
Description
Keywords
Global food system transformation, welfare analysis, hidden costs, policy bundles
Introduction
The hidden costs of the global food system are estimated to be $15 trillion USD 2020 PPP per year (Ruggeri Laderchi et al. 2024), equivalent to 12 percent of global GDP in 2020 and substantially larger than the economic contribution of the approximately $10 trillion USD market value of the global food system (World Bank 2021). The global food system's current trajectory has exacerbated climate change, deforestation, biodiversity loss, and soil degradation. The AFOLU sector, contributes to 22% of global greenhouse gas emissions (IPCC 2023), while the entire agri-food value chain adds to one-third of global GHG emissions (Crippa et al. 2021). Addressing these issues requires a fundamental global food system transformation to reconcile trade-offs and foster synergies across health, social inclusion, and environmental dimensions (Gaupp et al. 2021), especially as approximately 1 billion people suffer from undernourishment, and 2 billion are overweight or obese, while 3.1 billion couldn't afford a healthy diet in 2020 (FAO et al. 2022). A sustainable transformation of food systems is not only vital for climate change mitigation and adaptation strategies in line with the Paris Climate Agreement but also essential for achieving the SDGs while staying within Planetary Boundaries.
Objective
The Food System Economics Commission (FSEC), an independent, scientific commission, has outlined five operational goals: (1) consumption of healthy diets by all; (2) fostering strong livelihoods throughout the food system; (3) protection of intact lands and restoration of degraded lands; (4) promoting environmentally sustainable food production; and (5) building resilient food systems that ensure food security and nutrition in the short and long term. Along these five targets, various research questions have been posed: What would it take to make our food systems inclusive, health-enhancing, and environmentally sustainable by 2050? Is such a global transformation economically beneficial? What policy levers can facilitate this transformation? And what obstacles could impede progress?
Method
FSEC has examined the potential for transforming food systems using economic modelling, literature reviews, and case studies, focusing on two science-based pathways until 2050 evaluated using the MAgPIE framework (Model of Agricultural Production and its Impact on the Environment, Dietrich et al. 2019; Bodirsky et al. 2023).
The "Current Trends" (CT) pathway continues existing food system trajectories. In this scenario, global GDP doubles by 2050 with uneven distribution, poverty persists, and food production meets demand for a population of 9.5 billion, yet 640 million remain undernourished. Unhealthy diets lead to a surge in obesity, and climate change mitigation efforts fall short due to insufficient international cooperation, resulting in continued degradation of ecosystems.
The "Food System Transformation" (FST) pathway presents an alternative future where countries commit to an inclusive, health-enhancing, and environmentally sustainable food system. Over 30 years, nations move away from unhealthy diets towards plant-based foods, ending hunger by 2050 for 640 million people. Vast natural areas are preserved, with forest expansion programs adding 2.5 million hectares yearly until 2050. By 2040, agriculture becomes a net carbon sink, aided by tech advancements. Poverty in agriculture is addressed, ensuring fair wages for 400 million workers. Through diet changes and carbon tax redistribution, food remains affordable.
FSEC employs two methods to assess the economic impact of food system transformation: a top-down approach measures changes in societal welfare, while a bottom-up approach quantifies hidden costs avoided, such as those related to health, environment, and poverty. Together, these methods offer a comprehensive understanding of the global economic implications of food system transformation.
Findings
FSEC demonstrates the feasibility and economic benefits of adopting the FST. The transition to this approach positively impacts under- and overnutrition, reduces premature deaths, mitigates GHG emissions from the food system, and halts biodiversity loss, among other benefits. These positive effects lead to a reduction in hidden costs of over 5 trillion USD 2020 PPP annually and generate a welfare gain equivalent to increasing global GDP by 9.6 trillion USD 2020 PPP. Our analysis highlights that the primary driver of change for transforming the global food system lies in shifting towards a plant-based diet like the EAT-Lancet Planetary Health Diet (Willet et al. 2019). This dietary shift not only addresses the triple burden of malnutrition and related non-communicable diseases but also eases pressure on natural resources, reshapes production systems, and reduces GHG emissions.
However, despite various policy instruments worldwide incentivizing healthier diets (e.g., taxing sugar-sweetened beverages, regulating the marketing of unhealthy foods, targeting public procurement), large-scale implementations are lacking. Furthermore, compensation schemes are essential to offset potential food price increases for lower-income groups. Preventing unintended consequences and fully leveraging the environmental benefits of the dietary shift in food systems requires the implementation of coherent policy bundles rather than standalone policies. Nonetheless, the design and implementation of such policy bundles remain under-researched. Key principles for constructing these bundles include eliminating inconsistencies, ensuring coherence across new and existing policies, capitalizing on synergies with other sectors (such as energy and water), prioritizing policies with maximum impact, establishing coordinated governance structures for food system change, implementing with robust enforcement and evaluation mechanisms, and ensuring the inclusion of diverse groups in policy design and decision-making.
Conclusion
While FSEC confirms the feasibility and economic viability of transforming food systems globally, numerous challenges persist on the policy and political economy fronts. National and international policy silos impede a comprehensive and holistic approach to transforming food systems through policy bundles. Overcoming these challenges requires the formation of new stakeholder coalitions within and beyond politics, leading to the establishment of a new food system governance framework. Such participatory governance arrangements can enhance stakeholder buy-in, foster new narratives, and hold governments accountable for progress.
References
Bodirsky et al. (2023). https://doi.org/10.21203/rs.3.rs-2928708/v1
Crippa et al. (2021). https://doi.org/10.1038/s43016-021-00225-9
Dietrich et al. (2019). https://doi.org/10.5194/gmd-12-1299-2019
FAO et al. (2022). https://doi.org/10.4060/cc0639en
Gaupp et al. (2021). https://doi.org/10.1038/s43016-021-00421-7
IPCC (2023). https://report.ipcc.ch/ar6syr/pdf/IPCC_AR6_SYR_SPM.pdf
Ruggeri Laderchi et al. (2024). https://foodsystemeconomics.org/wp-content/uploads/FSEC-GlobalPolicyReport-February2024.pdf
Willett et al. (2019). https://doi.org/10.1016/S0140-6736(18)31788-4
World Bank (2021). http://documents.worldbank.org/curated/en/879401632342154766/Food-Finance-Architecture-Financing-a-Healthy-Equitable-and-Sustainable-Food-System
