Transforming global food system could unlock trillions in economic gains

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In the recently published global policy report Dr Commission on Food System Economics, A multinational and multidisciplinary team of more than forty researchers has undertaken the most ambitious food economics study to date to assess ways in which the food system can be economically improved. They conducted a cost-benefit analysis of the current global food situation to estimate the economic, social and environmental impacts of optimized global policy changes. Their findings show that transforming the system could generate economic gains of up to US$10 trillion per year (1.7%–12% GDP gains), while policy and implementation to accomplish these transformations would cost only 0.2–0.4% of global GDP.

Global Policy Report: The Economics of Food System Transformation.  Image credit: YEINISM/ShutterstockGlobal Policy Report: The Economics of Food System Transformation. Image credit: YEINISM/Shutterstock

Pathways to food system transformation

A ‘food system’ refers to the national scale through which food is produced, marketed and consumed. It is intrinsically tied to the political, economic, social, cultural and environmental aspects of a nation. Since the advent of modern humanity, it has contributed to malnutrition, poverty and population growth while trying to balance life expectancy.

Unfortunately, food systems are rarely optimized. With the increasing number of mouths to feed, the effects of global warming and global food crises, recent efforts to adapt national food systems have done more harm than good, contributing to increased global hunger in underdeveloped and developing countries. In contrast, advanced individuals suffer from obesity. When translated using economic models, environmental, social and ecological losses are estimated to exceed US$10 trillion per year, which is more than the total global food system’s contribution to GDP.

This represents an unsustainable situation that needs to be scientifically assessed for improvement, lest the world be stuck in an escalation feedback loop with catastrophic results. This fueled the formation of the Food System Economics Commission (FSEC), a nongovernmental consortium of scientists across nationalities and academia, aimed at identifying food system security challenges and the policy changes needed to overcome them.

The current report summarizes more than four years of FSEC research and includes the proceeds of more than 30 publications. It compares and contrasts the ‘Current Trends’ pathway with the ‘Food System Transformation’ pathway. As the names suggest, the former refers to future outcomes if policies continue as before or inevitably worsen through the aforementioned feedback loop. In contrast, the transition path involves system optimization of FSEC.

“FSEC findings are based on rigorous economic modeling, in-depth literature reviews and case studies. All background research is available at foodsystemeconomics.org.”

Forecasting the current food system

The current global food situation is dire, highlighted by the United Nations (UN) Food and Agriculture Organization (FAO), which revealed that in 2020 alone, the hidden environmental, health and social costs of the agri-food system exceeded US$10 trillion. FSEC has developed a novel economic model, which translates environmental, cultural, ecological, and health care services into financial form. Their findings validate the FAO’s economic picture and warn that more than 640 million people (121 million children) will suffer from hunger and malnutrition by 2050 if ‘business as usual’ continues.

Other alarming flaws in current trends include a 70% increase in global obesity prevalence by 2050, a 2.7 °C increase in global temperature by 2099 as a direct consequence of agriculture-related greenhouse gas (GHG) emissions, and significantly reduced resilience. The ability of the system to respond to stochastic changes.

What is the best food system transformation pathway?

Assuming effective policy implementation, following FSEC’s transition path is expected to completely eliminate malnutrition by 2050, saving an estimated 174 million people from starvation-related deaths. In contrast to current GHGH sources, the transition pathway could transform the global food system into a carbon sink, prevent global warming from exceeding 1.4°C increase (2099), and protect 1.4 billion hectares of land. The biodiversity and environmental benefits are countless.

Implementing this pathway would release surplus nitrogen from the agricultural sector that could be treated and used for industrial applications at a fraction of today’s costs. This pathway will ensure food and financial security for the more than 400 million additional farmers needed to make meaningful changes.

Show me the numbers

When comparing the current and transition models, the economic gains of the latter are phenomenal, with only the net increase estimated to exceed the total GDP contribution of the current food system. It represents an equivalent national economy that appears significantly more prominent than in the economy picture, with the highest benefits in low-income countries (12% larger than observed) and middle (3.4%) and low-income (1.7%).

“In perspective, for high-income countries, the total losses avoided through food system transformation will exceed their cumulative losses from the 2007-2008 financial crisis.”

What will it cost?

Although food system transformation pathways policy implementation processes will be challenging to achieve, infrastructure and implementation costs are substantially lower than potential policy-based costs. FSEC estimates that annual costs will not exceed 0.2-0.4% of a country’s GDP, a fraction of the economic gains this path predicts at 1.7-12%.

“This new analysis highlights the urgent need for global food system transformation, but this will look different for different countries. For example, strategies in many parts of the world should focus on reducing the consumption of animal products to reduce poor health and environmental impacts, while in other areas, combating malnutrition Change should focus on increasing access to these to do.”

Some proposed measures include differential taxation, where economically and environmentally sub-optimal crops are taxed more than their more beneficial counterparts. Investing in agricultural research and agriculture-focused subsidiaries can help accelerate this process.

So what can I do to help?

An exceptional finding of this study was the profound impact of variable diets on economic climate and environmental outcomes.

“Global adoption of a predominantly plant-based diet would account for about 75% of the total health and environmental benefits from food system transformation and would contribute an average of an additional 2% per year to global GDP. Importantly, economic improvements have been felt across all income groups, low-income countries from high-income countries.”

So, if you want to contribute to this net benefit for humanity, reducing meat consumption and switching to a predominantly vegetarian diet may be the best place to start.



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