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Book (series)True cost accounting applications for agrifood systems policymakers
Background paper for The State of Food and Agriculture 2023
2023Also available in:
No results found.This background paper to The State of Food and Agriculture 2023 introduces true cost accounting (TCA) as an approach to measure and value the costs and benefits generated by agrifood systems in order to facilitate improved decision-making. The paper is based on a systematic review of existing TCA approaches and of relevant case studies in agrifood systems. Guidance on conducting TCA is provided, especially in relation to data collection. The paper ends with a discussion on scaling and harmonizing TCA for agrifood systems transformation. Based on a systematic literature review, the paper describes seven TCA approaches and identifies nine case studies deemed most relevant to policymakers in agrifood systems. It then proceeds to describe the different stages and steps needed to undergo a TCA study, such as: setting the boundaries of their assessment; determining the materiality of indicators; and estimating data points that are not readily available. The latter is particularly important given that a lack of (robust) data at low cost is potentially the main barrier to applying and scaling up TCA, especially in middle- and low-income countries. Because a TCA study requires a substantial amount of data to be collected, it is important to start with the data that are available and use this to determine which data points are crucial to answering a given policy question, to then focus on refining the available data points and filling in missing data points that are essential to the analysis. Another important bottleneck to scaling up TCA is the issue of harmonization, which the paper argues is impeded by the number of approaches available. As future steps for scaling up TCA, harmonization by integrating methodologies and adopting shared principles, ideas and requirements, is thus recommended. -
Book (series)Accounting for the hidden costs of agrifood systems in data-scarce contexts
Background paper for The State of Food and Agriculture 2023
2023Also available in:
No results found.This background paper to The State of Food and Agriculture 2023 reviews the methods used, as well as the data required, to estimate the hidden environmental, social and health costs associated with agrifood systems. The studies analysed are based on the true cost accounting approach, which can facilitate improved decision-making by policymakers, businesses, farmers, investors and consumers. The reviewed studies demonstrate that hidden costs of agrifood systems are considerable, and that action is needed at global, national and local levels. To apply true cost accounting at the country level, the methods developed must be downscaled and the data limitations overcome. This review goes through each cost category – environmental, social and health – and proposes approaches to deal with them, with a focus on country-level estimates and analysis, especially in data-scarce countries. Where data are not available or time is limited, methods combining secondary data are suggested. In some cases, the suggestion is to collaborate with research centres. The paper further argues that, when addressing hidden costs in agrifood systems, trade-offs may arise, which may require the use of more complex tools, such as partial and general equilibrium models, to analyse their impacts on different areas. In general, the extent of the compromise will be minimized if there are at least as many policy instruments as there are objectives. For example, if a country seeks to restore fish stocks and address rural poverty, restricting catch alone could increase poverty in the artisanal fishing community. Adding income support, however, could allow both objectives to be met. -
Policy briefRevealing the hidden costs of agrifood systems to enhance their value 2023
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Agrifood systems are invaluable to society. However, they also contribute to climate change and natural resource degradation while failing to provide healthy diets to all. Many of these impacts are not included in market prices and are thus hidden. True cost accounting (TCA) allows estimating the hidden costs and benefits of agrifood systems, providing decision-makers with the evidence needed for their transformation. A national-level TCA assessment for 154 countries reveals that global quantified hidden costs from agrifood systems are highly likely to exceed 10 trillion dollars, revealing the urgent need to factor these costs into decision-making. These new estimates are a first step in raising awareness and should be followed by more targeted TCA assessments.
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