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BookletHidden costs of agrifood systems
An update to the methodology for the State of Food and Agriculture 2024
2024Also available in:
No results found.The State of Food and Agriculture 2024 report by FAO refines the global estimates of hidden agrifood system costs across 156 countries, introducing a typology of six agrifood system types rather than geographic classifications. Building on the 2023 report, this update incorporates data from 2020 and 2021, including greenhouse gas and nitrogen emissions, poverty indicators, and land-use change. By focusing on updated FAO and UN sources, the 2024 report provides a more unified basis for assessing costs.Despite methodological updates, the economic risks from agrifood systems remain consistent with the 2023 findings. Low-income countries bear the highest relative costs – over 30 percent of their GDP – while costs decrease with income. The report cautions that rising hidden costs from agrifood systems will impede economic growth unless addressed, as agrifood system impacts, such as nitrogen pollution and productivity losses from unhealthy diets, challenge global sustainability. Policymakers are encouraged to address these risks with tailored policies to protect growth, underscoring that reducing agrifood sector impacts differs fundamentally from the decarbonization pathway demanded of other sectors. -
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. -
Book (series)Hidden costs of agrifood systems and recent trends from 2016 to 2023
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 examines the annual hidden costs of agrifood systems across 2016–2023 for 154 countries. Hidden costs include environmental hidden costs from greenhouse gas emissions, nitrogen emissions, land-use transitions, and blue water withdrawals; social hidden costs associated with undernourishment and poverty; and health hidden costs from unhealthy dietary patterns. The expected value of hidden costs is around 13 trillion 2020 purchasing power parity (PPP) dollars. This is equivalent to approximately 10 percent of global gross domestic product (GDP) PPP in 2023 and around 35 billion 2020 PPP dollars per day. Environmental hidden costs averaged around 3 trillion 2020 PPP dollars over the 2016–2023 period; health-related costs averaged 9.3 trillion 2020 PPP dollars; and social hidden costs averaged 560 billion 2020 PPP dollars. Health hidden costs are the largest across all world regions, apart from sub-Saharan Africa, where costs from poverty and undernourishment prevail. Hidden costs also report an upward trend from 2016 to 2023, driven primarily by health hidden costs. Overall, hidden costs place a disproportionate burden on low-income countries. Left unchecked, these hidden costs will depress future growth and development. However, these hidden costs do not reflect the GDP PPP loss that may be avoided by transitioning to more sustainable agrifood systems. In other words, while these may be avoidable, the quantified hidden costs do not indicate the costs of transitioning to alternative systems. Subsequent studies are needed to quantify these.
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