Agrifood systems. Cover the journey of food from farm to table – including when it is grown, fished, harvested, processed, packaged, transported, distributed, traded, bought, prepared, eaten and disposed of. They also encompass non-food products that constitute livelihoods and all of the people, as well as the activities, investments and choices, that play a part in getting us these food and agricultural products. In the FAO Constitution, the term “agriculture” and its derivatives include fisheries, marine products, forestry, and primary forestry products.1

Capital. The economic framing of the various stocks in which each type of capital embodies future streams of benefits that contribute to human well-being (see also “human capital”, “natural capital”, “produced capital”, “social capital” and "stock").2

Human capital. The knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being.2

Natural capital. The stock of renewable and non-renewable natural resources that combine to yield a flow of benefits to people.3, 4

Produced capital. All manufactured capital, such as buildings, factories, machinery and physical infrastructure (roads, water systems), as well as all financial capital and intellectual capital (technology, software, patents, brands and so on).2

Social capital. Networks, including institutions, together with shared norms, values and understandings that facilitate cooperation within or among groups.2

Capital change. The net change in quantity and quality of capital stock.5

Cost. In common usage, a cost is the monetary value of goods and services that producers and consumers purchase. However, there are situations where such a definition is not helpful. Economists distinguish between the following types of cost:

Abatement cost. The monetary cost to reduce a hidden cost from capital change. Can also refer to the minimal monetary cost to reduce hidden costs to a certain level given a costed portfolio of actual or potential abatement measures.5

External cost. A cost incurred by individuals or a community as a result of an economic transaction in which they are not directly involved. The difference between private costs and the total cost to society of a product, service or activity is called an external cost.6

Hidden cost. Any cost to individuals or society that is not reflected in the market price of a product or service. It refers to external costs (that is, a negative externality) or economic losses triggered by other market, institutional or policy failures.

Private cost. Any cost paid by a consumer to purchase a good or by a firm to purchase capital equipment, hire labour or buy materials or other inputs. These costs are included in production and consumption decisions.6

Social cost. The decrease in economic value to society from a capital change. It is estimated in monetary terms by an economic valuation of the decrease.5

Cost–benefit analysis. A process for calculating and comparing the benefits and costs of a given policy or project, based on assigning a monetary value to all the associated activities. It is used to evaluate the feasibility or profitability of projects and public policy interventions. It aggregates the costs and benefits in different periods to a single value using a discount rate, assigning lower weight to the costs and benefits as they happen further into the future.2

Cost-effectiveness analysis. A process used to compare the costs of two or more courses of action to achieve a certain target and to identify the least costly option for achieving that target.2

Decision-makers. Those who determine or influence which, when, where and how levers, such as policies and investments, are activated. They include key private, public and civil society agrifood systems actors, as well as donors, governments, local authorities, international organizations and academia.

Dietary pattern. The combination of foods that form diets in context and time. Dietary patterns are contextual, driven by factors of food access and affordability but also by culture, traditions, values, preferences and other considerations.

Healthy dietary patterns or healthy diets.a Those that: 1) start early in life with early initiation of breastfeeding, exclusive breastfeeding until six months of age, and continued breastfeeding until two years of age and beyond combined with appropriate complementary feeding; 2) are based on a great variety of unprocessed or minimally processed foods, balanced across food groups, while restricting highly processed food and drink products; 3) include wholegrains, legumes, nuts and an abundance and variety of fruits and vegetables; 4) can include moderate amounts of eggs, dairy, poultry and fish, and small amounts of red meat; 5) include safe and clean drinking water as the fluid of choice; 6) are adequate (i.e. reaching but not exceeding needs) in energy and nutrients for growth and development and meet the needs for an active and healthy life across the life cycle; 7) are consistent with WHO guidelines to reduce the risk of diet-related non-communicable diseases and ensure health and well-being for the general population; and 8) contain minimal levels or none, if possible, of pathogens, toxins and other agents that can cause foodborne disease. According to WHO, healthy diets include less than 30 percent of total energy intake from fats, with a shift in fat consumption away from saturated fats to unsaturated fats and the elimination of industrial trans fats; less than 10 percent of total energy intake from free sugars (preferably less than 5 percent); consumption of at least 400 g of fruits and vegetables per day; and not more than 5 g per day of salt (to be iodized).8

Unhealthy dietary patterns or unhealthy diets. Do not meet one or more of the principles of healthy diets. They are one of the primary drivers of all forms of malnutrition, and related morbidities. For the purpose of this report, the focus is on a specific set of unhealthy dietary patterns, which are typically low in fruits, vegetables, nuts, wholegrains, calcium and protective fats, and high in sodium, sugar-sweetened beverages, saturated fats and processed meat. These diets are associated with obesity and non-communicable diseases, leading to productivity losses.

Flow. A cost or benefit derived from the use of various capital stocks.2

Functional unit. The unit of analysis used in true cost accounting assessments. The functional unit of an assessment determines the actor(s) for which results are most relevant and who can use the assessment to steer better impact.9 In the context of agrifood systems, there are five commonly used functional units: agrifood systems (see definition above), dietary patterns, investment, organization and product.10

Dietary patterns unit. Captures different forms of diets (e.g. vegetarian) and is appropriate for examining policy interventions aimed at realizing certain diets, such as healthier and more sustainable diets.10

Investment unit. Typically refers to investments made by organizations or investors and, in the context of policymaking, to public investment and expenditure.10

Organization unit. Suited to describing the impacts of a given entity, typically a commercial organization.10

Product unit. Typically used to assess the impacts of a given (food) product, ideally covering its entire life cycle.10

Institutional failure. When institutions – governments, markets, private property and communal management11 – fail to provide the necessary framework for development. From a sustainability perspective, it has been defined in terms of the inability of institutions to conserve resources.12 Institutional failures manifest in a variety of ways:

Conflict between bureaucracies. Where one part of a government undermines efforts by another part to save resources.11, 13

Corruption. The abuse of entrusted power for private gain.14 It takes many forms, varying from small-scale bribes and fraud (e.g. administrative corruption), to high-level abuse of government power and political positions (e.g. political corruption).15

Dispersed governance. Where the subnational level has some degree of separate political authority, which can reduce the degree of consistency in the delivery of policies formulated at national level but implemented at subnational level.16, 17

Free-riding. Enjoying the benefits of collective action without incurring the associated costs.18 This can occur when groups are large, where boundaries cannot be enforced, and where people do not bear the consequences of their actions.11

Inexistent or ill-defined property rights. A situation where legal ownership and use of resources are not clearly defined or established. An example is open-access resources, where access to resources is unrestrictive and non-excludable and there is rivalry in consumption, leading to overexploitation.19

Lack of transparency and accountability. Transparency ensures that information (e.g. where funds go) is available. In this sense, transparency serves to achieve accountability, which is the capacity to sanction or compensate institutions for their actions.20 Without transparency and accountability, trust will be lacking between institutions and those relying on them.

Life cycle assessment (LCA). A systematic set of procedures for quantifying the environmental impacts directly attributed to the inputs and outputs of materials and energy used in all the processes, activities and resources used throughout the life cycle of a product, a production system or a service system. For each step of the life cycle, an inventory is made of the used material and energy and their impacts on the environment, which are, in most cases, reported in physical units and not converted into monetary terms.2, 21, 22

Market failure. A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net loss of economic value to society, that is, the full benefits of the use of social resources are not realized. There are many types of market failure including the following:

Demerit good. A good or service considered undesirable because its consumption has negative effects on the consumer.23 The consumption of unhealthy diets is an example: consumption does not affect other parties, but results in health damages to the consumer and a cost to public health systems. The distinction between “externalities” and “demerit goods” is important, because the action needed for the two can vary.24

Externality. A positive or negative consequence of an economic activity or transaction that affects other parties without this being reflected in the price of the goods or services transacted.2

Market power. The relative ability of an actor to manipulate the price of an item in the marketplace by manipulating the level of supply, demand or both.25 Market concentration measures the extent to which market shares are concentrated between a small number of firms and is often taken as a proxy for the intensity of competition.26

Missing market. The economic situation in which there is no market for a certain product because private actors see no prospect of profit, even though the exchange of such an item would be beneficial to society as a whole.27, 28

Public goods. Products that one individual can enjoy without reducing the amount available to others (e.g. roads, public parks, clean air and other basic societal goods). In other words, they are non-rivalrous and non-excludable.29 The private sector has little incentive to produce public goods, resulting in underproduction and market failure.

Materiality. Generally defined as a measure of how important a piece of information is when making a decision,30 or the importance, worth or usefulness of something.31 In the context of true cost accounting, it reflects significant economic, environmental and social impacts that substantially influence the assessments and decisions of stakeholders. An impact may be considered material if measurement and communication of the impact have the potential to alter decision-making processes.31

Double materiality. Applied to the private sector (that is, businesses and investors), it is the principle that businesses and investors must disclose not only how they are affected by sustainability issues, such as climate change (“outside in”), but also how their activities impact society and the environment (“inside out”).32

Moderate poverty. Income below the international poverty line of 3.65 2017 purchasing power parity (PPP) dollars per day.33

Multicriteria analysis. A method to assess projects or policies against a variety of criteria, using both quantitative and qualitative indicators. It is used in cases where multiple objectives are being pursued. It can take into account various factors, such as public financing needs and implementation barriers, against multiple objectives, such as employment creation, emissions reduction and improving farming income. Its main limitations revolve around deciding which criteria to include and what weights to give to the different criteria, as they can greatly impact the results of the exercise.2

Nutritious foods. "Safe foods” that contribute essential nutrients, such as vitamins and minerals (micronutrients), fibre and other components, to healthy diets that are beneficial for growth, health and development and guard against malnutrition. In nutritious foods, the presence of nutrients of public health concern, such as saturated fats, free sugars and salt/sodium, is minimized, industrially produced transfats are eliminated and salt is iodized.8

Policy failure. When a policy, even if it is successful in some minimal respects, does not fundamentally achieve the goals that proponents set out to achieve.34 Policy failures are dependent on the policy landscape, whose contours are shaped by fiscal policies, regulations and standards. Policy failures can take the following forms:

Distributional failure. A situation where public policies fail to guarantee for all the population a minimum level of decent income that can protect against different forms of deprivation, such as poverty, food insecurity and malnutrition, despite the availability of resources to do so.

Ill-informed policies. When policymakers make their decisions based on poor or partial information. This can lead to underestimating the time, costs and risks of delivery, and/or overestimating the benefits. In other words, by generating overly optimistic expectations, ill-informed policies, at best, undermine the value of resources and, at worst, lead to unviable interventions and investments.16, 35

Vagaries of political cycles. The idea that politicians are not held accountable for policy outcomes because they “either moved on or moved out”.16

Prevalence of undernourishment. Percentage of the national population experiencing undernourishment, as calculated by FAO et al. (2022).33, 36

Scenarios. Representations of possible futures for one or more components of a system, including alternative policy or management options.37

Business-as-usual (BAU) scenario. A scenario for future patterns of activity which assumes that there will be no major changes in important parameters, such as technologies, institutions, or policies, so that current circumstances are assumed to continue unchanged. It serves as a benchmark in policy analysis to measure the impact of alternative scenarios that include a change in one or more parameters over a specific time span.38

Exploratory scenario. Examines a range of plausible futures, based on the potential trajectories of drivers – either indirect (e.g. sociopolitical, economic and technological factors) or direct (e.g. habitat conversion and climate change). Exploratory scenarios are particularly relevant in the agenda-setting stage of the policy cycle. They typically have strong qualitative and quantitative components and are often combined with participatory approaches involving local and regional stakeholders.39

Policy-screening scenario. Ex ante assessment to forecast the effects of alternative policy or management options (interventions) on environmental outcomes. In policy-screening scenarios, a policy, or set of policies, is applied and an assessment of how the policy modifies the future is carried out.40

Retrospective policy evaluation scenario. Policy evaluation scenario employed in ex post assessments. Ex post assessments are the present evaluations of past efforts to achieve policy goals throughout all stages of the policy cycle and decision-making context.41

Target-seeking scenario. A valuable tool for examining the viability and effectiveness of alternative pathways to the desired outcome. It starts with the definition of a clear objective or a set of objectives that can be specified either in terms of achievable targets (e.g. food self-sufficiency) or as an objective function to be optimized (e.g. minimal biodiversity loss).

Shadow prices (of a resource). The change in the value of an economic activity associated with one more unit of that resource.

Simulations. Quantified scenarios, generated using simulation models.42

Simulation models. Simplified representations of reality that use mathematical formulations to generate projections. Such projections can be used for backcasting (e.g. what policy mix is required to reach a stated objective) and forecasting (e.g. how close to the objective would a given policy mix deliver).42

Stock. The physical or observable quantities and qualities that underpin various flows within the system, classified as produced, natural, human or social (see also “capital”).2

True cost accounting (TCA). A holistic and systemic approach to measuring and valuing the environmental, social, health and economic costs and benefits generated by agrifood systems to facilitate improved decisions by policymakers, businesses, farmers, investors and consumers.43

Undernourishment. The condition in which an individual’s habitual food consumption is insufficient to provide the amount of dietary energy required to maintain a normal, active, healthy life. For the purposes of this report, hunger is defined as being synonymous with chronic undernourishment. The prevalence of undernourishment is used to measure hunger.8

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