- 1 The value of agrifood systems is not in doubt. They provide nourishment, sustain economies and shape cultural identities. However, one must also consider the environmental, social and health hidden costs associated with these systems.
- 2 True cost accounting allows the estimation of the hidden costs generated by market, institutional and policy failures. It provides decision-makers with the evidence needed to correct these failures and transform agrifood systems for the better.
- 3 True cost accounting for decision-making builds on a long tradition of economic valuation; however, a lack of availability of high-quality data, on both hidden costs and the costs of taking action, often limits its application.
- 4 This report proposes a two-phase assessment process, relying first on national-level true cost accounting assessments to raise awareness (presented in this report) and then moving towards in-depth and targeted evaluations to prioritize solutions and guide transformative actions (which will be the focus of the 2024 edition of the report).
- 5 This year’s report presents a first attempt at a national-level assessment for 154 countries. Even with large uncertainty and excluding some impacts, there is a very high degree of confidence that the global quantified hidden costs of agrifood systems amount to 10 trillion dollars or more at 2020 purchasing power parity (PPP), revealing the urgent need to factor these costs into decision-making to transform agrifood systems.
- 6 Globally, the dominant quantified hidden costs are those arising from dietary patterns which lead to diseases and lower labour productivity. These health-related costs exhibit considerable variation across countries, but are most prominent in high- and middle-income countries.
- 7 The environmental hidden costs, while not exhaustive, constitute over 20 percent of the quantified hidden costs and are equivalent to almost one-third of agricultural value added. They are mostly associated with greenhouse gas (GHG) and nitrogen emissions and are relevant across all country income groups.
- 8 Hidden costs appear to be a greater burden in low-income countries, where they are estimated to amount, on average, to 27 percent of gross domestic product (GDP), compared with 11 percent in middle-income countries and 8 percent in high-income countries.
- 9 Addressing poverty and undernourishment remains a priority in low-income countries, as they account for about half of the total hidden costs quantified in these countries.
- 10 The new national-level estimates are a first step in raising awareness, even if they are incomplete and involve a high degree of uncertainty. Targeted true cost accounting assessments that also look at the cost of different abatement actions – the focus of next year’s report – are needed to inform decision-makers on how to leverage policy, regulation, standards and private capital for a transition towards sustainable agrifood systems.
- 11 For true cost accounting assessments at scale, innovations in research and data, as well as investments in data collection and capacity building, are needed to scale the application of true cost accounting, especially in low- and middle-income countries, so that it can become a viable tool for informing decision- and policymaking in a transparent and consistent way.
