The State of Food and Agriculture 2023

Chapter 1 Factoring the Costs and Benefits of Agrifood Systems into Decisions

Laying out the scope of the report

This chapter has highlighted the importance of assessing the impacts of agrifood systems to generate evidence and trigger processes to transform agrifood systems and make them (economically, socially and environmentally) sustainable, and to ensure food security and nutrition for all. Special attention needs to be paid to providing and safeguarding decent livelihoods and incomes for all. On the environmental side, it highlights the need to transform the ways in which we produce, process, store, distribute, consume and dispose of foods. To this end, the chapter presents a conceptual framework that clarifies how agrifood systems impact and depend on natural, human, social and produced capitals, and how and which policy levers can be used to better influence them.

It recognizes that it is an aspiration to be able to assess all hidden costs and benefits, as this is an incredibly resource- and data-intensive exercise. Instead, a two-phase process that gradually moves from preliminary national-level agrifood systems assessments towards more targeted evaluations is more realistic and advisable. This is particularly true for low- and middle-income countries, where data and overall capacities are lacking and policymakers need to make decisions amid conflicting objectives.

Against this backdrop, the chapter recognizes TCA as a fitting approach to assessing the impacts of agrifood systems. However, to achieve agrifood systems transformation, accounting is just part of the process. The transformational process further involves the realignment and/or deployment of levers – such as price incentives, regulations and voluntary standards – that influence the inner workings of agrifood systems. Decisions should involve relevant stakeholders to ensure the alignment of interests, the coordination of actions, and accountability.

The rest of the report is organized as follows: Chapter 2 provides national-level estimates of the hidden costs of agrifood systems for 154 countries as an input to phase one of the two-phase assessment process. The results are preliminary, thus, a starting point for raising awareness and initiating a dialogue with national policymakers. Given the substantial hidden costs identified in Chapter 2, Chapter 3 provides guidance on how to move towards more targeted assessments that are action oriented and which take into account country-specific information from stakeholders and experts (that is, the second phase of the assessment process). The focus of Chapter 4 is on how to scale up the use of TCA and how policymakers and other stakeholders can leverage TCA results to employ different transformational levers and drive change towards more sustainable agrifood systems.

With this report, FAO is paving the way for agrifood systems assessments to be part and parcel of decision-making, with a positive effect on sustainability. It will raise awareness of their centrality to agrifood systems transformation and mobilize resources to scale up their application.

The 2024 edition of The State of Food and Agriculture will build on this and aim to catalyse action and agrifood systems transformation by providing concrete examples of the targeted assessments, showcasing how these affect agrifood systems change. Notably, it will provide insights into how TCA can be a useful complementary tool to support decision-making across a range of value chains and countries, even in data- and resource-constrained contexts.

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