Moving from desired outcomes, such as those identified in the FABLE case study, to identification and implementation of policy levers requires government backing. Governments need to prioritize objectives, as trade-offs are bound to arise during the transformation of such complex global systems. The TCA approach can facilitate the prioritization of different levers by considering all relevant impact indicators and clearly linking impacts to pathways to distinguish between cost bearers and cost producers. This can be done either through government-led TCA assessments or through those carried out in partnership with governments. Key to either approach is the engagement of stakeholders.
Existing national processes and commitments are key to scaling up true cost accounting in policymaking
The second phase of TCA assessments can take many forms and vary in scope, as summarized in Figure 12 of The State of Food and Agriculture 2023. The most ambitious and complex are targeted nationwide agrifood systems assessments, which have significant data requirements in order to go beyond assessments based on publicly available global data sources. Because of this complexity, no country has so far officially integrated TCA into its nationwide policy prioritization process, although many countries use cost–benefit assessments in their policymaking and the transition to TCA should not present a major challenge.59, 60
In response to the spotlight shone by the 2023 edition of this report on the hidden costs of agrifood systems, a number of countries reached out to FAO to explore the potential of using TCA in their national policy discussions. One of the case studies commissioned for the 2024 edition was a study supported by the Swiss Federal Office for Agriculture, which systematically assessed the hidden costs associated with Swiss agrifood systems and conducted a tailored assessment of the hidden costs to identify entry points for decision-makers.
The Swiss case study provides the most detailed and advanced understanding of how a tailored TCA assessment can complement existing national food security and sustainability commitments. One of the most important enablers of this process is the existence of a national commitment to agrifood systems transformation, which contributes to the country’s 2050 carbon neutrality target across all sectors and society as a whole, enshrined in law as well as in the Swiss Nutrition Policy following a referendum in June 2023.j This process acknowledges the complex interdependencies of the country's agrifood systems and emphasizes policy coherence. The case study is an important step in working towards the Swiss Vision 2050 to guide the identification of policy entry points for transformation pathways. In addition to validating the national TCA results of The State of Food and Agriculture 2023, the study adapts them to national needs driven by existing commitments using more locally relevant and accepted cost categories and data sources.
The case study follows the steps for the phase two TCA assessment outlined in Figure 11 of The State of Food and Agriculture 2023. Starting with the system boundaries, it explores whether the assessment should include the hidden costs of imports into Swiss agrifood systems (including feed and fertilizer imports) and exclude some of the hidden costs of exports.k This discussion was driven by the observation that the country imports about 50 percent of its food, so some stakeholders suggested that the hidden costs of its consumption within globally interconnected agrifood systems should be acknowledged. Expanding system boundaries in this way would naturally lead to many new assumptions, such as how much of the environmental, social and health hidden costs of a trading partner country may be caused by the production of imported goods and attributed to the importing country and how they can be reduced. Such difficult decisions were deliberated in detail through stakeholder consultations and hidden costs of imported food, feed and fertilizer were calculated using existing data and a simplified approach. These hidden costs provide a lower bound estimate as they exclude the health and social hidden costs of imports, which require more detailed data and analyses that are left for future phase two TCA assessments (Box 9).
Box 9The challenges and opportunities of stakeholder consultations as part of tailored true cost accounting assessments: insights from Switzerland
A stakeholder consultation process was conducted between October 2023 and May 2024 as part of the targeted assessment of the hidden costs of Swiss agrifood systems. The participants were stakeholder representatives from Swiss research centres, academic institutions, producer organizations, consumer organizations, government departments and FAO.
The process involved a kick-off meeting and three monitoring meetings in which all of the aforementioned stakeholders took part, along with additional meetings on specific questions, as required, either bilaterally or in small groups. This enabled the collection of inputs from a very broad range of experts to clarify and refine the structure and narrative of the case study, to sharpen the arguments made, to shed light on the expectations of the various experts and institutions involved, and to identify and address gaps and unclear formulations where needed.
The key challenge was to make the group as inclusive as possible. The main challenge during the consultation involved discussions on complex topics with participants from different backgrounds; topics included how to define the various cost categories, which costs should be called “external” or “hidden”, and which types of cost would warrant government intervention. There were also discussions on responsibilities for action, for example, on health hidden costs due to dietary patterns and the extent to which individual consumers or agrifood systems actors were responsible for them. Because of the complexity of the true cost accounting approach, there was disagreement on what additional costs should be added to those in The State of Food and Agriculture 2023 and whether it would be better to aim for more accurate coverage of existing cost categories or broader coverage through additional ones.
Due to the diverse backgrounds of participants, there were different expectations as to the content, goals and impact of the report. Expert and institutional opinion differed, to some extent, regarding what the report should cover and aim to achieve. This was reflected, for example, in differing views on how concrete suggestions on policy action might be formulated and how strongly a consumer, producer or general value-chain focus should be adopted. There were also some reservations as to how the numbers might be used in public fora, underlining the importance of communicating the complex findings in a simple and contextualized way to avoid misuse.
A particularly sensitive issue related to the hidden costs associated with certain actors, which could easily have been mistaken for undue finger-pointing. Different opinions arose on how to deal with topics that were deemed relevant, but which, due to missing data, could not be included to the same quantitative extent as those already covered. Not including such topics would implicitly assign them an incorrect value of zero. Therefore, where possible, such topics were included, cautiously based on qualitative assessments to convey unbiased messages.
The stakeholder consultation process resulted in a number of important outcomes. First, it prompted participants to explore where data for additional assessment might be available and which experts to contact for details on any topic of interest, so that important gaps in hidden cost assessments were filled or acknowledged. The process was deemed very transparent – all participants could contribute and set the basis for an encompassing and widely accepted assessment. This does not mean that all experts agreed with the decisions taken on certain aspects in the final report, but the process provided an opportunity for mutual understanding on any decision, which forms a good basis for the future engagement of all stakeholders in the national policy discourse on the hidden costs of agrifood systems.
Additional topics of potential relevance for Swiss hidden cost estimates have been identified based on a review of ongoing key debates in the national agrifood discourse and the existing and planned regulatory frameworks for sustainability monitoring. These include pesticides, antimicrobial resistance (AMR), ecosystem services (such as biodiversity), soil quality and animal welfare. Even in data-rich settings such as Switzerland, the extent to which these new components are assessed and integrated into TCA vary. The hidden costs of some components are included based on existing studies, others are quantified based on many simplified assumptions, while a selected set is quantified using high-resolution national databases.
The results provide an initial validation of the hidden costs quantified in The State of Food and Agriculture 2023 and indicate that national-level assessments of the same hidden cost components fall within the uncertainty bounds of the 2023 assessment for Switzerland. The study identifies where the largest hidden costs arise in order to indicate entry points for agrifood systems transformation pathways in Switzerland. The refined and amended hidden cost estimates send a relatively simple message: key entry points for action towards food systems transformation could focus on dietary patterns, biodiversity and GHG emissions. Another key message is that a pragmatic approach should be taken to incorporating the results of targeted assessments in decision-making. Hidden cost categories that are relatively small today may warrant early action to avoid becoming intractable problems tomorrow, such as water scarcity, AMR and soil fertility.
Though the social hidden costs of Swiss agrifood systems are estimated to be zero in national-level estimates (because of the use of the global moderate poverty line and the prevalence of undernourishment statistics), this does not mean there are no social hidden costs based on national standards. The topics of decent working conditions and the wages and incomes of agricultural workers and farmers were discussed as they are seen in the more general context of equity and justice in Swiss society and its economy. Targeted phase two TCA assessments, therefore, are recommended to adjust the thresholds used in global statistics and include other hidden cost domains as needed to capture the nationally relevant hidden cost dimensions that are of central moral importance to a society. Attribution to agrifood systems, however, needs to be assessed carefully, as some of these issues may be related to justice in the overall labour market rather than being entry points for agrifood systems transformation.
Partnering with governments to address hidden costs
In the absence of country-led TCA assessments, other than that of Switzerland, a UNEP initiative has been partnering with governments to address the hidden costs of agrifood systems.
The Economics of Ecosystems and Biodiversity (TEEB) was launched in 2008 with the aim of informing decision-making and policy outcomes through a better understanding of our impacts and dependence on the natural world.61 The use of the TEEBAgriFood Evaluation Framework in several countries offers further examples of how to combine a consultative scenario-building process with TCA. With funding from the European Union, the TEEBAgriFood initiative has been working with governments in seven countries since 2019.l It adopts a comprehensive strategy for policy intervention for agrifood systems transformation. Following a scoping stage to collect documentary insights, identify stakeholders and conduct a preliminary evaluation of policy interventions, policy mapping is conducted to pinpoint pertinent policies and their governing mechanisms. Pilot projects are subsequently devised and refined to serve as models for policy intervention scenarios. Collaboration with the Capitals Coalition facilitates business engagement aimed at understanding the implications, both economic and ecological, of integrating natural capital and biodiversity assessments into corporate decision-making processes.62
Scenario analysis is a crucial aspect, presenting the rationale for change by juxtaposing policy scenarios against the status quo, utilizing the TEEBAgriFood Evaluation Framework. A roadmap for change is crafted to delineate key agents and drivers of change, evaluate associated risks, and outline concrete steps for implementation. Lastly, communication and outreach initiatives are undertaken to enhance awareness and comprehension of the significance of integrating the (hidden and visible) values of nature into government and corporate decision-making, as well as education.
Because of the case-specific consultations on policy objectives with government and other stakeholders, no two TEEBAgriFood studies are the same. Although most studies have a relatively narrow scope, such as niche primary production systems or the sustainability of key products in national food supply chains, some have a broader focus. For example, through sustained broad-based stakeholder engagement in India since 2019, TEEBAgriFood objectives have been aligned with the government’s vision for agrifood systems transformation, starting in three states and expanding to cover nine national entities. True cost accounting principles are now being used to advance the integration of the value of nature into government decision-making, including the inclusion of TCA in undergraduate courses in 4 central and 51 state agricultural universities by 2025. Chapter 4 expands on the importance of education in shaping the preferences of consumers of today and tomorrow.
Similarly, stakeholder consultations with several ministries conducted by TEEBAgriFood in Brazil led to a scaling up of the use of TCA principles from local to national level. They culminated in the development in 2023 of two presidential decrees – the Urban and Peri-urban Agriculture (UPA) National Programme and the Food and Nutritional Security Strategy for Cities. A wide stakeholder consultation led to the development of a national Guide for UPA Agendas promoting food and nutrition security, socioeconomic development and climate resilience, with net positive impacts on nature and people.
Box 10 provides more details on how stakeholder consultations at the national level led to policy impact in India and Brazil.
Box 10TEEBAgriFood stakeholder consultations and success stories: examples from India and Brazil
TEEBAgriFood in India
In India, the stakeholder consultation process for the TEEBAgriFood project took place over three virtual sessions in July 2020, involving around 120 participants. The inception workshop provided a crucial platform for key stakeholders, including government officials, civil society organizations, academic institutions, experts, farmer groups and international organizations to shape policy focus areas collaboratively.
A decision was taken to focus the TEEBAgriFood policy application on three states (Uttar Pradesh, Uttarakhand and Assam), targeting the upscaling and adoption of organic farming and agroforestry systems across heterogeneous agroecological zones. This choice was partly driven by the need to provide economic valuation evidence to support extant national policies and programmes, such as the National Mission for Clean Ganga, Paramparagat Krishi Vikas Yojana (Traditional Agricultural Development Scheme), Mission Organic Value Chain Development for Northeast Region and the National Agroforestry Policy.
A national-level project steering committee was established to align TEEBAgriFood objectives with the government’s vision for agrifood systems transformation, co-chaired by the Ministry of Environment, Forest and Climate Change and the Ministry of Agriculture and Farmers’ Welfare. Establishing the steering committee using a multisectoral approach enabled contributions to national priorities, including sustainable agrifood systems transformation, agricultural production, natural resource management, biodiversity conservation, watershed development and farmer income enhancement. State- and national-level consultations were conducted periodically to refine the technical aspects of the TEEBAgriFood project, tailor it to policy needs, share findings and foster discussions to drive change across the entire value chain.
From 2019 to 2023, with funding from the European Union, the project extended its reach significantly, collaborating with nine national-level entities. The TEEBAgriFood initiative in India achieved significant milestones in advancing the integration of nature’s values into government decision-making. The true cost accounting (TCA) principles, including the TEEBAgriFood Evaluation Framework, are now engrained in leading government agricultural research institutions, with the Indian Council of Agricultural Research spearheading the nationwide integration of TEEBAgriFood principles. The project has informed national policies on sustainable agriculture more broadly, as evidenced by the Ministry of Agriculture and Farmers' Welfare seeking United Nations Environment Programme (UNEP) inputs on TCA and TEEBAgriFood for various initiatives: i) the Voluntary Carbon Market Framework for the agriculture sector; ii) the Operational Guidelines for Climate Resilient Agriculture in India; and iii) the revision of the National Agroforestry Policy and future roadmap development for agroforestry. In addition, the TEEBAgriFood Evaluation Framework is included in the G20 Compendium of Best Practices for Forest-Fire Affected Areas Restoration.
TEEBAgriFood in Brazil
In Brazil, the collaboration between UNEP and several ministries (Environment, Rural Development, Social Development, Work and Employment) on the use of the TEEBAgriFood Evaluation Framework contributed to two presidential decrees: the Urban and Peri-urban Agriculture (UPA) National Programme (Decree 11.700/2023) and the Food and Nutritional Security Strategy for Cities (Decree 11.822/2023).63, 64 Together, they established the Guide for UPA Agendas,65 which uses the TEEBAgriFood Evaluation Framework as the main reference on multilevel governance (municipal, state and federal) for urban food systems to promote food and nutrition security, socioeconomic development, climate resilience and net positive impacts on nature and people.
The United Nations Environment Programme worked iteratively, starting by focusing on policy demand at local level. A study by two institutes – Instituto Escolhas and Instituto Urbem – with the collaboration of UNEP for São Paulo, assessed ecosystem services related to UPA. This crucial study was timely, as the State and the Municipality of São Paulo were in the process of developing legislation on ecosystem services and sought farmer engagement. Having established the potential of sustainable UPA as a nature-based solution for urban landscapes at local level, these findings were brought to the Ministry of Citizenship at national level. A key next step was UNEP advocating for the integration of UPA into the urban planning process. For that, UNEP and its research partner, the Centre of Sustainability of the Getúlio Vargas Foundation, established a steering and technical committee with about 60 stakeholders from civil society, research groups, municipalities, states and federal government, with a good gender balance (more than 50 percent of participants were women) and representatives from all regions of the country. In addition, more than 100 contributions from a wider public consultation process were incorporated into the final document.
The outcome was a UPA guide written using layperson’s terms, presenting a range of tools for upscaling UPA according to a city’s size and administrative capability, as well as the level of collaboration with civil society, and allowing for heterogeneity in local ecological, cultural and economic conditions. This guide was later complemented by a survey of 67 cities with UPA programmes, and the survey results were used to provide potential pathways for coordination between national- and subnational-level governmental authorities. This combination of compelling evidence from the TCA applications and the broad social participation achieved by the convening process attracted three additional ministries to the national UPA programme, unlocking more funds and leading to further synergistic action.
SOURCE: Authors' own elaboration.
