Food for Thought: Landmark New Study Shows Sustainable Food Systems Can Save $5-10 Trillion/Year and Address Climate Change

Providing financial incentives to smallholder farmers could turn farms into carbon sinks with more space for wildlife. Photograph: Bloomberg/Getty Images

By Alliance President Terry Gips

The most comprehensive economic study ever done of our global food system shows a switch to sustainable food systems could bring $5 to $10 trillion in benefits a year (equivalent to 4 to 8% of global GDP in 2020) by improving human health and easing the climate crisis. The Guardian reports existing production destroys “more value than it creates due to hidden medical and environmental costs, in effect, borrowing from the future to take profits today.” These stunning facts validate a core message of the Alliance for Sustainability since its founding 40 years ago. 

The study shows this transition would reduce food insecurity, so that “undernutrition could be eradicated by 2050, with 174 million fewer premature deaths, and 400 million farm workers able to earn a sufficient income.” It would also help limit global warming to 1.5C above pre-industrial levels and halve nitrogen run-offs from agriculture. The report was produced by an international team of experts through the Food System Economics Commission, with Oxford and the London School of Economics as academic partners.

A Broken, Expensive Current Food System

The economics of today’s food system are, sadly, broken beyond repair,” said leading climate change economist Nicholas Stern at the London School of Economics. He emphasized, “Its so-called ‘hidden costs’ are harming our health and degrading our planet, while also worsening global inequalities. Changing the ways we produce and consume food will be critical to tackling climate change, protecting biodiversity, and building a better future. It is time for radical change.”

Study co-author Johan Rockström from the Potsdam Institute for Climate Impact Research said, “The global food system holds the future of humanity on Earth in its hand.” He and his colleagues found “food was the largest sector of the economy breaching planetary boundaries.” It and climate impact are major drivers of land-use change and biodiversity decline. It is responsible for 70% of freshwater drawdown.

The Guardian reports the shocking facts that “food systems drive a third of global greenhouse gas emissions, putting the world on course for 2.7C of warming by the end of the century. This creates a vicious cycle, as higher temperatures bring more extreme weather and greater damage to harvests.” It adds that medical systems are also stressed, with the study predicting that “a business-as-usual approach would leave 640 million people underweight by 2050, while obesity would increase by 70%.”

Calculating the $15 Trillion in Hidden Costs

The study estimated the hidden costs of our food system at $15 trillion (equivalent to 12% of GDP in 2020), including climate change, human health, nutrition and natural resources, according to The Guardian. It made this calculation by creating a new model projecting how these hidden costs could develop over time based on humanity’s ability to change. Its finding was in line with last year’s study by the UN Food and Agriculture Organization (FAO), which estimated off-books agrifood costs at more than $12 trillion globally in 2020.

Dr. Steven Lord from the Oxford’s Environmental Change Institute said, “This analysis puts a first figure on the regional and global economic opportunity in transforming food systems. While not easy, the transformation is affordable on a global scale and the accumulating costs into the future of doing nothing pose a considerable economic risk.”

Making the Transition with Shifts in Subsidies, Farming Practices and Diet

How would we make the transition? The study calls for a shift of subsidies and tax incentives away from destructive large-scale monocultures relying on fertilizers, pesticides and forest clearance. “Instead, financial incentives should be directed towards smallholders who could turn farms into carbon sinks with more space for wildlife.”

Another key element is a change of diet. The study found that the global adoption of diets high in fats, sugar, salt and ultra-processed foods would increase the number of obese people worldwide by 70% to an estimated 1.5 billion in 2050, or 15% of the expected global population. It also cites other studies that the direct medical costs of treating the health consequences of overweight and obesity have been estimated to rise from $600 billion to almost $3 trillion by 2030.

The UN and a growing number of studies shows the health and climate benefits of a plant-based diet. While this this study did not prescribe vegetarianism, Rockström said demand for beef and most other meat would fall if hidden health and environmental costs were included in the price. The Guardian points to the Climate Observatory’s report last year: “Brazil’s beef industry – and its related deforestation – now has a bigger carbon footprint than all the cars, factories, air conditioners, electric gadgets and other sources of emissions in Japan.”

The Challenges and Possibilities

The study estimates that what it refers to as Food System Transformation to an “inclusive, health-enhancing and environmentally sustainable global food system” will need investments and transfers averaging $500 billion each year between now and 2050, equivalent to between 0.2% and 0.4% of global GDP per year. This would be on top of spending already expected.

About $200 billion of the $500 billion would cover investments in rural infrastructure, the protection and restoration of forests, reduction of food loss and waste, support for the dietary shift and agricultural research and development. The other $300 billion a year spending would be needed until 2050 to address the projected 30% increase in food prices, which is a key challenge of the proposed food transition. This would require political dexterity and support for poor sections of society, cautions Rockström.

Including Risk Swings the Call for Sustainable Food Systems Even Further

One thing the report did not address is risk, which is a major consideration for every farmer. As climate change worsens, the risk of drought and torrential downpours intensifies. One of the key benefits of organic, regenerative and sustainable agriculture is that they reduce risk. By increasing the amount of organic matter the soil acts like a sponge, both providing moisture in a drought and absorbing water in a heavy rainstorm.

A 2020 study showed that organic farms have fewer losses and can be more resilient to large losses than conventional farming. Though difficult to assess, the actual costs of conventional agriculture would be much higher than indicated in the report and sustainable food systems would be less expensive.

The Possibility of a Positive Future with Sustainable Food Systems

The report presents a possibility that we can turn things around and have a positive future with huge economic and other benefits for well-being. As the former Executive Secretary of the UN Framework on Climate Change Christiana Figueres said, this research “proves that a different reality is possible.” It shows “what it would take to turn the food system into a net carbon sink by 2040. This opportunity should capture the attention of any policymaker who wants to secure a healthier future for the planet and for people.”

More than 30 years ago in 1992, the Alliance successfully worked with more than 100 NGOs and the UN FAO to have all 179 of the countries attending the UN Earth Summit in Rio adopt sustainable agriculture as a goal. This study makes a clear economic, environment, equity and health case that the time has finally come for the world to fully implement sustainable food systems. We can all play a role in this transition through our food purchases, diet and calls for our policy makers to adopt this win-win-win-win solution.

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