Transforming global food system could unlock trillions in economic gains

By Hugo Francisco de SouzaJan 31 2024Reviewed by Susha Cheriyedath, M.Sc.

In a recent global policy report published by the Food System Economics Commission, a multinational and multidisciplinary team of over forty researchers carried out the most ambitious food economic study yet to evaluate means by which the food system could be economically improved. They conducted a cost-benefit analysis of the current global food scenario to estimate the economic, social, and environmental impacts of optimized global policy change. Their findings revealed that transforming the system could achieve economic gains of up to 10 trillion USD per annum (1.7%-12% gains GDP gains), while the policies and implementation to meet these transformations would cost barely 0.2-0.4% of global GDP.

GLOBAL POLICY REPORT: The Economics of the Food System Transformation. Image Credit: YEINISM / Shutterstock

The Food System Transformation Pathway

The 'Food System' refers to the national-scale means by which food is produced, marketed, and consumed. It is intrinsically tied to a nation's political, economic, social, cultural, and ecological aspects. Since the advent of modern humanity, it has helped spur population growth while attempting to balance malnutrition, poverty, and life expectancy.

Unfortunately, food systems are rarely optimized. With the increasing number of mouths to feed, global warming effects, and the global food crisis, recent attempts of national food systems to adapt have resulted in more harm than good, contributing to increasing global hunger in underdeveloped and developing nations. In contrast, the developed ones suffer from obesity. When translated using economic models, the environmental, social, and ecological losses are estimated to be over 10 trillion USD per annum, higher than the total global food system's contribution to GDP.

This represents an unsustainable scenario that needs to be scientifically assessed for improvement, lest the world is locked into a feedback loop of escalating disastrous outcomes. This fuelled the formation of the Food System Economics Commission (FSEC), a private consortium of scientists across nationalities and academic fields, aimed at identifying the challenges to food system security and the policy changes required to overcome them.

The current report summarises more than four years of FSEC research and includes the proceeds of more than 30 publications. It compares and contrasts the 'Current Trends' pathway with the 'Food System Transformation' pathway. As the names suggest, the former refers to future outcomes if policies continue to function as they are or inevitably worsen through the aforementioned feedback loop. In contrast, the transformation pathway incorporates FSEC's system optimizations.

"FSEC findings are based on rigorous economic modeling, in-depth literature reviews, and case studies. All background research is available at foodsystemeconomics.org."

Current Food System Forecasts

The current global food scenario is dire, highlighted by the United Nations (UN) Food and Agriculture Organisation (FAO), which revealed that in 2020 alone, agrifood systems' hidden environmental, health, and social costs exceeded 10 trillion USD. FSEC developed a novel economic model, translating ecological, cultural, environmental, and healthcare services into monetary form. Their findings validate the FAO's economic figure and warn that if 'business continues as usual,' more than 640 million individuals (121 million children) will suffer from hunger and malnutrition by 2050.

Other alarming demerits of current trends include a 70% increase in global obesity prevalence by 2050, a 2.7 °C rise in global temperatures as a direct consequence of agriculture-associated greenhouse gas (GHG) emissions by 2099, and the substantially reduced resilience of the system's ability to respond to stochastic changes.

Is the Food System Transformation Pathway outlook better?

Assuming effective policy implementation, following the FSEC's transformation pathway is expected to completely irradicate undernutrition by 2050, with an estimated 174 million individuals rescued from starvation-associated death. In contrast to being a current GHGH source, the transformation pathway could convert the global food system into a carbon sink, preventing global warming from exceeding a 1.4 °C rise (2099) and protecting 1.4 billion hectares of land. The biodiversity and ecological benefits are incalculable.

Enforcing this pathway would further release surplus nitrogen from the agricultural sector that could be purified and used for industrial applications at a fraction of today's costs. This pathway would also ensure food and financial security for the more than 400 million additional farmers required to bring about meaningful change.

Show me the numbers

When comparing current and transformation models, the economic gains of the latter are unprecedented, with the net increase estimates alone projected as being higher than the total GDP contributions of current food systems. This represents an equivalent of national economics appearing substantially more prominent than the economy portrays, with benefits highest in lower-income nations (12% larger than observed) and lower in the middle (3.4%) and low-income ones (1.7%).

" For perspective, for high-income countries, the total damages avoided through food system transformation would exceed their cumulative losses from the 2007-2008 financial crisis."

What will it cost?

While the Food System Transformation Pathway policy implementation process will be challenging to achieve, the infrastructure and implementation costs are substantially lower than potential policy-based ones. The FSEC estimates the annual costs not to exceed 0.2-0.4% of a country's GDP, a fraction of the 1.7-12% economic gains this pathway predicts.

"This new analysis highlights the urgent need for global food system transformation, but this will look different for different countries. For instance, in many parts of the world strategies should focus on lowering consumptions of animal products to reduce poor health and environmental impacts, while in other areas, change should focus on increasing access to these to combat undernutrition."

Some recommended steps include differential taxation, wherein economically and environmentally suboptimal crops are taxed higher than their more beneficial counterparts. Investing in agricultural research and farming-centric subsidiaries could help expedite this process.

So what can I do to help?

An unexcepted finding of this research was the profound impact of modifiable diets on economic climate and ecological outcomes.

"Global adoption of a predominantly plant-based diet accounted for around 75% of the total health and environmental benefits from food system transformation and would contribute an additional 2% per year to global GDP on average. Importantly, an economic boost is experienced across all income groups, from low-income countries to high-income countries."

So, if you want to contribute to this net benefit to humanity, reducing meat consumption and switching to a predominantly vegetarian diet may be the best place to start.