Unlocking trillions: Advantages of food systems transformation

According to the Global Policy Report from the Food System Economics Commission (FSEC), there is a pressing need for a complete overhaul of existing food systems. The report highlights that such transformation is not only social and environmental but also have immense economic potential.

Our current food systems have managed to feed the growing global population, but they are now reaching a critical point. This is particularly concerning since the world’s population is expected to grow, resulting in an even greater demand for food.

A FSEC Global Policy Report analyses the hidden costs associated with today’s food systems and provides a framework for addressing these issues. According to this analysis, the benefits of a food systems transformation are worth between 5 and 10 trillion USD per year.  The impact can be seen in the form of improved nutrition and food security, but also reduced carbon emissions, better energy usage, and a more protected environment.

Achieving these results would however require a yearly investment of between 200 and  500 billion USD, highlights Vera Songwe, Nonresident Senior Fellow at the Brookings Institution, who contributed to the Report:

“This change is essential, and we can make it happen. To start, we must provide a menu of options since we are speaking to the entire planet – all 9 billion of us.”

Not a one-size-fits-all solution

The challenge lies in making the right policy decisions, which is possible but not easy.

Regional differences must be factored in when making decisions and policies. While, there is growing recognition that systemic changes are needed to provide access to healthy and sustainable diets, more attention should be paid to the different priorities across regions. According to the report, more than 770 million  people worldwide are obese, while 730 million are undernourished.

The report provides a framework for addressing these issues, which can lead to enormous benefits, estimated to be around 10 trillion USD annually, “more than food systems contribute to global GDP”. Additionally, external benefits include reduced carbon emissions, better energy usage, and a more protected environment.

Modelling the food system transformation

The report’s core model examines the period from 2020 to 2050, contrasting business-as-usual with the Food System Transformation (FST) path. The FST path could contribute five to ten trillion dollars annually, showcasing a significant economic benefit compared to the estimated 200 to 500 billion USD yearly cost of global food system transformation.

The report advocates for policy adjustments, including tax incentives, agricultural redirection, promoting healthier diets, and investing in innovation. Inclusivity is a key focus, where short-term negative impacts on certain populations should be mitigated so that economic gains benefit everyone.

To assess the economics of transforming food systems, two different methods are used and compared.  A top-down approach modelling how individuals acquire income, environment, and health is juxtaposed with a bottom-up approach. The latter assesses the hidden costs of today’s food systems and thereafter calculates the benefits and costs of FST item by item. The difference between the gross benefits and costs provides an alternative estimate of the net economic benefit of the FST.

Simon Dietz, a Professor of Environmental Policy, who collaborated to the report, emphasized the conceptual coherence of the two approaches – both yielded similar results, which provides a  robust estimate.

The power of a healthy diet

Changing diets holds significant transformative potential, contributing to 70% of the overall transformation, equivalent to a 5% increase in global GDP in 2020. Stella Nordhagen from the Global Alliance for Improved Nutrition highlights the powerful impact of consumer choices on health, food supply chains, and the entire food system.

The FSEC model envisions a shift to healthy diets globally by 2050, following principles from the EAT-Lancet Commission. While again not a one-size-fits-all solution, this change could eliminate undernutrition, cut diet-related healthcare costs, potentially save 174 million lives by 2050, and offer environmental benefits. The report notes that incorporating more legumes into healthy diets diversifies crop production and reduces reliance on nitrogen fertilizers.

Nordhagen called for innovation and investment to support nutritious foods that are environmentally friendly and accessible to everyone.

“More experimentation and research are required to identify evidence-based solutions that are good for people and the planet.”

Environmental benefits

Napoko Ishii, professor at the University of Tokyo’s presentation, came up with a remarkable result: the current food system could become a carbon sink by 2040, reverse biodiversity loss, particularly in Latin America. This is an incredible breakthrough but will require much investment and effort.

The 2022 IPCC report emphasizes the crucial role of the Agriculture, Forestry, and Other Land Use (AFOLU) sector in climate change mitigation. It highlights that effective management of land can serve as a substantial carbon sink, offering significant opportunities for reducing greenhouse gas emissions. The report underscores that, with appropriate adaptations to climate change, the AFOLU sector can play a pivotal role in not only storing carbon but also in providing essential resources like food, wood, and renewable materials, all while contributing to biodiversity conservation

However, Professor Ishii emphasized that to meet the Paris Agreement,  we must combine energy, food, and economic transformation. The most important step is to put the real price on natural capital to ensure sustainable food production and environmental.

“More sustainable food production could be the key that unlocks a brighter future.”