954. The Economics of Food System Transformation

At the end of January, a distinguished group of researchers specializing in the economics of climate change, health and nutrition, agriculture, and natural resources collaborated on a global policy report entitled The Economics of the Food System Transformation. The report provides insightful excerpts that shed light on crucial aspects of our interconnected food system.

The intricacies of the food system, which encompasses the production, distribution, and consumption of food, are deeply intertwined with the political, social, economic, environmental, and cultural fabric of our society. Over the years, human creativity, determination, and technological advances within the food system have played a pivotal role in alleviating famine, reducing poverty, extending life spans, and sustaining a population that has doubled since the 1970s. However, this progress has been uneven around the world, leading to pressing issues such as chronic hunger, malnutrition, obesity, biodiversity loss, environmental degradation and climate change.

A striking revelation from the report is the staggering negative impact of the food system on human and global health, which exceeds $10 trillion annually - more than the system's contribution to global GDP. Specifically, health costs resulting from reduced labor productivity, including conditions such as obesity, hypertension, cancer and other non-communicable diseases, are estimated at a staggering $11 trillion per year. In addition, the environmental costs of greenhouse gas emissions and biodiversity loss associated with land use and production practices are projected at $3 trillion per year, equivalent to 12% of global GDP in 2020, or $15 trillion per year. In essence, the report underscores the alarming reality that our current food system causes more destruction than it creates value. The warning is clear: if we continue to ignore this reality, the world faces a dire fate.

Moreover, if current trends continue, the negative consequences will go beyond climate change. Projections indicate that the global food security crisis will persist until 2050, with 640 million people undernourished, including 121 million who are underweight. The problem is expected to be particularly severe in regions such as India, Southeast Asia and sub-Saharan Africa. At the same time, the prevalence of diets high in fat, sugar and salt and heavily reliant on processed foods is increasing. By 2050, the number of obese people worldwide is expected to increase by 70%, reaching 15% of the world's population. In particular, the direct healthcare costs of treating overweight and obesity are projected to rise from $600 billion today to a staggering $3 trillion by 2030.

Despite these alarming projections, food system issues have long been overlooked in the international discourse on climate change due to different stakeholder perspectives. Advancing food system transformation globally represents an opportunity to improve the livelihoods of hundreds of millions of people while addressing pressing climate, biodiversity and health crises. The current moment offers a timely opportunity to raise the ambition of food system transformation.

Estimates suggest that food system transformation could generate net benefits of $5-10 trillion annually, or 4-8% of global GDP in 2020. Coupled with transitions in non-food sectors, such as the transition to low-carbon energy, food system transformation will play a critical role in limiting global warming to below 1.5°C by the end of this century. The need for action on food system transformation is clear and urgent.

Following the signing of the Emirates Declaration by over 150 countries at COP28, a unique opportunity has emerged to drive food system transformation on a global scale. The key drivers of this transformation will be manifested through concerted efforts at the national and local levels. Recognizing that there is no one-size-fits-all approach, the report outlines five strategic priorities aimed at optimizing policy outcomes at these levels.

• Shift consumption patterns toward healthier diets: Regulation and taxation of unhealthy food marketing, nutritional guidance labeling on packaging, public procurement of healthy food options, etc.
• Resetting of incentives: Review of incentives by emphasizing subsidies from environmentally destructive agriculture to sustainable agriculture　
• Resetting of incentives: e.g., support for poor farmers through tax revenue for carbon sequestration and nitrogen pollution reduction
• ncouraging innovation that leads to increased labor productivity and livelihood opportunities: R&D by national and international research institutions that complements technology development in the private sector and anticipates the needs of small farmers and producers in low- and middle-income countries.
• Scaling-up safety nets to keep food affordable for the poorest

Reference
Ruggeri Laderchi, C., et al. (2024). The Economics of the Food System Transformation. Food System Economics Commission (FSEC), Global Policy Report. https://foodsystemeconomics.org/wp-content/uploads/FSEC-Global_Policy_R…

Contributor: IIYAMA Miyuki (Information Program)