Catalyzing Action: Trucost Quantifies Environmental Costs of Food Production

Catalyzing Action: Trucost Quantifies Environmental Costs of Food Production
From foodtank.com, by Emily Nink

Trucost is an organization that provides data to business clients to help firms understand their economic dependencies on natural capital. Food Tank interviewed Libby Bernick, North American Senior Vice President for Trucost, to find out how Trucost works to quantify environmental externalities in the food system.

Food Tank (FT): What does the true cost of food include? How does Trucost work to communicate this concept to both producers and consumers?

Libby Bernick (LB): The true cost of food includes all the environmental costs and benefits of producing food that are not part of the market price we pay. For example, water pollution from the excessive use of fertilizer creates a cost for businesses or communities that then have to pay to treat the water so they can safely use it. And fossil fuels that are used to grow crops create air pollution that harms our health and increases the cost of health care. By putting a dollar value on environmental impacts, Trucost helps producers uncover hidden risks across global operations and supply chains. Putting monetary value on impacts translates environmental issues into business terms, and allows producers to consider their environmental costs alongside financial costs.

Communicating true cost also helps engage consumers. For many people, nature can be a bit abstract or perhaps a place where you might go for a Sunday stroll. Seeing the true cost of food shows consumers that these environmental impacts are real, they are being paid for by society, and they drag down our economies. 

FT: What are some of the methodologies Trucost uses to investigate externalities- for example, in researching meat production? 

LB: Trucost’s goal is to direct capital investments toward more sustainable business models, so we compare business-as-usual scenarios to more sustainable methods of production to quantify either the net benefit or positive impacts. We use a systems approach that accounts for a wide range of environmental impacts, like greenhouse gas emissions, air and water pollution, water use, and land use, among others. By using the best scientific data available, models that assess the entire life cycle of a product, and standard environmental economic accounting methods, we quantify environmental costs for commodities across consumer supply chains. For example, we recently analyzed the true cost of meat production as part of a broader research effort with the Food and Agriculture Organization. The analysis quantified the true cost of livestock impacts—pork, poultry, and cattle—across more than 30 different countries, taking into account the direct operations of livestock production and all of the environmental costs of the raw materials within their supply chains. The full report, “Natural Capital Impacts in Agriculture: Supporting Better Business Decision Making,” includes detailed findings, methodologies for valuing externalities, and perhaps most importantly, a framework that can be adopted to measure the net environmental benefits of different agricultural management practices.

FT: What are some policy mechanisms that can work to address the true cost of food?

LB: Carbon pricing is a great place to start, because some of the largest environmental impacts from food are from greenhouse gas emissions. Many of the world’s leading businesses agree that pricing carbon is a vital step to avoid the economic consequences of a changing climate. Policymakers can also use the true cost of food production to allocate scarce resources, like water. For example, knowing the full community value of water allows agencies to better allocate water to satisfy basic human needs as well as the continued vitality of businesses within the local economy. Policymakers should also incorporate these environmental costs when deciding if and how to provide subsidies, or when weighing the costs and benefits of environmental regulations. 

FT: How can industry leaders, public sector initiatives, and civil society organizations work together more cohesively for a better food system?

LB: From Trucost’s point of view, valuing the true cost of food can be the catalyst that shifts awareness to action, driving investment in a better food system. By bringing together players from the whole system in one room—businesses, communities, and environmental organizations—to assess scientific models of environmental costs gives people common ground to set priorities. We have used this approach to weigh the environmental costs and financial costs of different options to identify win-win situations. It’s also a great way to bypass some of the hyperbole and subjectivity that can sometimes stall the conversation when diverse groups of people with competing interests get together. 

FT: Are there pressing food and agriculture issues that Trucost is most concerned with, or is the focus more long-term?

LB: We are actively working on water scarcity, which is a very acute issue. Seven of the world’s 10 largest cities are in water-scarce areas, and these are the very locations businesses want to grow.  Droughts in Sao Paolo, Brazil and Modesto, California are taking a toll on growers and producers, forcing them to confront business-as-usual approaches to managing water. Part of the problem is that the market has failed because water is not priced according to its scarcity; in other words, where water is most scarce it’s often cheapest. This creates an incentive for businesses to grow in areas where that growth is least sustainable. We are helping businesses understand the true value of water so they can invest in water stewardship and plan for growth.  

FT: How do food justice and food access for low-income communities play a role in Trucost's vision for a more sustainable food system?

LB: The current economic system only accounts for financial wealth, and needs to recognize the value of natural and social capital.  Accounting for other forms of capital will provide for economic growth in a way that serves all people equitably.

Food Tank will host a panel and luncheon to launch a new research report highlighting the external costs of food production and policy mechanisms to create a more transparent, accountable, and sustainable food system. The event will take place at American University’s School of International Service on Thursday, November 12th, 2015 at 10:30 AM EST and a live webcast will be available. A limited number of tickets are available. Register here today!

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