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Unlocking the Potential of Data to Implement True Cost Accounting for Food Systems Transformation

TMG will soon publish a report and a European database to enhance the accessibility and usability of the True Cost Accounting methodology

by Siranush Ghukasyan, Gültac Cinar, Olivia Riemer | 2024-05-15

Unlocking the Potential of Data to Implement True Cost Accounting for Food Systems Transformation

We often hear that global food systems are broken. Over the past five decades, there have been substantial shifts in the global dietary patterns towards energy-intensive and animal-based foods. These changes have caused significant environmental damage as well as the rising prevalence of obesity and non-communicable diseases, posing a significant challenge to the health and well-being of the global population and the environment (IPCC, 2019). Our diets create present and future costs of environmental consequences of food production and consumption, expenses incurred by healthcare due to diet-related illnesses, and damage costs associated with social injustices such as the exploitation of underpaid farm workers or the utilization of forced child labour. These so-called hidden costs, however, are not reflected in the price we pay for food. In its flagship 2023 SOFA report, the Food and Agriculture Organization of the United Nations (FAO) estimated that the hidden costs of agrifood systems amount to 10 trillion 2020 purchasing power parity (PPP) dollars, or roughly 10 percent of the global gross domestic product.

True Cost Accounting of Diets

For a transition to more sustainable and healthy diets and the consequent transformation of food systems, we urgently need a systemic approach to address these hidden costs holistically. True Cost Accounting (TCA) has the potential to do so. TCA is a novel approach to holistically consider the environmental, social and health impacts of systems and to help identify strategies for reducing the system’s hidden costs that occur elsewhere or in the future. By framing sustainability issues in monetary terms, TCA simplifies the communication and integration of sustainability aspects into decision making by consumers, businesses, and policy makers. In the context of dietary analysis, TCA can be used to identify the key factors contributing to the negative impacts and true costs of diets, prioritize improvement actions and develop effective strategies to promote sustainable and healthy diets.

However, the lack of data is described as one of the main barriers to adopting TCA. TCA analyses heavily rely on production, consumption, and impact data associated with agrifood systems. This data is often reported as either unavailable, challenging to obtain or requiring substantial primary data collection efforts.

Under the Horizon Europe PLAN’EAT project, TMG leads the work on TCA analysis of European diets and explores the data aspects of TCA of diets from various angles. Firstly, in a comprehensive data gap analysis, TMG identified the extent to which secondary data sources can be utilized to assess the true costs of diets in Europe and highlighted the existing data gaps. Secondly, TMG is developing a European database on the true costs of food to enhance secondary data availability for TCA analysis.

Status quo: TMG’s findings on critical data gaps

To address one of the primary obstacles facing TCA – data scarcity – TMG conducted an extensive analysis to identify the critical data gaps for TCA implementation in the context of dietary analysis.

TMG analysed the availability of food consumption data, input-output data, impact data and valuation data. The findings of the report indicated that although food consumption data is freely available for various age groups across European countries, it lacks granularity on socio-economic levels and for population groups with specific health issues. While the input data for production (e.g. information on the use of pesticides in Germany) is available and accessible at an aggregated country level, it often lacks product-specific details (e.g. information on the pesticide use for German potato production), necessitating the use of paid data sources. The findings also identified several gaps within the environmental, social, and human health data domains. While environmental impact data and corresponding monetization metrics showed relatively good availability and accessibility, the report identified significant data gaps regarding the social and human health impacts as well as monetization data for social impacts.

The resulting report also delves into the challenges posed by data gaps, outlining the consequences for various stakeholders. Policymakers, for instance, may struggle to formulate effective strategies for promoting sustainable and healthy diets, while businesses may fail to recognize opportunities for transformation. Consumers lack comprehensive information to guide their dietary choices, and TCA researchers face data limitations in providing essential analysis for decision-making.

The report proposes a strategy for how to bridge or overcome these gaps and how to enhance the overall quality, accessibility, and usability of TCA data. One key recommendation to improve the decision of TCA is the standardization of data collection frameworks as well as the establishment of standardized reporting guidelines by international standard-setting bodies to ensure comparability across different datasets. Additionally, the report calls for alignment of TCA data harmonization with the existing EU initiatives, such as the Product Environmental Footprint (PEF) and the Organization Environmental Footprint (OEF).

Given that TCA had not been previously applied in a dietary context, the report also introduced a novel methodology of TCA for dietary assessment.

The full and summary version of the report is expected to be available to the wider audience in the summer, once the full version submitted to the European Commission goes through all the stages of formal approval.

What’s next: TMG’s TCA database initiative

To advance the availability and access to secondary TCA data, TMG, in collaboration with the TCA consultancy True Price, is developing an open-access database. The database, which is expected to be released later this year will enable users to access key data concerning the environmental, social, and health impacts and associated true costs of a broad spectrum of food products from around the world that are being consumed in Europe. In total, the database will cover over 200 raw or primarily processed food items sourced from over 80 countries, adding up to over 2000 product-country combinations in total. The database covers ca. 12 hidden impacts and true costs that occur during the cultivation stage and the first simple processing stage.

Different stakeholders can use the database for various purposes: businesses can use the database to gain insights into potential areas of high impact and pinpoint where action may be needed within their supply chains. National and EU policymakers can use the database to identify negative food production and consumption patterns and thereby inform the development of regulations and policies aimed at promoting sustainability in the food industry. For example, TMG is currently working with the TCA consultancy Patos on a study that will use the database to assess the true costs of diets in Germany, France, and Ireland. The study will compare these true costs with those associated with diets following national dietary guidelines and the planetary health diet designed by EAT Lancet. This allows us to identify the dietary patterns high in hidden costs and design recommendations for policies incentivizing sustainable practices to eradicate these hidden costs. The findings from the case studies are expected to be compiled into a report scheduled for release in October 2024 as part of the PLAN'EAT project deliverables.

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