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- Transforming global food systems could create 5-10 trillion USD of economic benefits every year.
- Food systems are currently destroying more value than they create – with inefficient and fragmented policies leading to hidden health and environmental costs upwards of 10 trillion USD per year.
- Fixing food systems requires an overhaul of food system policies, investment in innovation and enabling people to eat healthier and more environmentally sustainable diets.
- The cost of transformation is small compared to its multi-trillion dollar benefits.
- New economic modelling finds that food systems are a uniquely powerful means of addressing global climate, nature and health emergencies at the same time – while offering a better life to hundreds of millions of people.
The global food system does the crucial work of producing and distributing food to a growing population, but its hidden costs – caused by undernutrition, productivity loss and environmental damage – are currently estimated as equivalent to 10% of global GDP annually, higher than the system’s contribution to economies.
In the most ambitious study of food system economics to date, leading economists and scientists from the Food System Economics Commission (FSEC) chart how the hidden costs of the global food system will continue to mount in the future unless we see major shifts in policy and practice. They show how transforming the global food system could instead present an opportunity of up to 10 trillion USD per year and how the costs of accessing this opportunity are relatively small compared to the potential benefits.
Opportunity to turn costs into contribution
FSEC – a joint initiative by the Potsdam Institute for Climate Impact Research (PIK), The Food and Land Use Coalition (FOLU), and EAT – has brought together leading experts on the economics of climate change, health, nutrition, agriculture, and natural resources to develop a unique economic model. It provides the most comprehensive modelling of the impacts of two possible futures for the global food system to date: our Current Trends pathway, and the Food System Transformation pathway.
In the Current Trends pathway, by 2050 food insecurity will leave 640 million people (including 121 million children) underweight in some parts of the world, while obesity will increase by 70% globally. Food systems will continue to drive a third of global greenhouse gas emissions, which will contribute to 2.7 degrees of warming by the end of the century compared to pre-industrial periods. Food production will become increasingly vulnerable to climate change, with the likelihood of extreme events dramatically increasing.
However, FSEC also finds that the food system can instead be a significant contributor to economies, and drive solutions to health and climate challenges. In the Food System Transformation pathway, economists model that by 2050 better policies and practices could lead to undernutrition being eradicated, and cumulatively 174 million lives saved from premature death due to diet-related chronic disease. Food systems could become net carbon sinks by 2040, helping to limit global warming to below 1.5 degrees by the end of the century, protecting an additional 1.4 billion hectares of land, almost halving nitrogen surplus from agriculture, and reversing biodiversity loss. Furthermore, 400 million farm workers across the globe could enjoy a sufficient income.
FSEC also quantified the cost of achieving this transformation – estimated at the equivalent of 0.2-0.4 percent of global GDP per year – which is small relative to the multi-trillion dollar benefits it could bring.
Johan Rockström, Principal of FSEC and Director of PIK, said: “The costs of inaction to transform the broken food system will probably exceed the estimates in this assessment, given that the world continues to rapidly move along an extremely dangerous path whereby it is likely to not only breach the 1.5°C limit, but also face decades of overshoot, before potentially coming back to 1.5°C by the end of this century. Overshoot, even of 0.1-0.3 degrees, will add massive social costs across the world. Moreover, the only way to return back to 1.5°C is to phase out fossil-fuels, keep nature intact and transition food systems from source to sink of greenhouse gases. The global food system thereby holds the future of humanity on Earth in its hand.”
The current state of food systems
These findings follow recent reporting from the United Nations Food and Agriculture Organization (FAO), which brought renewed attention to the hidden costs of current food systems – including unhealthy diets, undernourishment and environmental damage. FSEC’s Global Policy Report shows it is possible to bring these costs down through a combination of ambitious policies and incentives.
However, many governments currently lack a coherent food system strategy, and instead fund a fragmented and often contradictory set of incentives and regulations. Responsibility for food systems is often spread across many different government departments, and existing incentives often work against health and nutritional outcomes, rather than toward them.
Dr. Ottmar Edenhofer, Co-chair of FSEC and Director of PIK said: “Rather than mortgaging our future and building up mounting costs that we will have to pay down the line, policymakers need to face the food system challenge head-on and make the changes which will reap huge short- and long-term benefits globally. This report should open up a much-needed conversation among key stakeholders about how we can access those benefits whilst leaving no one behind.”
The Food System Transformation pathway
The new FSEC Global Policy report outlines five broad areas of action – from technological innovation to policy incentives – to achieve food system transformation by 2050. It calls for the development of national food system transformation strategies, while emphasising that challenges and solutions vary significantly from country to country.
These strategies should include:
- Policy incentives for the agriculture and food industry, taxing production of the most damaging and unsustainable foods, and directing the income to make healthy foods more affordable to low income households. This could include, for example, taxing carbon and nitrogen pollution in food production.
- Realigning agriculture and food industry subsidies, supporting producers to shift their production toward healthy foods and sustainable practices. Many subsidies – such as un-targeted direct payments – currently work against health and environmental outcomes and could be reallocated.
- Encouraging healthier and more sustainable diets, tailored to local needs. There is no “one size fits all” approach, and solutions will include lowering consumptions of animal products in many parts of the world, while increasing access to it in others, to combat undernutrition.
- Investing in innovation to develop new agricultural technologies, and widen accessibility of existing ones, to support small-scale farmers. The spread of technologies – such as remote-sensing, in-field sensors and market access apps – can make farming radically more efficient and support producers, while lowering emissions.
- Ensuring no one is left behind, by proactively mitigating potential knock-on impacts such as increases in food prices and job losses. These mitigations could include direct subsidies and support for both farmers and consumers, and targeted investment in productive infrastructure, skills and access to finance for those most vulnerable, such as women farmers.
Gunhild Stordalen, Principal of FSEC and executive chair of EAT, said: “The food system has immense potential as preventative medicine for both people and planet, but is currently causing widespread damage. To avert this tragedy, global policymakers must revamp fragmented policies and regulations, utilising the food system’s power for positive change. FSEC offers an urgent economic rationale and provides political and economic decision-makers with the necessary evidence to transform food and land-use systems.”
Morgan Gillespy, Executive Director, the Food and Land Use Coalition, said: “Amidst alarming projections of increased food insecurity, food-related health issues, and climate impact, this new analysis not only strengthens the case for why we must transform our food systems but sets out a clear path forward. By 2050, we can considerably reduce undernutrition, turn food systems into net carbon sinks, protect 1.4 billion hectares of land, and uplift 400 million global farm workers. Now, the future hinges on our collective commitment to meaningful change.”
Tedros Adhanom Ghebreyesus, Director-General of the World Health Organisation, said: “This research shows that equitable transformation of global food systems can bring benefits to the health of people, planet and economies. By encouraging and increasing access to sustainable healthy diets, world leaders have an opportunity to save millions of lives, trillions of dollars, and the natural resources on which we depend. WHO is committed to supporting all countries and development partners to reshape the food environment and ensure food systems deliver health for all.”
Christiana Figueres, former executive secretary of the UN Framework Convention on Climate Change, said: “Today, the global food system is one of the biggest drivers of climate change, contributing one third of all greenhouse gas emissions. But this research by FSEC proves that a different reality is possible, and shows us what it would take to turn the food system into a net carbon sink by 2040. This opportunity should capture the attention of any policymaker who wants to secure a healthier future for the planet and for people.”
“As this report makes clear, today’s global food systems fail to adequately nourish billions of people and cause more planetary harm than good. The Rockefeller Foundation is committed to working with the Food Systems Economics Commission and other partners to transform those systems, making them more equitable and sustainable and ensuring they produce food that is good for people and planet alike.”
- Dr Rajiv J. Shah, President of The Rockefeller Foundation
“The economics of today’s food system are, sadly, broken beyond repair. Its so-called ‘hidden costs’ are harming our health and degrading our planet, while also worsening global inequalities. Changing the ways we produce and consume food will be critical to tackling climate change, protecting biodiversity, and building a better future. It is time for radical change.”
- Nicholas Stern, Professor of Economics and Government & Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics
“We already know that our food system is disastrous both for our bodies and our planet: it is the single biggest cause of deforestation, biodiversity loss, drought and fresh-water pollution, and the second-biggest cause of greenhouse gas emissions. It is also by far the biggest cause of preventable illness and death in the developed world. All of this exacerbates social inequality. It’s clear what needs to change, and yet it remains easier and cheaper to produce and eat food that is severely damaging to our health and the planet.
This report shows that there’s even more at stake than these vast health and environmental benefits, there is a huge economic benefit that governments must take action to capture. The economic burden of doing nothing is so great, that if we governments do not heed this call, we will end up not just sick, but impoverished.”
- Henry Dimbleby, author of the National Food Strategy an independent review for the UK government, and co-founder of Leon Restaurants, the Sustainable Restaurant Association and Chefs in Schools
“New York City is leading the world when it comes to combating climate change, because we’re starting with what’s on our plates,” said Kate MacKenzie. “Plant-powered food isn’t just good for our physical and mental health, but good for the planet as well. We’ve already made great strides in reducing our food emissions by leading with plant-based meals in our public hospitals and introducing Plant-Powered Fridays in our public schools, but we must also think of the bigger picture. The national and global food system has huge hidden costs, and it’s up to all of us to reduce them. I commend the Food Systems Economics Commission for giving leaders the tools to act decisively and the insights to soundly inform those decisions. No matter where you are, the way we eat impacts everything, and just as New York City is leading the way in reducing food-related greenhouse gas emissions through plant-based foods, now we’re going to be able to do more to impact life for future generations for the better, together.”
- Kate MacKenzie, Executive Director, Mayor’s Office of Food Policy, Office of the Mayor of New York City
“The new Global Policy Report from the Food System Economic Commission outlines the stark difference for our economies between business-as-usual and food systems transformation. With food systems carrying over $10 trillion of hidden costs for people, the environment and the economy, it is imperative that we urgently take action to deliver healthy, nutritious and sustainable food for all. By outlining five actions that policymakers should prioritise, the report provides a valuable resource for national-level decision makers to accelerate implementation and drive impact. It is possible to not only reduce the negative impacts of food, but to power a virtuous system that helps nature and people thrive.”
- Joao Campari, Global Food Practice Leader, WWF
“Food production increasingly has a broad environmental impact on our planet. About 30 percent of global greenhouse gas emissions come from agriculture. Additionally, agriculture accounts for approximately 80 percent of water usage. If we continue with business as usual, we run the risk of seriously damaging our planet. This report explores how revolutionizing the food system can lead to a better future by decoupling environmental impact from food production. Policymakers should take inspiration from this report and incorporate scientific findings into their decision-making processes to steer us towards a more sustainable path.”
- Børge Brende, President of the World Economic Forum
“Though food systems all over the world require transformation towards sustainably producing healthier food, every country needs to put its own pieces of the systems puzzle together, because real solutions grow from grassroots level. I count that FSEC will provide guidance and inspiration for all actors and stakeholders.”
- Gerda Verburg, UN Assistant Secretary-General and Coordinator of the Scaling-Up Nutrition Movement
“Rightly, the report underlines how serious the false economics of the food system are: maldistribution, externalised costs, inappropriate power. Current events are slowly pushing the food system into multiple crises – food is being weaponised, with gross hunger in some parts, over- and mal-consumption in others; and unnecessary diet-related ill-health and environmental damage everywhere. As crises amplify and cascade impacts into each other, food policy advisors, scientists, civil society organisations and the general public must redouble efforts to push for a reset of what is required from the food system. It sounds simple: good quality, health and environment enhancing produce from decent jobs and available everywhere to suit cultural tastes. In fact, it requires fierce focus and unity to ensure the proponents of business-as-usual do not regain the upper hand.”
- Professor Tim Lang, Emeritus Professor of Food Policy, City University London
“The restructuring of food systems is indisputably one of the greatest opportunities we have to reverse decades of damage to both the planet and to human health. There is no longer time to delay the inevitable – this report highlights the steps that policymakers must take now to create a healthier, more sustainable future.”
- Michael Pollan, journalist and Harvard professor
“Changes to our food will become an increasingly powerful part of the way we experience escalating climate and nature crises. Food systems are key drivers of climate change and nature loss, while also having to adapt and respond to the resulting shocks and stresses. This report brings invaluable evidence to support policymakers and decision takers in the urgent task of shifting investment, policies and practices toward sustainable food systems that provide healthy diets and economies and protect our planet.”
- Debbie Palmer, Director of Energy, Climate and Environment Directorate, UK Foreign, Commonwealth and Development Office
“The Economics of the Food System Transformation is a landmark report that shines a bright light on the hidden costs of food systems. The report’s recommendations align with the GEF’s work to design integrated, inclusive and impactful programs that will help transform food and land use systems. Furthermore, it provides decision-makers with concrete, science-based tools that can be applied to achieving one of the biggest steps we can take forward to address the triple planetary crisis.”
- Carlos Manuel Rodríguez, CEO and Chairperson, Global Environment Facility
“Overlapping and reinforcing crises over recent years have proven just how vulnerable our food supply chains are to shocks – including extreme weather events driven by climate change. This research brings new data to the discussion on the hidden costs of our current food system, and shows that in a world of increasing instability, the resilience, shape and nature of our food system needs to be brought to the top of the international agenda – both as a major risk if left unaddressed – and a major opportunity for change.”
- Inger Andersen, Under-Secretary-General of the United Nations and Executive Director of the United Nations Environment Programme
“I welcome the release of The Economics of the Food System Transformation report, which underlines the urgency and economic case for food system transformation. To overcome the tension that ambitious change will give rise to, we must take a systemic and multistakeholder collaborative approach. The world should be looking at business to drive innovative and transformative solutions both towards regenerative agriculture, as well as healthy and sustainable food consumption. Business needs to be held accountable for its contributions to the food system transformation and supported by relevant financial and policy frameworks.”
- Peter Bakker, President and CEO of the World Business Council for Sustainable Development (WBCSD)
“Our global agrifood systems, while successful in feeding the world, have simultaneously imposed staggering hidden costs. Reflecting a consensus between FAO and FSEC these are estimated to be greater than 10 trillion USD annually. These costs, manifesting in health, environmental, and social issues, highlight the critical need for systemic changes to ensure sustainable, healthy, and inclusive agrifood systems globally.”
- Maximo Torero, Chief Economist, UN Food and Agriculture Organization (FAO)
“The global food system is a network that interlinks us all, yet it fails to serve each of us equitably. This imbalance exerts a significant strain on global economies, escalating debt in human health and climate spheres—a burden disproportionately borne by the most vulnerable, particularly small-scale farmers and rural communities. This report plays a crucial role in guiding policymakers. It offers clear directions on mitigating the harms perpetuated by the current system and paves the way towards a more sustainable and equitable framework that promises collective benefits in the long term.”
- Alvaro Lario, President, International Fund for Agricultural Development
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The Food System Economics Commission is an independent academic commission, set up to equip political and economic decision-makers with tools and evidence to shift food and land-use systems.
It brings together leading experts across the economics of climate change, health, nutrition, agriculture and natural resources, representing organisations including the World Health Organisation, World Bank, Potsdam Institute for Climate Impact Research, London School of Economics, World Resources Institute Africa, and many more.
FSEC is a joint initiative by:
EAT (Lead communications and engagement partner) is a non-profit dedicated to transforming our global food system through EAT partnering with a range of foundations, academic institutions, organizations and companies and collaborating on programs. It was founded by the Strawberry Foundation, the Stockholm Resilience Centre and Wellcome, to spearhead a holistic approach to today’s food related challenges.
The Food and Land Use Coalition (FOLU) (Lead research partner) is a global community of country platforms, partner organizations and Ambassadors working to advance sustainability, equity and resilience in food and land use systems. Created in 2017, FOLU supports diversity, embraces disruptive thinking and forges consensus through an evidence-based approach. The coalition empowers farmers, policymakers, businesses, investors and civil society to unlock collective action at scale.
The Potsdam Institute for Climate Impact Research (PIK) (Lead research partner) provides relevant scientific advice for policy decision-making for a safe and just climate future. Its areas of research include both natural science and social science, planetary risks and solutions, planetary boundaries, and managing Global Commons.