Valuing the Invisible

The economic invisibility of agriculture and food systems

by Dustin Miller * 
DustinMiller Banner© Photo: Dustin Miller

What does ‘economic invisibility’ mean, and how does it relate to our planet’s agriculture and food systems?

Agricultural systems are most known for the benefits they deliver to society. An industrial cornfield in the US Corn Belt might yield several hundred bushels of corn per year for processing into foodstuffs, animal grain and/or ethanol and could be exported and consumed halfway across the planet. Elsewhere, a cooperative of small-scale cocoa farms in the Congo Basin could feed up to 80 per cent of the local population (as is frequently the case in lower income countries[1]), employ dozens of producers, and sustain the livelihoods of countless local families and communities.

In economic terms, these values are largely visible in the sense that they can be measured and accounted for in global and national economies. Some familiar metrics used in national accounts, for example, could include cost of labor, per capita income, taxes less subsidies on production, and food prices.

It is equally argued that agriculture and food systems provide a vast array of values, both positive and negative, that are economically invisible, i.e. unaccounted for. For example, agricultural production systems create significant costs to human wellbeing, largely in the form of health impacts during production (exposure to agrochemicals and antibiotics) and consumption (malnutrition). To illustrate the degree of these impacts, the economic impact of obesity alone is estimated at US$2 trillion every year, roughly equal to that of smoking or armed conflict [2].

Farming landscapes also provide invisible positive values in that they are an important source of cultural heritage and identity as well as social cohesion.

Economic invisibility also affects agriculture and food systems in another way, namely by the innumerable benefits provided by nature in the form of ecosystem services and biological diversity. Rarely are the invaluable contributions of nutrient cycling, pollination, pest control and water flow from catchment areas reflected in national agricultural production accounts, yet they are taken freely and unsustainably. Ecosystem degradation and biodiversity loss, a considerable portion of which is caused by agricultural production itself, ultimately undermines the natural resource base that the agricultural sector – and society as a whole – rely upon.

To put this into context, the true cost of producing one kilogram of wheat or one liter of milk can vary markedly from the price we pay as consumers if we take into account the role of all ecosystem services and biodiversity along the value chain. At the heart of this study, the question is being asked: are we paying the correct price for our food? In some cases, we may be paying too little (as the economic system does not capture the full range of public costs through negative impacts on natural and social capital), and in other instances we may be paying too much.

 

How will TEEBAgriFood make a difference?

‘The Economics of Ecosystems and Biodiversity’ (TEEB) is globally recognized as an approach for recognizing, demonstrating and capturing nature’s values in decision-making in order to improve human wellbeing. ‘TEEB for Agriculture & Food’ (TEEBAgriFood) is a research initiative that will apply this approach to the agriculture and food context, providing detailed insight into the importance of ecosystems and biodiversity, and the (visible and invisible) impacts of different production systems on human and ecological wellbeing, and showcasing policy opportunities that exist for taking forward pathways to sustainable development.

Visible and invisible Flows

TEEBAgriFood will explore the complex interaction between agricultural, human and ecological systems (or the ‘eco-agri-food systems complex’) by undertaking a comprehensive economic evaluation of the impacts and dependencies arising from the production, processing and distribution of food on natural and social capital.

An Interim Report, launched in December 2015, provides a first look at what this study seeks to achieve in terms of realizing change. Preliminary findings from a number of exploratory studies on livestock, rice, agroforestry, inland fisheries and palm oil reveal some critical insights into how today’s agro-ecological systems are suffering from a distorted economic and policy environment. The Report also provides a first step toward developing a holistic framework for valuation in which the full range of visible and invisible impacts and dependencies are accounted for.

Key outputs from this initiative will include two technical reports, exploring the scientific and economic foundations of the ‘eco-agri-food systems complex’, as well as the policy dimensions of this work, respectively. The latter component will identify a range of possible policy interventions at different levels (international, national and local) and across different stages of the value chain (production, processing and consumption), and offer specific recommendations for decision-makers in government and business to take forward in order to facilitate a transition towards more sustainable agricultural practices.

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* Dustin Miller is Technical Expert for TEEBAgriFood at the UNEP TEEB Office

[1] IFAD/UNEP (2013) ‘Smallholders, food security and the environment’, Rome.
[2] Dobbs, R. et al. (2014) Overcoming obesity: an initial economic analysis – discussion paper, McKinsey Global Institute.

 

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