India’s hidden costs of agrifood systems at $1.1 trillion, third-highest in the world, says new FAO report

India’s total hidden costs of agrifood systems were approximately $1.1 trillion, the third largest in the world after China and United States (US), according to the State of Food and Agriculture report by Food and Agriculture Organization (FAO) of the United Nations.

The report was released November 6, 2023 and assessed 154 countries. 

Hidden costs of agrifood systems include environmental costs from greenhouse gas and nitrogen emissions, water use, land-use change, health hidden costs from losses in productivity due to unhealthy dietary patterns and social hidden costs from poverty and productivity losses associated with undernourishment. 

India’s share was 8.8 per cent, out of the global quantified $12.7 trillion hidden costs associated with agrifood systems, while China contributed 20 per cent and US 12.3 per cent, as per the FAO’s report. 

The authors said uncertainty cannot be ruled out in this global estimated figure but even with this uncertainty, they could say with impact that the costs would amount to $10 trillion. 

In India, the burden of disease (productivity losses from dietary patterns) had the largest share (60 per cent) among hidden costs, followed by the social cost of poverty among agrifood workers (14 per cent) and then the environmental cost of nitrogen emissions (13 per cent). 

The hidden costs for China and US were $2.5 trillion and $1.5 trillion, respectively.

Environmental, social and health hidden costs: Top 10 countries (in millions)

The trend of unhealthy dietary patterns forming the largest share among the costs was true for the top two countries as well — 80.2 per cent and 85 per cent of the total costs, respectively. However, the second highest hidden agrifood costs in these countries were nitrogen emissions (15 per cent in China) and land use (7 per cent in US). 

In fact, globally, the dominant quantified hidden costs were those arising from dietary patterns that lead to diseases and lower labour productivity. These health-related costs exhibit considerable variation across countries, but are most prominent in high-and middle-income countries.

The report presented a first attempt at a national-level assessment for 154 countries, revealing the urgent need to factor these costs into decision-making to transform agrifood systems. 

The interactions of agrifood systems with the environment, the economy, nutrition, health and society are ultimately connected to UN-mandated Sustainable Development Goals (SDG) — especially the impact they can have on SDG 1 (no poverty), SDG 2 (zero hunger) and SDG 3 (good health and well-being). 

The majority of hidden costs were generated in upper-middle-income countries — 39 per cent of total quantified hidden costs — and high-income countries — 36 per cent of total costs. Lower-middle-income countries account for 22 per cent, while low-income countries make up 3 per cent.

Environmental costs, which are likely underestimated, corresponded to about 20 per cent of total quantified hidden costs caused by agrifood systems globally. Of these, more than half pertained to nitrogen emissions, mostly from runoff to surface waters and ammonia emissions to air. These were followed by the contributions of GHG emissions to climate change (30 per cent), land-use change costs (14 per cent) and water use (4 per cent). 

These results suggested there is considerable variation from country to country in the relative importance of environmental, social and health hidden costs, underscoring the need to produce national estimates of hidden costs and improve them with country-specific information, so they can be a useful input in decision- and policymaking processes.

Hidden costs differ not only in their magnitude, but also in their composition by income level. 

“The hidden costs described are meant to help identify entry points for the prioritisation of interventions and investments. In this respect, the first step should be to identify where, in a given agrifood system, hidden costs are more significant and due to what activities. Starting with the environmental dimension, estimates suggest that these costs occur mostly in primary production, with pre- and post-production costs comprising less than 2 per cent of total quantified hidden costs,” said the report.