In 2014, the FAO published the report ‘Food wastage footprint: full cost accounting’. The report was the result of the Full Cost Accounting Project (FCA) led by Nadia El-Hage Scialabba (Senior Officer for Environment and Sustainable Development at the Climate, Energy and Tenure Division). In conjunction with FiBL, the Swiss research institute for organic agriculture, a method was developed to calculate the hidden costs of food production, specifically the part of global food production that is wasted.
Results of the investigation included a table showing constants from which the hidden costs of water pollution, greenhouse gas emissions, and other effects could be calculated. For example, FAO linked the emission of 1 kg of greenhouse gas to a specific sum of money — the cost of the resulting global warming. Thanks to this method, every organization can now work out the hidden costs per product as long as the CO2 footprint, water footprint, and soil erosion for the product are known.
For health costs, additial modelling was done by EY. These costs are calculated based upon the impact that pesticides have on consumers as well as the working conditions of farmers and farm labourers. To determine the pesticide exposure level, data of scientists Peter Fantke and Oliver Jolliet were used as well as data from EFSA (European Food Safety Authority) and Ecolnvent. To look at “impact on health” and for this, the WHO (World Health Organisation) measuring unit DALY was used. DALY stands for Disability Adjusted Life Years. Fantke and Jolliet published a list of pesticides for which the DALY impact was estimated. By combining all data, accountancy firm Ernst & Young (EY) calculated the impacts for organic and non-organic products. For the impact of working conditions an analysis was made of the number of work related accidents and the relation to absenteeism.
The calculations were provided by accountancy EY (previously Ernst & Young) and by Soil & More International, a daughter company of Eosta. EY focused mainly on health and social impact, while Soil & More looked mainly at climate, soil, water and biodiversity. EY en Soil & More cooperated with the FAO, FiBL, EFSA, EcoInvent and individual scientists to develop a practical approach for True Cost Accounting in SME companies, building on previous work by NCC, WHO, WBCSD, A4S and TEEbAg.
Since True Cost Accounting is still in full development, many impacts have not been included in the model yet. We expect to find that the differences between organic and industrial farming in reality will even be larger.