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Where does the number of USD $ 4.8 trillion of externalised costs per year come from?

In 2014, the FAO published the report ‘Food wastage footprint: full cost accounting’. In close cooperation with the Swiss Agricultural Research Institute FIBL, a methodology was developed as to how one can calculate the external costs of food production. 

The methodology not only included the value of wasted food but also all the environmental and social costs involved in producing the food. On top of economic costs totalling more than USD $1 billion dollars each year, the report calculated that annual ecological and social costs - just for wasted food - amounted to USD $700 billion and USD $900 billion respectively.
Considering that approximately 1/3 of the global food production is wasted, this leads to an estimate of hidden costs of USD $ 2100 billion in environmental damage and USD $2700 billion in social costs; together USD $ 4.8 trillion.

It must be noted that the total cost of wasted food will differ for different product groups. Since the ratio of different product groups will differ for consumed food and wasted food, extrapolation of the global cost of waste to the global cost of food production will increase the margin of error. 

However a more recent FAO report, "Natural Capital Impacts in Agriculture" from 2015, confirmed the number for environmental damage, evaluating the environmental costs of global agriculture to be over USD $ 2330 billion (USD $ 2.33 trillion) per year, which is near enough the earlier estimated USD $ 2100 billion.

These costs are not paid for at the grocery checkout counter, yet consumers today and future generations tomorrow will bear the brunt of this huge financial burden through taxes and healthcare costs.


Website FAO:
FAO report "Food wastage footprint: full cost accounting - 2014"  
FAO report "Natural Capital Impacts in Agriculture - 2015

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