Trucost News / 15 Oct 2015

Trucost reveals $3 trillion environmental cost of farming

Research for the Food and Agriculture Organization of the United Nations shows how the huge cost of conventional farming methods can be reduced by switching to more sustainable practices.

Industrialized farming practices cost the environment some $3 trillion per year* — more than the UK’s annual GDP — according to new research for the Food and Agriculture Organization of the United Nations by environmental consultants Trucost.

The research identifies a range of more sustainable farming practices that could greatly reduce the cost of environmental impacts and help countries cope with the challenge of increasing food production to meet the needs of a growing population. The environmental costs of rice farming in India, for example, could be cut by 25% while profits increase by 18% using a system of rice intensification.

The study is a first step in highlighting the costs to society of unsustainable food production practices, while offering a method of assessing alternative approaches to farming that make environmental and economic sense.

Farming depends on freely available environmental goods and services to provide healthy soil, a stable climate and clean supplies of water to grow crops and raise livestock. But agricultural pollution, land clearances and climate change are severely damaging these vital services.

The FAO commissioned Trucost to calculate the monetary value of these environmental impacts to raise awareness about the risks to business and society. The research covers farming practices in over 40 countries accounting for 80% of production of four commodity crops (maize, rice, soybean and wheat) and four livestock commodities (beef, cow milk, pork and poultry).

The FAO also asked Trucost to put a financial value on the reduced environmental costs of a range of alternative farming practices through four case studies: cattle farming in Brazil, rice farming in India, soybean farming in the USA and wheat farming in Germany.

The research finds that livestock farming costs the environment $1.81 trillion per year, equivalent to 134% of its production value. Beef production in Brazil accounted for the most costly environmental impacts at $596m, largely as a result of deforestation to clear land for pasture. The impacts of pork production in China cost $327m primarily due to land-use conversion in direct operations and in the supply chain for feed production.

Crop production costs $1.15 trillion per year, equivalent to 170% of its production value. Maize farming in China had the highest cost at $130m followed by the USA at $90m, both due to land-use change and water pollution. Wheat farming in Germany costs $62m primarily due to water pollution from nitrogen fertilizers.

The research finds that holistic grazing management in Brazil, where cattle are penned in smaller paddocks to allow grassland to recover elsewhere, can reduce environmental costs by 11% due to increased carbon sequestration.

Soybean farming in the US and wheat farming in Germany would benefit from switching to organic agricultural practices which utilize crop rotation, cover crops and manure instead of applying chemical fertilizers and pesticides. The research shows that profit margins for farms using organic techniques are higher, while the environmental costs are significantly lower.

The environmental costs of rice farming in India can be reduced by switching to a system of rice intensification, which uses intermittent flooding rather than continuous flooding to irrigate rice, cutting water consumption, greenhouse gas emissions and pollution.

“The high environmental cost of industrialized farming practices is not reflected in food prices, leaving us vulnerable to supply disruption and price shocks as the effects of climate change worsen,” said Richard Mattison, chief executive officer of Trucost. “Our research for the FAO shows how alternative approaches to agriculture can benefit farmers and the environment, ensuring sustainable and affordable food supplies for all.”

Nadia El-Hage Scialabba, FAO Senior Natural Resources Officer, said: “Unveiling the hidden costs of mainstream agriculture is necessary to convince decision-makers that investing in conversion to sustainable food and agriculture systems is a much cheaper option than current expenditures for environmental mitigation and public health. True food prices entail reflecting producers’ efforts to meet their needs for the time required to reproduce the value, while the cost of environmental damage should not paid by society through higher food prices but by those who irresponsibly abuse common goods offered by our natural environment.”

*A previous version of this press release incorrectly stated this figure as $3.33tn.

Further information

Download Natural Capital Impacts in Agriculture: Supporting Better Business Decision Making

Media contact

James Richens, +44 20 7160 9804, james.richens@trucost.com