Natural Capital: What Is the True Cost of Food?

Published on Spiegel Online International, by Anna Behrend, April 2, 2016.

A kilogram of new potatoes this week costs just €1.29 in some German supermarkets. But is that the whole story? Not by a long shot. Environmental costs are almost always completely ignored. Some, though, are trying to change that … //

… What Does Nature Cost?

How, though, can deforestation, water pollution or damaging emissions be converted into money? “If you value water correctly, it would be correlated with scarcity,” Mattison says. Doing so would mean that “products that rely on a lot of water in places where water is scarce would become more expensive.” That, though, frequently isn’t the case. “For example, in Jeddah (located in the Saudi Arabian desert) the price of water is three cents per cubic meter and in Copenhagen the price of water is more than $7 per cubic meter.” Often, he says, subsidies are to blame for such radical disparities in the cost of water. Trucost seeks to include such factors in its calculations.

Mattison and his colleagues also try to put a number on other forms of environmental damage, such as the effects of air pollution on humans and nature. In China, for example, harmful emissions cause economic damage worth 5 to 10 percent of the country’s gross domestic product, Mattison says. Those costs come in the form of additional medical expenditures because of respiratory disease, damage to buildings caused by acid rain and poor harvests. “Crop yield in China is on average 7 to 15 percent less than the global average,” he says. “In other words, you need more land to create crops because of the air pollution.”

On the strength of this approach, the company has calculated how much more a package of breakfast cereal, a bottle of fruit juice or a piece of cheese would have to cost if the demands on nature were considered. The result: cereal would cost 49 cents more, juice around 16 cents and cheese as much as a euro. The calculations for the three foodstuffs were made using standard median values. Were the products belonging to a specific brand to be examined, the results would be more varied. Prices differ depending on where and how a product is produced. Furthermore, it is impossible to include every environmental factor down to the last detail. The calculations would be far too complex.

… The true costs: … //

… The price depends on water: … //
… Difficult Calculations: … //
… Natural capital required for agricultural production: … //

… Fairy Dust:

But can such calculations have an influence on the production of foodstuffs and other products? For Mattison, the aim is the promotion of a new way of thinking that will ultimately result in more sustainable production. “I wouldn’t say that in every case food should become more expensive. I would just say that we need to lower the true cost of food.” His company is preparing the groundwork for that to happen.

Environmentalist Monbiot, though, doesn’t believe that putting a price tag on nature will solve any problems at all. Money, he says, is not some kind of “fairy dust that you sprinkle over all the unresolved problems.” Instead, he says, the idea of natural capital will simply increase the power of those who have money.
Trucost CEO Mattison also admits that the calculations themselves won’t change much. But he believes that change will come once damaging incentives are eliminated — such as subsidies for fossil fuels, excessive fertilization and water in arid regions. “In Saudi Arabia, they used to have a very significant subsidy for water. In fact, they used to give water for free for dairy farming and the cows were sprinkled every day with water. That water was created via desalinization, a very expensive process and very damaging to the environment as well because it is very carbon intensive.”

In some cases, Mattison says, reliance on natural resources can be significantly reduced by returning to traditional, more sustainable production methods. Unilever, for example, trained 400,000 tea farmers in various countries to spread tea-plant clippings on their fields. The method saves both fertilizer and money.

(full text, graphs).


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