To define context-specific actions to address the environmental, social and health hidden costs of agrifood systems, it is important to understand their distribution across the agrifood systems typology (Figure 6). This systems perspective offers insights into the commonalities and disparities among agrifood systems, highlighting both the sources of hidden costs and the varying degrees of burden these costs impose on different agrifood systems.
FIGURE 6 Quantified hidden costs by agrifood systems category
SOURCE: Authors’ own elaboration.
In terms of commonalities across the typology, health hidden costs linked to NCDs are the largest contributor to the total quantified hidden costs in all agrifood systems except for those in the protracted crisis category. Environmental hidden costs are the second largest contributor for these categories.
Industrial and diversifying agrifood systems have the highest total quantified hidden costs (amounting to 5.9 trillion dollars), driven by health hidden costs linked to NCDs. The lowest total quantified hidden costs are in protracted crisis agrifood systems with only 0.4 trillion dollars, driven by environmental and social hidden costs.
Diversifying agrifood systems stand out from the other categories for having the largest total quantified environmental hidden costs (720 billion dollars). They are followed by industrial and formalizing agrifood systems, which have environmental hidden costs of an estimated 650 billion dollars each.
Expanding, traditional and protracted crisis categories together contribute the majority of quantified social hidden costs globally. The traditional category particularly grapples with high social hidden costs (370 billion dollars) while also facing high health hidden costs (comparable to those of the other categories) and an estimated 400 billion dollars of environmental hidden costs.
Comparing the total quantified hidden costs to the GDP provides further insights into the burden of these costs on national economies. Figure 7 shows that countries with protracted crisis and traditional agrifood systems have the highest burden of social hidden costs. Consequently, reducing poverty and undernourishment will remain the highest priorities in these countries, primarily by investing in inclusive rural transformation to ensure job creation and better livelihoods.
FIGURE 7 Quantified hidden costs as a share of gross domestic product by agrifood systems category
SOURCE: Authors’ own elaboration.
As for the burden of health hidden costs associated with NCDs, the diversifying category is at the peak (10 percent of GDP), while the industrial category has the smallest burden (4 percent of GDP). This pattern reflects the nutrition transition that accompanies structural transformation.10 Agricultural productivity, urbanization and changing food environments (including the increasing use of supermarkets) – that is, the indicators used to create the typology – are closely correlated with structural transformation and incomes. As structural transformation unfolds and incomes increase, demand for dietary diversity increases (Bennett’s law), improving essential nutrient intake, which may at the same time introduce foods with harmful attributes.11 The decreasing share of health hidden costs in GDP in formalizing and industrial agrifood systems also reflects higher financial and institutional capacity and better health systems to address the burden of NCD-related health hidden costs, as well as the rise in demand for healthier diets as incomes increase. The following section explores the different unhealthy dietary patterns in order to provide insights for policies aimed at avoiding the increase in health hidden costs traditionally observed along the agrifood systems transformation pathway.
The usefulness of the adopted typology is apparent when looking at countries in protracted crisis. It is notable that countries in this category have the highest burden of environmental and social hidden costs as a share of GDP, equivalent to 20 percent and 18 percent of GDP on average, respectively. In this category, 17 out of 21 countries are low-income countries (Figure 5), underlining the connections between low income levels and prolonged crisis. Countries in the protracted crisis category need to prioritize addressing the drivers of long-term crisis, such as conflict and insecurity, global and national economic shocks, and weather extremes,12 which would also contribute to decreasing the social and environmental hidden costs.
