The prices of food we see on the supermarket shelf seldom reflect actual costs to the environment or human health. Ecologically damaging, unhealthy foods – such as unsustainably farmed animal products or sugary cereals – are often cheaper for consumers and more profitable for producers. This is because the real costs of cheap food are “externalized”. They show up elsewhere as healthcare costs for treatment of diseases like diabetes or as costs related to degradation of nature, like deforestation or climate change. Indeed, the Scientific Group from the United Nations Food Systems Summit estimates that food systems globally cost nearly three times the market value of food.
Promising approach
One promising approach to this complex challenge is true cost accounting for food (TCAF). It seeks to assess the full social, environmental, and health impacts of food production and consumption in monetary terms. Some initial methodologies for such accounting have been developed. But they still contain major gaps, such as failure to account for human health impacts. Meanwhile, policymakers finally appear ready to take such cost accounting more seriously – including Switzerland, whose 2030 Development strategy states that “the Confederation is committed to ensuring true cost pricing by internalizing external costs”.
Incentivizing a sustainable food system
Against this backdrop, the TRUE-COST project seeks to help transform the Swiss food system towards sustainability and resiliency by developing ways to introduce true cost accounting for food. The project assumes that properly pricing externalities could lead to behaviour change among actors all along food value chains. This will require identification of the necessary framework conditions, or policies, for calculation and implementation of true costs. A mix of taxes and subsidies at different levels will be necessary to ensure acceptance of true cost accounting along the value chains that supply Swiss consumers and beyond. But the most-promising combinations of policy levers remain unknown without further research.
More specifically, the goals of the current project are:
- To establish knowledge transfer among project partners as well as to the wider public, including achieving a common understanding of true cost accounting and a harmonized methodology for Switzerland;
- To identify the true cost of the Swiss food system by means of impact modelling and economic modelling, including exploration of compensation mechanisms;
- To build consensus regarding the role of true cost accounting and the need for policy changes;
- To explore corresponding opportunities for the private sector, including the impacts on business models;
- To investigate consumer responses to different ways of communicating about true cost accounting for food.
Taken together, these goals can facilitate agreements between key stakeholders about how best to implement true cost accounting in Switzerland.
CDE’s role
The project brings together experts in agriculture, public health, environmental engineering, behavioural science, and more from several Swiss Universities. In collaboration with partners, CDE researchers are developing a system-based theory of change towards true cost accounting for food, conceptualizing transition pathways and scenarios for acceptable mechanisms of compensation, and analysing the underlying Swiss policy framework.
