Shift Incentives to Transform the Food System

REPORT FROM DAVOS

The World Economic Forum has identified all 5 of the leading global risks as related to climate and environment:

  1. Extreme weather
  2. Climate action failure
  3. Natural disasters
  4. Biodiversity loss
  5. Human-made environmental disasters

Climate breakdown is accelerating, and global carbon emissions are not declining. The loss of climate stability is not a small or narrow problem. It affects all value-creation everywhere. More than 50% of global economic production (GDP) is vulnerable to climate disruption, in our current scenario. As a result:

  1. The window of opportunity to shift efficiently to climate-smart practices is rapidly closing, and
  2. Status quo investment strategies will become obsolete far faster than expected.

Most institutions are not prepared for the speed or severity of what we are witnessing. As Børge Brende notes in his preface to the Global Risks Report:

the growing palpability of shared economic, environmental and societal risks signals that the horizon has shortened for preventing—or even mitigating—some of the direst consequences of global risks.

Each of the 5 likeliest-to-occur global risks is also among the 10 highest-impact risks. Each of them presents structural costs that far exceed the disaster preparedness or economic resilience planning budgets of most nations.

One major priority—which is more actionable than most leaders realize—is the shifting of incentives from old industrial activities that undermine natural capital to new climate-smart practices that build natural capital. If well-designed, such shifting of incentives will generate as much or more measurable market value as the old model.

Transformation of the global food system will be a vital determining factor in our efforts to correct course and prevent extreme climate breakdown. This includes agricultural production and land use strategies, as well as a serious, multilevel effort to realign national priorities with investment in natural capital—the underlying Earth-systems value we cannot replicate or replace—and leveraging the immense value of human health and wellbeing gains from healthier food.

The EAT Foundation, together with the Food and Land Use Coalition and the Potsdam Institute for Climate Impact Research, launched a new Food System Economics Commission at the 2020 World Economic Forum in Davos.

Dr. Gunhild Stordalen, Founder and Executive Chair of the EAT Foundation, said in Davos that “This transition just might be our greatest opportunity for the world to come together to make the future we want.” About the Food System Economics Commission, she explained:

The Commission is designed to provide a comprehensive understanding of the economics of food systems, the environmental, health and social costs across them, and to provide a better analysis to support policy design and investment decisions that make the great food system transformation possible.

The Commission will issue a final report for the United Nations Food System Summit in 2021.

The World Economic Forum report “Incentivizing Food System Transformation” lays out four pathways for improving the human and planetary health of food production and consumption:

  1. Repurposing public investment and policies
  2. Business model innovation
  3. Institutional investment
  4. Consumer behavioural change

No one of these pathways can achieve the needed overall transformation on its own. They must be mutually reinforcing and pull in support from research and innovation leaders, policy advocates, everyday consumers, government action, development partners, and food producers and industry. Ultimately, banking and finance must restructure critical incentives built into their operations, to favor healthy, sustainable food production and consumption.

Dr. Agnes Kalibata, President of the Alliance for a Green Revolution in Africa (AGRA) said only those who make measurable commitments to transform the food system will be invited to address the United Nations Food System Summit in 2021.

The WEF report on food system transformation reveals overwhelming costs stemming from existing inefficiencies and immense opportunities that come with building new efficiencies. For instance, 95% of the world’s land will be degraded by 2050, if we continue current unsustainable practices, and:

Nearly one-third of the food produced each year is uneaten. Food loss and waste cost the global economy $936 billion annually and account for 8% of planet-warming greenhouse gases.[8] A recent estimate suggests that overall, food systems cost society $12 trillion dollars in health, economic and environmental costs – 20% more than the market value of food systems.[9]

Global heating is disrupting food and water supplies already, and putting unmanageable pressure on farmers. Insurers are demanding public assistance, a shift to sustainable practices, and healthier food choices, from clients. Governments, communities, and private enterprise, all stand to access vast new investment opportunities if food-system savings can be maximized and mobilized.

In 2020, we must not only act locally, nationally, and as a global community, to reduce each of the 5 global risks listed above—to secure food and water supplies and provide a solid foundation for future prosperity. We must also achieve an unprecedented level of cooperative multifaceted innovation, linked to deep understanding of Earth systems, and re-learn how we value committed and invested funds.

Planetary change won’t wait for us to get up to speed. We need to start optimizing, saving, redirecting, and building new value, through a healthier, more sustainable food system, starting today.


Go deeper into the food system opportunities for improved human health and natural system sustainability: