BACKGROUND

Sustainable agrifood systems provide enough quality, healthy, and affordable food to all without imposing a burden on planetary and social boundaries. By this standard, it is quite clear that agrifood systems in many countries are not sustainable as they generate substantial environmental, social, and health costs while failing to provide affordable food to all (FAO et al., 2020).

This implies the need to have a good understanding of the extent to which those externalities are present in country specific agrifood systems. The key challenge is that such externalities are not reflected in market prices (Baker et al., 2020), being therefore hidden factors to drivers of choices by market players, as the link between market activity and those social and environmental harms is not directly visible or reflected in the incentives that drive economic systems (UNFSS, 2021). Internalizing the externalities of the agrifood systems will require the full estimation of costs, including the measurement of externalities through “True Cost Accounting” (TCA) approaches.

The Nature-Positive Solutions (Nature+) initiative seeks to address this issue by studying the true costs of food in Kenya and Vietnam. It follows the approaches suggested in an analytical framework (Benfica, 2023). The analytical framework provides the key elements for the application of approaches to measure the true costs of food in Kenya and Vietnam. It highlights: (a) Key research questions, their relevance, and policy implications; (b) How the TCA analytical framework fits in The Economics of Ecosystems and Biodiversity (TEEB) framework; (c) Country selection and geographic focus – national, sub-national; (d) Data requirements for estimating the true costs, including household surveys, workers’ surveys, externally compiled Global Impact Database (GID), and monetization factors; and (e) A step-by-step process for estimating the true costs in the study area and country level GID analysis. It is on those grounds that this note is based.

OBJECTIVE AND TASKS

The consultancy is aimed at estimating the true costs of food in Kenya and Vietnam. There are two streams of True Cost estimations: (a) TCA analysis using household level data for the Nature + target area; and (b) GID based analysis, primarily national and scalable to the Nature+ area.

The following are the specific tasks under each of the analytical streams. The analysis will be based on the methodology outlined in the analytical framework.

Task 1. Assessment of Impacts from the Global Impact Database

This analysis is primarily undertaken at the national level, and subsequently scaled down to the Nature+ sites. Using the GID, the analysis looks at:

• The relative distribution of the impacts in the agrifood system at the country level.
• Make tabular and graphical representations to illustrate country level:

  (a)Distribution/structure of impacts using Value Chain Impacts [VCI] (direct, upstream, downstream) and Procurement Chain Impacts [PCI] (all Value Chain) by main sectors (constructed from the GID categories) in the country;

  (b)Distribution/structure of impacts using VCI (direct, upstream, downstream) and PCI (all VC) in the aggregate (all food sectors together) in the country.

• Use the country-sector-impact ($PPP/$value added) from the country analysis as the impact per $ of output to value the cost accounting for the sector specific output in the target area. This allows for the derivation of (a) and (b) for the Nature+ target area.

Task 2. True Cost Accounting analysis from the household survey data

The analysis is representative of the Nature+ sites. It includes the following key tasks:

• Explore in-depth the farmer household, and workers’ survey data.
• Calculate the direct production costs incurred by farming households, as well as the volume and value of total production.
• Identify and quantify the impacts/footprints by impact type (sub-categories of social and environmental impacts).
• Use Monetization Factors (remediation costs) to assess the impacts monetarily.
• Aggregate the impacts by externality type (social, and environmental) and direct production costs.
• Undertake an analysis of (a) the structure and distribution of the costs of food, and (b) design and run alternative scenarios to form the basis for the identification of actions needed to achieve more sustainable external costs structures of the agrifood system.

DELIVERABLES