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7 Reflecting on the Path Forward T hroughout the workshop, individual participants reflected on the presentations and discussions and shared key considerations for strategies going forward. This chapter is a compilation summary of all the open discussions, organized into five major themes: 1. The concept of externality and whether externalities are the best way to frame a full-scale accounting of the cost of food 2. The importance of recognizing trade-offs among costs and benefits, for example, the trade-offs associated with large- versus small-scale production 3. The challenge of quantifying effects and the level of uncertainty around many estimates 4. Opportunities for more data and research, but also concerns that sufficient data in some areas are being overlooked 5. The daunting challenge of measuring a single “true cost” of food ARE EXTERNALITIES THE BEST WAY TO FRAME THE PROBLEM? Participants expressed some disagreement about whether certain effects should be included in a full-scale accounting of the cost of food. Some par- ticipants argued that even though the external cost of diet-related cardio- vascular disease may be internalized through health insurance premiums, cardiovascular disease nonetheless imposes a cost to society that exceeds, or is different than, its internalized value. For example, during his presenta- tion, Steven Wing argued that many external costs of the food system are 83

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84 EXPLORING HEALTH AND ENVIRONMENTAL COSTS OF FOOD strongly related to health inequalities, with certain populations bearing a disproportionate amount of those costs. That unequal distribution is not ac- counted for in a model based on externalities. Some participants wondered if there is another model or approach that could be used that accounts for distribution. The implications of building a framework based on a broader view of costs are unclear. James Hammitt offered an explanation. The concept of externality falls under the purview of welfare economics, which is an attempt to quantify the well-being of people. When quantifying the costs and benefits associated with an activity, welfare economists quantify in dollar amounts those costs and benefits as perceived by the individuals actually benefiting or being harmed and then add those quantities across society. If some policy action is expected to have society-level benefits that exceed society-level costs, in principle those people who gain from the policy could “transfer” some of their gains to those who are harmed so that everyone would be better off after the transfer is made. In other words, Hammitt said, “you can think of it as expanding the size of the social pie.” If externalities can be corrected through policy, that is, if they can be internalized, then “we can make the pie bigger.” But how that pie is divided across people is a separate ques- tion. He said, “If we don’t like the distributional effects of that, we can redistribute using other mechanisms. Rather than foregoing the opportunity to increase the size of the social pie, we should go ahead and increase it, and then redistribute it.” Not implementing a policy that imposes costs on a subset of the subpopulation while providing benefits that exceed costs overall is, in his opinion, an “extreme position.” There are more efficient ways to redistribute well-being than to not implement a policy because it will increase the cost to a subset of the population. In the case of a food policy that increases overall well-being but increases the cost of food to poor people, he said, “It is much better to deal with the poverty directly.” Anna Alberini added that, although economists are primarily concerned with the size of the pie, few agencies conduct cost-benefit analyses without also conducting regulatory impact analyses to deal with those distributional issues. She said, “Considerations of this kind do indeed take place.” Still, some participants wondered whether there might be other eco- nomic strategies, such as ecological economic models, that could provide other ways to frame the discussion. Helen Jensen responded that, yes, there are other approaches, but none of those approaches take away from the ba- sic understanding of externality. Jayson Lusk warned, “If we are not going to use the externality argument, there needs to be some rational argument for what the basis is of some policy recommendation.” He explained that externalities represent an opportunity for interventions that allow people to benefit by their own account. The alternative is paternalism. He said, “With children, most people are more open to using paternalism as a jus-

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REFLECTING ON THE PATH FORWARD 85 tification for public policy. People like myself are a little less willing to use that justification on the average population.” Lusk’s response triggered some comments about choice and how be- havior in the real world differs from behavior in economic models. For example, Aaron Wernham expressed concern that the policy environment might drive choice as much as the market does. Also, earlier during the workshop, there had been a question about whether lack of choice in food deserts (i.e., areas without access to food) can be factored into a model based on externalities and responding remarks about how lack of access to food is a social issue, not a market issue, and therefore cannot be analyzed within the context of externalities. (See the summary of James Hammitt’s presentation on public health effects in Chapter 3 for more thoughts on the challenge of analyzing effects impacted by “real-world” behavior.) TRADE-OFFS1 ASSOCIATED WITH DIFFERENT SCALES OF ANIMAL PRODUCTION The importance of trade-offs was a major overarching theme of the workshop discussion, from keynote speaker Katherine Smith’s admonition that “everything is relative” onward. Smith cautioned that a cost is only a cost relative to something else. Most subsequent discussion of trade-offs revolved around those associated with large- versus small-scale production. An audience member remarked that agriculture in the United States has undergone a major transformation over the past century from many small independent producers to a small number of large, sometimes global, cor- porations controlling sectors of the food system. At the same time, accord- ing to Michael Doyle, there has also been a recent drive in the United States and across Europe toward a small-scale way of farming food animals. These trends raise the questions: What are the costs and benefits of large- versus small-scale animal production? What are the implications for food safety, water and air quality, and manure management? How are local communi- ties impacted? What are the costs and benefits to the farmers themselves? In some experts’ opinion, arguably one of the greatest benefits of large- scale production is its economy of scale, with large-scale production being more efficient and more cost-efficient. However, one audience member remarked that the economy of scale afforded by large-scale production may shift at a certain “tipping point,” beyond which further production actually creates greater costs than benefits. For example, there may be a point at which raising too many pigs turns manure from a commodity into 1  Atrade-off is defined here as an exchange of one effect for another when a different deci- sion, policy, or practice is implemented.

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86 EXPLORING HEALTH AND ENVIRONMENTAL COSTS OF FOOD a toxic problem. The participant wondered how that “tipping point” could be factored into a true-cost accounting of the food system. A challenge brought up in regard to meat production was how to de- sign a different system that would produce the amount of meat equivalent to that produced by concentrated operations and in a safe manner. Presum- ably, the costs to the environment of a small animal production system versus a concentrated production system would be similar as long as the total amount of animals produced is the same. In this respect, a participant remarked one of the goals should be to raise fewer total animals. He said, “The epidemiological evidence is overwhelming that our high meat diet is unhealthy.” John Antle identified loss of farmer income as a cost of small-scale animal production. Much of what is driving the trend toward large-scale farming, he said, is the desire to generate household incomes that are com- parable to those earned by professionals in nonagricultural sectors. For example, a wheat farmer in Montana cannot generate an income greater than about $30,000-$40,000 a year without more than 3,000-4,000 acres of land. He said, “you have got to keep those factors in mind. . . . There are fundamental economics driving what we see in terms of the scale of production.” Some audience members agreed that economics are driving the trend toward large-scale production, that any policy changes aimed at reducing some of the external costs associated with large-scale production would need to be done very carefully, and that choices about trade-offs would be paramount. An audience member observed that the export of finished meat prod- ucts is another factor driving the trend toward large-scale production, and that the cost of global trade also needs to be considered when evaluating the trade-offs associated with small- versus large-scale production. UNCERTAINTY ABOUT THE MAGNITUDE OF SOME EFFECTS Another major overarching theme of the open discussions was the chal- lenge of quantifying effects. Throughout the workshop, participants consid- ered a range of methodologies for quantifying health, environmental, and other impacts. Some methodologies seem especially well suited for certain effects. For example, participants in one of the working groups described LCA as the tool of choice for examining GHG emissions. But for other ef- fects, like the cost of antimicrobial use in food animals, varying opinions were expressed on whether risk assessment would be a feasible strategy for covering all antibiotics across every animal species. Some workshop partici- pants opined that the greater challenge is not quantifying effects, rather it is quantifying them with certainty. Many participants noted that the level

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REFLECTING ON THE PATH FORWARD 87 of certainty about the magnitude of effect varies tremendously, with some effects being very clearly associated with sources and others not. Indeed, some effects cannot be quantified at all. Hammitt mentioned that costs in the NRC (2010) energy report were calculated with uncertainty ranges (see Table 5-1 in Chapter 5). Several factors contribute to this uncertainty, not the least of which is the heterogeneous nature of the food landscape. Several participants commented at numerous times on the tremendous variation in production that exists across both space and time, which creates both analytical and data challenges. Another contributing factor is the complexity of the food system and the challenge of teasing apart pathways. As just one example, while almost the entire workshop discussion was on food products, an audience member pointed out that the same systems that produce animal food products also produce nonfood by-products (e.g., hides, fats, phar- maceutical products). He asked how costs and benefits should be allocated between food products versus nonfood by-products. Hammitt replied that there is “no non-arbitrary way” to allocate external costs (and benefits) associated with raising animals across all of the various products. Rather than considering total costs and how to allocate those costs, he suggested considering marginal changes that would occur if animals were raised in a different way. John Antle opined that if externalities were addressed at the production level (e.g., by taxing or otherwise imposing measures that impact industry decisions about production), they would be appropriately valued into the system at that level and reflected in the cost of product and by-product production. Marty Heller agreed with Antle that the problem could be approached from that sort of “system expansion perspective,” whereby all of those other components (i.e., by-product production path- ways) are incorporated into the analytical model, but cautioned that an analysis of impacts of the food system in particular may still require some sort of allocation of costs among food versus nonfood products. OPPORTUNITIES FOR MORE DATA AND RESEARCH For some effects, lack of sufficient data may also contribute to uncer- tainty about the magnitude of those effects. There were many calls through- out the workshop for more data and research. For example, there was a call during the public health effects break-out group for more research on the health effects of exposure to hormones in animal food products. As another example, during her presentation Anna Alberini listed four understudied ar- eas that she thinks represent fertile ground for new research on food-related valuation: (1) willingness to pay (WTP) to reduce dietary cardiovascular and diabetes risks; (2) WTP to reduce endocrine disruption risks (i.e., which

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88 EXPLORING HEALTH AND ENVIRONMENTAL COSTS OF FOOD have been linked to certain pesticides); (3) WTP to reduce effects on the reproductive system; and (4) WTP to reduce antibiotic resistance. For some phenomena, it is not clear whether more data are needed or whether existing data need to be more thoroughly analyzed or interpreted. For example, one participant asked whether more research is needed on populations that tend to be excluded from research studies. Steven Wing responded that, in some cases, “we have a lot of data, but we are not paying attention to the data that we have.” The greater challenge, in his opinion, is the question(s) being asked. He mentioned a long history of research on questions that are of economic interest to producers and a short history of research on questions related to the health and environmental impacts of production systems. “So do we need more [data]? Maybe we do,” he said. But the lack of information is also a result of “who is at the table.” As another example, a participant questioned the call for more scientific evidence on the association between antimicrobial use in food animals and antimicrobial resistance in humans. He implored that scientists have known about the cost of antimicrobial resistance for decades, since the 1969 Swann Committee report (Swann et al., 1969). Yet, the demand for more data persists. Why? He called for more discussion on the political nature of the debate about antimicrobial use in food animals. THE DAUNTING CHALLENGE OF MEASURING “THE” COST OF FOOD Early on during the workshop, an audience member commented on the complexity of the food system and its wide range of effects and asked whether there was a way to ensure that all costs and benefits have actu- ally been measured. He said, “What if I miss something? . . . The ultimate answer would be just wrong.” Even if the focus is on marginal costs, not total costs, still the dimensions of that margin need to be known. “To some extent,” he said, “I have sort of despaired listening to this conversation.” John Antle expressed similar concern about the wide range of effects, not- ing that policies that fail to consider important consequences “really mess things up.” Given what she characterized as “squishiness” from a lack of data and problems with analyzing those data, Katherine Smith questioned the inten- tion of tallying up all costs and benefits to derive an estimate of the total “true” cost of food. She suggested evaluating the effect of public policy on one “dimension” or on the trade-offs between a couple of dimensions of the food system, instead of calculating total cost. Jayson Lusk and others agreed that analyzing the costs and benefits of specific interventions might be a more feasible research strategy than estimating the “true” cost of food.

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REFLECTING ON THE PATH FORWARD 89 WRAP-UP There is no obvious best research strategy for conducting a full-scale accounting of the external costs and benefits of the food system. Activities at all stages of the food life cycle have tremendously far-reaching and wide- ranging consequences for the environment, human health, the economy, and society at large. Workshop participants considered a range of methodolo- gies to consider, from LCA to HIA, yet many questions remain about how to quantify effects with an acceptable level of certainty and how to analyze effects that cannot be quantified. Measuring and valuing the “true” cost(s) of food is made all the more difficult by widely divergent expert opinions about how to even frame the challenge—within the context of economic thinking about externalities, or otherwise. The participants had differences of opinion on whether focusing on externalities in the strict economic sense (see Box 1-1) is too limiting. While the goal of the workshop was not to reach any conclusions or make any recommendations, some personal opinions were expressed about how to move forward. There were a couple of calls for conducting a more systematic and comprehensive consideration of potential effects, method- ologies for measuring those effects, and limitations of the methodologies. While the small group break-out session was a valuable exploratory exer- cise, the opportunity for even more work persists. For example, one group opted not to work with the matrix because it would have been too time- consuming given how much is known about GHG emissions and energy use. Another group did not have enough expertise at the table to consider some issues. In addition to more thoroughly considering potential effects and meth- odologies for quantifying and valuing those effects, there were many calls for a reconsideration of the intention of a full-scale accounting of the “true” cost of food. Several participants questioned not just the feasibility, but also the applicability, of assembling a list, or matrix, of all potential costs and benefits and trade-offs, and suggested instead a more selective examination of the food system from a policy perspective. That is, examine a policy or intervention and its potential impact on costs and benefits rather than the costs and benefits of the food system as it is. While a full-scale accounting of the external costs and benefits of the food system will undoubtedly be a challenging endeavor, this information- gathering workshop was an important first step in showcasing the range of expertise, methodologies, and information sources that could be used to pursue that endeavor. Although the U.S. food system provides multiple benefits, those benefits could be expanded even further with a better un- derstanding of how decisions made along the entire course of the food life

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90 EXPLORING HEALTH AND ENVIRONMENTAL COSTS OF FOOD cycle adversely impact the environment, public health, and community economic development. REFERENCES NRC (National Research Council). 2010. Hidden costs of energy: Unpriced consequences of energy production and use. Washington, DC: The National Academies Press. Swann, M. M., et al. 1969. Report of the Joint Committee on the Use of Antibiotics in Animal Husbandry and Veterinary Medicine. London: Her Majesty’s Stationery Office.