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A democratic alternative to true cost pricing

Nature Food volume 2, pages 632–634 (2021)Cite this article

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The dollarization of food systems’ externalities carries economic and political risks. Local democratic experiments navigate these risks by embracing both the complexity of valuation and the processes necessary for systemic political change.

The food system generates externalities, and a consensus is beginning to emerge on their magnitude. A report published in 2012 by the management consultancy group KPMG attempted to quantify a slice of the ecological ones. Using analysis from the Trucost research corporation’s proprietary global input–output model, researchers tracked and priced 22 environmental factors — including selected greenhouse gases, water abstraction, pollutants including acid rain precursors and ozone-depleting substances, and waste generation1. They concluded that for every $1 of revenue generated by the food industry in 2010, the industry generated $2.24 of environmental harm. The order of magnitude of such findings have been reconfirmed using a range of back-of-envelope methodologies2,3, pointing to the general conclusion that the price of food is at least one half of what it should be, and likely more. The greater the range of harms that are valued, the higher the likely ‘true’ cost will be.

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Fig. 1: A sample Good Food Purchasing score card.

Center for Good Food Purchasing

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Acknowledgements

The author is grateful to A. Delwiche for providing insight into the Good Food Purchasing Program and permission to use the graphic in Fig. 1.

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  1. Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, Austin, TX, USA

    Raj Patel

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  1. Raj Patel
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Correspondence to Raj Patel.

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Patel, R. A democratic alternative to true cost pricing. Nat Food 2, 632–634 (2021). https://doi.org/10.1038/s43016-021-00347-0

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