F9B: The Illustrated Series

Download the "Webzine" The Role of Government and Policy


Hello, my name is Evan Fraser and I work at the University of Guelph in Ontario Canada.

As anyone who has followed this video series knows, climate change, population growth, and high energy prices mean that many experts worry farmers will struggle to produce enough food for us all over the next generation.  But there are other ways of looking at the problem.

For instance, huge amounts of data show that the modern food system is extremely wasteful.  Inefficient irrigation means that we squander vast amounts of precious water, while many farmers apply more fertilizer than plants can use. These excess nutrients runoff fields and pollute rivers and lakes. What’s worse, Westerners waste about between 30 and 50% of the food that we buy.

Surely if we simply cleaned up our act, we wouldn’t worry so much about the future of our food system, right?

Economists give us a way to think about this problem by talking about “negative externalities”.  Negative externalities are costs of producing food that the market doesn’t account for. For instance, if a farmer doesn’t pay for the water he or she uses, then the value of the water would be “external” to the price consumers pays for the food and hence there would be no incentive for the farmer to conserve this resource.

Similarly, if a farmer pollutes a river, and the price of the food from that farm doesn’t include the price of cleaning up the river, then the cost of pollution is another negative externality.

These hidden costs mean farmers who waste resources or pollute the environment actually do better economically than farmers who steward their land. For instance, if farmers don’t pay for the water they use, then a farmer who uses inefficient irrigation may be able to offer consumers cheaper food than a farmer who spends her or his money investing in more efficient watering systems.

In the 1990s, a group of scientists calculated that externalities like polluted water, damaged habitat, soil erosion and food poisoning imposed £2,343 million of costs on UK society alone in 1996. The British Royal Family was not amused: Prince Charles regularly talks about the future of farming where he argues that “…we need to include in the bottom line the true costs of food production – the true financial costs and the true costs to the Earth”.

Many argue that because of negative externalities, policies are needed to ensure that farmers, processors, retailers, and consumers pay the full cost of producing our food.  There are a number of ways of doing this. One way is to pass laws that make farmers pay for the things they use from the environment.  Mostly, this has been tried in irrigated farming systems where countries have experimented with charging farmers more for the water they draw from aquifers or wells. Where these programs have been tried, they generally are quite successful in encouraging conservation.

Another way is by paying farmers for “ecosystem services”, which is a fancy way of saying “the things that the environment gives us.”  For instance, the European Union has policies that pay farmers for maintaining wildlife habitat and biodiversity.  This is useful because it creates an incentive for farmers to tolerate wildlife that might otherwise simply be seen as a pest because they disturb crops.

A third approach is to tax pollution or waste.  This may be a particularly useful strategy in terms of getting consumers in the West who throw out a huge amount of the food to become more efficient. If policies are enacted that make us bear the full price of our food, then it stands to reason that food prices will go up. And if food prices rise it also stands to reason we will throw less out, making the whole global food system more efficient.

But while such approaches may sound ideal, there might be unintended negative consequences.  In particular, policies that force consumers to bear the full cost their food might also cause a rise in food insecurity and malnutrition for those consumers who could not afford to pay more for their food. So while it is vitally important for policy makers to develop strategies to correct negative externalities, such strategies must go hand in hand with other policies to protect the poor from the negative effects of price rises.

But that’s all for now. If you are interested in learning more, you might be keen to check out my recent book Empires of Food.  Also, you can find me on YouTube, Facebook and Twitter where I regularly post about issues relating to global food security. And the website www.feedingninebillion.com has annotated scripts along with references and our blog.

I hope to see you again, but until then, thanks for watching!