Towards an EU approach to assess and internalise positive and negative externalities of food for incentivising sustainable choices

Better internalisation of positive and negative climate, biodiversity, environmental, social and health externalities of food has emerged in the policy debates as one of many options for improving the availability and affordability of sustainable food for consumers and generating fair economic returns for sustainable producers. However, the advantages and disadvantages of the internalisation externalities of food are widely discussed. In addition, the attribution, assessment and valuation of these externalities are complex and challenging tasks. Interest and research around the internalisation of externalities of food have been growing in recent years. A number of initiatives and collaborations are building at various levels, from local to global. Accordingly, various frameworks, methods and approaches to operationalise the internalisation of externalities related to food have been developed and researched (e.g. true cost accounting). Nevertheless, the concept remains more theoretical than practical and it requires development and adaptation over time.

Proposals should follow a ‘multi-actor approach’, pilot a ‘community of practice’ and convene policy dialogues engaging researchers, policymakers and other relevant actors from across farming and food systems on land and at sea (e.g. farmers, fishers, downstream and upstream businesses, retailers, hospitality operators, consumers, financial institutes, NGOs, etc.) that are involved on the ground in identifying, measuring and putting a monetary value on the positive and negative climate, biodiversity, environmental, social and health externalities of food. A balanced coverage of the EU contexts and the inclusion of a wide range of viewpoints (i.e. from ‘believers’ to ‘sceptics’) and relevant projects/initiatives at different levels, from local to global, are essential.

Based on an in-depth review of the state-of-the-art (including scientific evidence, diverse projects and initiatives, and, for example, existing natural capital accounting), proposals should scrutinise various approaches to:

• identifying, assessing and monetarising positive and negative climate, biodiversity, environmental, social and health externalities of food; and
• measuring degrees of internalisation (i.e. what parts of various costs and benefits are already internalised in the current context).

Proposals should explore possible ways to improve, harmonise and operationalise these approaches in practice. They should also map and analyse gaps in existing databases, and collect data needed to assess the externalities, in such a way that they can be used for several purposes (e.g. footprint analysis). Proposals may identify a comprehensive set of case studies (e.g. based on a comprehensive ‘hotspot’ analysis) and demonstrate the usefulness of various approaches and databases in practice.

Proposals should also identify various possible strategies for elevating internalisation of externalities and embedding it in decision-making of primary producers, businesses and consumers. They should analyse these strategies in order to inform policymakers and businesses about the various possible options (e.g. taxing negative externalities and/or rewarding positive externalities across food value chains, from input industry through production to consumption) and their effectiveness, costs, benefits and risks.

All work should cover a wide range of food products sourced from different types of farming systems on land and at sea (including agroecological and organic), supply chains, processes, contexts and levels (e.g. farm, product, policy, investment, organisational, etc.). Attention should also be paid, inter alia, to legal issues (especially in relation to fiscal policy) and distributional effects, the international dimension (e.g. how to deal with feed and food produced outside the EU) and the whole spectrum of impacts along value chains (e.g. in relation to deforestation, land-grabs and rights violations, leakage of greenhouse gas (GHG) emissions, etc.), in line with the principles of due diligence and systems thinking.

Policy recommendations and business strategies should be derived from the insights generated, and then widely communicated and disseminated. Proposals should encourage networking, sharing of knowledge and good practices, as well as building the necessary expertise and competencies among policymakers and businesses, including primary producers and SMEs. As a result, taking into account the various approaches and viewpoints, a consensus should be reached in the policy debate on the feasibility, implications and next steps for developing and implementing a harmonised EU approach for assessing and internalising externalities of food. Depending on the results, proposals may also develop an action plan for policymakers and businesses, and a roadmap for future research and innovation (R&I) to operationalise in practice the assessment and internalisation of externalities of food.

The possible participation of the JRC in the project would consist of a contribution to a holistic assessment, including footprints (e.g. with the MAGNET model). This topic should involve the effective contribution of SSH disciplines. In this topic the integration of the gender dimension (sex and gender analysis) in research and innovation content is not a mandatory requirement.