Rui Benfica

Assessing environmental and social burdens in agrifood systems: Insights from Colombia and Peru

Agrifood systems (AFS) in Colombia and Peru generate substantial economic value but also impose significant environmental and social externalities that remain unpriced and largely invisible in policy and market decisions. Using the Global Impact Database (GID) and a True Cost Accounting (TCA) framework, this paper quantifies the hidden costs embedded in 19 AFS sectors, with a focus on seven major crop sectors. As one of the first cross-country applications of GID data in Latin America, the analysis offers a harmonized and comprehensive assessment of the true costs of food production, processing, and distribution. Results show that externalities are equivalent to 12 percent of AFS output in Colombia and 13 percent in Peru—a substantial burden that is not captured by conventional economic indicators. Environmental externalities dominate in both countries, driven primarily by land occupation, climate change, air pollution, and use of scarce water. Social externalities—especially underpayment, child labor, and gender wage gaps—are smaller in aggregate but become markedly more significant within crop sectors, as labor intensity and informality characterize production systems. Livestock, dairy, and bovine meat products consistently emerge as the most externality‑intensive sectors, while cereals, rice, sugarcane, oilseeds, and fruits and vegetables exhibit comparatively lower externality costs. Value‑chain decomposition shows that most externalities originate at the production stage (at farm level). These findings highlight several clear leverage points for targeted policy and investment: reducing environmental pressures in livestock systems, improving labor conditions in crop sectors, and integrating TCA metrics into national planning and sustainability strategies. Making the hidden costs visible is essential for advancing more sustainable, equitable, inclusive, and resilient food systems in Colombia and Peru.

Making food system costs visible: A policy imperative for Colombia and Peru

Key takeaways • True cost accounting (TCA) quantifies hidden impacts in agrifood systems not captured in standard economic analyses, including environmental damage and social inequities. • A TCA study of Colombia and Peru finds these costs are substantial , equaling 12% and 13% of agrifood output, respectively. • Policy action to address these costs should target key system gaps , including environmental impacts of livestock systems and labor conditions.

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