Background Governments world-wide implement policies to enhance sustainability of food production Mineral policies Fair trade Greenhouse gas emission

Transcription

1 Measuring Sustainability using an Index Approach Alfons Oude Lansink Wageningen University Vic, 18 December 2014 Background Governments world-wide implement policies to enhance sustainability of food production Mineral policies Fair trade Greenhouse gas emission Trade negotiations increasingly require sustainability impact assessments for commodities What is the sustainability of pork produced in the USA versus pork produced in Spain? 1

2 Background: Sustainability Measuringsuccessof sustainability enhancing policies Comparing sustainability different commodities Requires transparent measurement of sustainability Background: Sustainability Environmental Greenhouse gas emissions Leaching Human toxicity Economic Fair income Price volatility Social Working conditions Food safety 2

3 Comparing sustainability of commodities Currently... Example proliferation of sustainability initiatives for biofuels (Unica, Brazil, 2010) Lack of harmonization in standards Most standards only include only one or two sustainability dimensions 3

4 Current Methods for Assessing Sustainability Ecological footprint Food miles Multi-Criteria Analysis Life Cycle Assessment Life Cycle Assessment: limitations Data requirements Costly to perform Main focus on environmental issues Positive externalities excluded Difficult to compare results different LCA s 4

5 LCA: Which product to prefer? What do we propose? Land use Global Warming Deforestation Child labour Human toxicity Profitability Working conditions Different units Different methodologies Various scales Weighting introduces subjectivity Total Factor Productivity (TFP) Index Internalise costs of negative social and environmental consequences Aggregation of all costs and benefits of production of a commodity into one index Product A Product B Scores farther from the center are considered negative 5

6 What is TFP? """ " The higher the TFP score the higher the level of sustainability Inputs Labour inputs Capital inputs Energy Materials and feed Business services PORK: PRIMARY PRODUCTION TRANSPORT PROCESSING Good outputs Pork meat Leather Rest products Bad outputs Emissions, leaching, waste, deforestation, zoonoses, anti-biotic resistance DISTRIBUTION 6

7 Aggregation Using (Shadow) Prices Inputs, outputs and bad outputs converted into a common unit: Money Higher TFP = more sustainable Primary production Processing Primay production Processing Market prices for marketable outputs (e.g. pork meat) and inputs (e.g. feed) Shadow prices for environmental and social consequences (Willingness to Pay) Distribution Pork in USA 0.6 Distribution Pork in Spain 1.2 7

8 Illustration: Soymeal production Sustainability of the Brazilian GM and non-gm soybean meal chain exported to the European market Inputs Seeds, Lime, labour Pesticides fertilizers labour, fuel Fuel, labour Primary production Transport Bad outputs Global warming Eutrophication Deforestation Farmer toxicity Consumer toxicity Loss of employment Global warming Steps: 1) Chain boundaries and selection of inputs and good and bad outputs Hexane, labour electricity Processing Global warming 2) Quantification of good and bad outputs, inputs and (shadow) price information 3) TFP index computation Fuel Distribution Global warming Good Outputs Soybean meal 8

9 Quantification bad outputs: farm stage Quantification bad outputs: Transport Processing-Distribution Environmental Social GWP (kg CO2-eq) GWP (kg Co2-eq) Eutrophication Pot. (kg PO4-eq) Env. Toxicity (EIQs) Deforest ation (m2) Farmer Toxicity (EIQs) Consumer Toxicity (EIQs) Loss employ ment (hours) Non-GM soy meal Transport Processing Distribution Non- GM chain Calculated per ton of soybean meal GM soy meal Calculated per ton of soybean meal GM 9

10 Shadow prices Bad output Unit Shadow Price US$ Global Warming kg CO2-eq 0.02 Deforestation m² 0.1 Eutrophication kg PO4-eq 9.1 Environ. Toxicity EIQe 0.02 TFP index The bars represent the deviations of the GM chain relative to the non-gm chain in terms of prices and quantities. The higher the deviation, the more sustainable the GM chain is in comparison to its non- GM equivalent. Consumer Toxicity EIQc 0.4 Farmer Toxicity EIQf

11 Future Implementation Future Implementation Approach can be applied to a wide variety of commodities in livestock and plant production e.g. beef, soybean, coffee Implementation requires consensus among stakeholders such as farmers, consumers and policy makers on: Future use Organisation for Economic Cooperation and Development (OECD) comparing different commodities Policy Evaluation Sustainability issues to be incorporated Market prices and shadow prices 11

12 Concluding TFP index is a flexible tool for comparing commodities in terms of economic, social and environmental sustainability Comparability Integration Increased objectivity Variety of sustainability issues Variety of commodities - chains QUESTIONS? Alfons Oude Lansink Business Economics Wageningen University alfons.oudelansink@wur.nl 12