Valuing the hidden costs of production in the palm oil sector

PalmOil_banner

A recently published report on palm oil demonstrates how natural and human capital accounting can be used to understand and reduce the environmental and human impact costs of palm oil production. Palm oil is the world’s most popular vegetable oil, widely used in the food, personal care, chemicals and energy sectors. Over 56 million tonnes of palm oil was consumed in 2013 and this is expected to double by 2050. Its popularity is due to palm oil’s high productivity, low market price, and versatility compared to other vegetable oils.
However, the rapid growth of palm oil production in some countries is having serious environmental and social impact costs due to carbon dioxide emissions and air pollution from using fire to clear rainforest and peatland for new plantations, water pollution and harm to health from applying fertilizers and pesticides to crops, methane released from palm oil mill effluent processing facilities, land property rights violations during land expansion and substandard wages and working conditions.
The report was commissioned by TEEB as part of a series of studies for its agriculture and food (TEEBAgriFood) project. True Price and Trucost worked together with TEEB on this report to improve business decision making. Read the full report here.

Alliander’s Integrated Impact

Belangrijkste impacts van Alliander2

True Price has mapped the impact of all activities of Alliander, the largest energy network supplier of the Netherlands. We looked at impacts on six capitals: financial, produced, intellectual, environmental, social and human capital. For this, we used our Integrated Profit and Loss tool and worked together with Ecofys.

Alliander has set itself high ambitions with respect insight into their impacts, both positive and negative. In 2016, Alliander and True Price, together with Ecofys, started with the quantification and monetization of Allianders impacts, such as the impact of CO2 emissions or the employment of people with a distance to the labor market.

The calculations of the impacts have been published in Allianders annual report and a seperate impact report. Please read the annual report (in Dutch) here and the impact analysis (in Dutch) here.

The road to a true price

Nederland Voedselland

Read this interesting blog ‘the road to a true price’ by Reinier de Adelhart Toorop and Eise van Maanen from True Price (in Dutch): http://nederlandvoedselland.nl/artikel/op-weg-naar-de-echte-prijs

The content, in short: As far as sustainability policy goes; what is counted, counts. For example: meat tax, flight tax, payment for the use instead of ownership of a car. To be able to achieve this, calculations are necessary. The ‘true price’ can help with this; what would the true price be if all natural and social externalities were taken into account.

Societal effects of food

Adrian de Groot Ruiz Food presentation

What are the societal effects of the food we eat? Now it’s possible to calculate it with a new model made by True Price and Wageningen Economic Research, on behalf of the ministry of Economic Affairs. We held a symposium on January 12th to present the results of a research project that shows positive and negative societal effects of food in a transparent and comparable way.

We can differentiate 37 impact categories for food, divided over six ‘capitals’: financial, produced, intellectual, natural, social and human. With financial, produced and intellectual capital there are mostly positive effects of food, such as employment, contributing to the economy and knowledge production. With natural capital we see mostly negative environment impacts. With social capital we take into account animal welfare for example, and positive and negative health impacts with human capital. The researchers can determine the average effects of food, but also zoom in on specific products. Furthermore, they can show the scores per product in relation to the average.

WUR-researcher Willy Baltussen and director of True Price, Adrian de Groot Ruiz, presented the first results of the model with very Dutch products: potato, green bean, milk and minced meat. The results showed that the societal effects of the potato and the green bean were very similar. Baltussen: “Both (products) deliver average financial positive effects (contribution to the economy, lower natural negative effects (which have little influence on the environment) and a lot of positive effects on health). Milk has more natural negative effects (water, air, climate), more social negative effects (underpayment of farmers due to low prices). The human capital scores of milk are both positive (nutrition) and negative (fat). Minced meat has a similar score to milk.”

“The goal of the model is to give insight to governments and nutrition companies to the positive and negative impacts of nutrition, so that the positive effects can be increased and the negative impacts can be diminished’, says Adrian de Groot Ruiz of True Price. “The outcomes make it possible to have a discussion with stakeholders in the food sector. For example, about underpayment of African cocoa farmers for the production of chocolate, but also about low wages of Dutch dairy- and pig farmers.”