Making food system costs visible: A policy imperative for Colombia and Peru
Latin America’s agrifood systems are economically dynamic, generating jobs, exports, and foreign exchange, and driving regional growth
- food systems
- prices
- costs
- hidden costs
By Kristin Davis, Rui Benfica, Carlo Azzarri, Sedi Boukaka, Carlo Fadda, and Baragu GeoffreyJune 4, 2026
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.
Latin America’s agrifood systems are economically dynamic, generating jobs, exports, and foreign exchange, and driving regional growth. They are the backbone of rural economies. But existing alongside this apparent success story are the environmental and social burdens that do not show up on balance sheets.
Many agrifood system impacts, positive and negative, remain unpriced and largely invisible in policy and market decisions—including greenhouse gas emissions, land degradation, water scarcity, air pollution, child labor, and wage inequities. Systematically accounting for these effects, or externalities, reveals a more complete—and more sobering—picture of the impacts of agricultural production.
A new study, Assessing Environmental and Social Burdens in Agrifood Systems: Insights from Colombia and Peru, authored by researchers from IFPRI and the Alliance of Bioversity International and CIAT, brings these hidden costs for those two countries to light. It accounts for externalities using the Impact Institute’s Global Impact Database and a true cost accounting (TCA) framework. As we observe World Environment Day (June 5), with its call to climate action, the study findings show how analytical tools such as TCA are crucial to designing policies to guide sustainable food system transformation.