The economic impact of reducing food waste is measured by changing the percentage of food waste that is avoidable. This percentage is based on the fact that between four and ten percent of all food purchases are wasted before they reach the customer. These percentages are multiplied by the midpoint of avoidable food waste to find the total value of avoidable food waste.
Changes in production
Reducing food waste can lead to a number of changes in the agricultural system. In addition to preventing food waste, the interventions may improve resilience to crises and free up resources in the supply chain. These interventions can also save land and increase the availability of nutritious foods. This chapter looks at some of these changes.
The food and beverage industry plays a vital role in reducing food waste by providing products that are less likely to go to waste. According to a survey by Tetra Pak, 77 percent of consumers are concerned about food waste. Reducing food waste is a win-win situation for manufacturers.
The environmental impacts of food loss are significant. The resulting pollution amounts to 3.3 gigatonnes of CO2 per year. Additionally, the economic impacts of food loss and wastage are substantial. The global full cost of food loss and waste is estimated to be US$2.6 trillion per year. This figure includes 700 billion USD in environmental costs.
Reducing food waste also improves resiliency. By reducing food waste, farmers can better match supply with demand. They can also reduce variability by using resilient varieties. In addition, they can use forecasting and storage to bridge the gap between production and demand.
Changes in GDP
We study the impact of reducing food waste on GDP in three countries: Germany, Poland, and Spain. The shock resulting from reducing food waste in Germany is almost three times larger than in Spain, while the shock to Poland is slightly smaller than in Germany. In both countries, production declines by 0.33% while employment declines by 36,580. While substitution effects reduce the negative impact of reducing food waste, they are not enough to offset the negative effect on GDP and employment.
In addition to the direct impact of food wastage on GDP, it also positively influences the level of poverty. A 1% reduction in food wastage is associated with a 0.28% increase in GDP per capita, and a 1% reduction in poverty results in an additional 0.87% in GDP per capita. By reducing food waste, governments can reduce the levels of poverty and promote economic growth.
The monetary impact of food waste is estimated at USD 2.6 trillion a year, or around 3.3% of global GDP. Of that total, about 1% is directly related to the waste problem; a further 0.7 trillion is linked to the impact on the environment (water, GHG emissions). Reducing food waste will lead to changes in GDP in several sectors, including food service and manufacturing.
Changes in emissions
In an article in the Washington Post, Chad Frischmann discussed how reducing food waste can reduce greenhouse gas emissions. According to the FAO, approximately one-third of food produced for human consumption is wasted and lost. That adds up to 1.3 billion tonnes of CO2eq per year. In the United States, food loss and waste account for nearly 8 percent of greenhouse gas emissions.
The federal government can help support state efforts to reduce food waste by providing funding for innovative programs. Once these programs become successful, they can spread quickly across the country. However, a national ban on food going to landfills may be unrealistic. Some countries in Europe, however, have banned the disposal of food in landfills. This has helped increase donation rates and has encouraged businesses to prevent food waste.
Food waste is a major problem because the production of food requires a considerable amount of resources. According to the Intergovernmental Panel on Climate Change, food waste contributes between eight and 10 percent of all man-made greenhouse gases. This makes the food-wasted-food industry the world’s third largest contributor to greenhouse gas emissions.
Food waste costs consumers, retailers, and farmers a fortune. But many of these costs cannot be passed on to consumers. According to ReFED, $408 billion in value will be lost due to excess food in 2019. As food prices rise and food businesses face more costs, reducing food waste is important to mitigate these costs.
The environmental costs of food waste are also enormous. Every year, 60 million metric tons of food are wasted in the United States alone, with the cost of wasted food running as much as $162 billion. Of that, 32 million metric tons end up in municipal landfills, which costs local governments around $1.5 billion a year. In addition, waste causes health problems and lower productivity.
The economic costs of food waste are staggering: by 2030, consumer food waste could cost the world economy as much as $400 billion a year. A reduction in food waste by 20 to 50 percent could save billions of dollars. That is enough to feed 870 million hungry people worldwide. And yet, food waste is a major problem not just in developed nations, but in countries all over the world.
Changes in revenues
The Food Recovery Action Network is a hub for efforts to reduce food waste. According to its research, 35 percent of the food we buy is never eaten, and the vast majority of this waste ends up in landfills. This waste costs the U.S. economy $408 billion, or 2 percent of its GDP. By reducing food waste, cities and businesses can save money and create jobs at the same time.
Changing lifestyles are contributing to an increase in food waste. Unhealthy eating habits, lack of cooking skills, and improper storage of food all contribute to increased food waste. Additionally, the food industry is facing a growing problem of unsold stock and food spoilage. To address this problem, the industry is investing in a more efficient system.
Reducing food waste can save consumers as much as $5.6 billion annually, according to the study. It could also benefit businesses by generating revenue, which could reach $1.9 billion a year. Restaurants and food service businesses stand to benefit the most. These businesses have large amounts of food to prepare and sell and frequently change their menus.
Trade-offs between reducing food waste and increasing revenues
While most retailers understand that increasing On Shelf Availability (OSA) will lead to increased safety stocks and inventory, few understand how OSA and %Waste relate. There are several factors that determine which items are more likely to be thrown out. These variables are often the result of past decisions. For example, in the past, buyers may have prioritized buying items with the lowest price, leading to more waste. Fortunately, retailers now have a tool that can quantify the impact of their decisions on waste.
In the food industry, waste is a serious issue, which affects consumers and retailers alike. By reducing food waste, businesses can reduce their costs while improving the quality of their products and keeping them fresh. In the grocery industry, food waste is estimated to account for nearly one third of all food.
However, this is not the only area where retailers must make trade-offs. The food industry is growing more competitive in emerging economies and the number of retailers is decreasing. In many countries, supermarkets are replacing retail stores. This trend is contributing to food waste.