New estimates shed light on crushing economic costs of hunger
Economic value of production lost to hunger significantly more than costs of investing to reduce it
The grim tally of human lives cut short or scarred by disability leaves no doubt that hunger is morally unacceptable, observes FAO in the latest edition of The State of Food Insecurity in the World.
But calculating the economic costs shows that allowing hunger to persist is also unaffordable -- not only to the victims themselves but also to the economic development and prosperity of the nations in which they live.
The economic costs of hunger to society come in several distinct forms, FAO explains.
The most obvious are the direct costs of dealing with the damage it causes. These include the medical costs of treating both the problem pregnancies and deliveries of anaemic, underweight mothers and the severe and frequent illnesses of children whose lives are threatened by malaria, pneumonia, diarrhoea or measles because their bodies and immune systems have been weakened by hunger.
A very rough estimate in SOFI 2004 indicates that these direct costs add up to around US$30 billion per year.
But the direct costs are dwarfed by the indirect costs of lost productivity and income caused by problems associated with chronic hunger: premature death, disability, absenteeism in the workplace and reduced educational and occupational opportunities. Provisional FAO calculations suggest that these indirect costs could range into the hundreds of billions of dollars. (For more detailed analysis on this, see the actual SOFI 2004 report.)
As SOFI 2004 assesses it: "losses of that magnitude clearly represent a significant drag on national development efforts."
Investing to end hunger would yield major long-term economic benefits
Both the indirect and direct costs are unacceptably high, says FAO. Yet ironically, the Organization adds, even though the costs of preventing hunger are miniscule in comparison to the potential productive benefits of doing so, many countries still do not invest enough in hunger reduction programmes.
"Numerous studies suggest that every dollar invested in well-targeted interventions to reduce undernourishment and micronutrient deficiencies can yield from five times to over 20 times as much in benefits," the Organization says. These benefits include reductions in direct costs of medical care made necessary by hunger as well as in the indirect costs of lost productivity.
An FAO macroeconomic study cited in SOFI 2004 found that reducing undernourishment by enough to meet the World Food Summit target would result in approximately US$120 billion a year earned through increased production over the years up to 2015 -- $3 trillion in earnings, all told.
The FAO study also calculated that this could be achieved through an increase of just US$24 billion in public investment in hunger reduction through rural agriculture development programmes in combination with targeted food assistance and the creation of social safety nets.
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