Global Forum on Food Security and Nutrition (FSN Forum)

The negative externalities of poor welfare for farm animals

The 2023 SOFA report is welcome but barely mentions the welfare of farm animals. However, consumers increasingly are concerned about poor animal welfare. Accordingly, I believe that the 2024 SOFA report on the true cost of food should include a section on the need to include the negative externalities of poor animal welfare within true cost accounting.

A key challenge to date has been the limited number of papers that attempt to put an economic cost on poor welfare. Earlier studies looked at consumers’ willingness-to-pay for specific animal welfare improvements. For example, Bennett and Blaney (2003) produced a paper entitled Estimating the benefits of farm animal welfare legislation using the contingent valuation method. This paper aimed to elicit UK citizens’ willingness-to-pay to support EU legislation to ban the keeping of egg laying hens in battery cages.[1]

More recently an improved approach has been set out by researchers from Wageningen Economic Research in a paper entitled A method for calculating the external costs of farm animal welfare based on the Welfare Quality® Protocol.[2] The paper aims to provide a method that can be used to estimate the external costs of inadequate farm animal welfare.

This paper points out that “When the level of AW [animal welfare] drops below a certain standard, the keeping of animals for food production creates a negative externality: animal suffering (Lusk and Norwood, 2011).”

In the paper’s method to calculate the external costs of AW at farm or production system level, two datasets are needed: 1) AW score, and 2) costs of AW measures. The first dataset contains data about the level of AW score of farms with different levels of AW and is based on the welfare scores of the Welfare Quality® Protocol as a measuring standard. The Welfare Quality scores are based on four welfare principles, namely good feeding, good housing, good health and appropriate behaviour.

The second dataset contains data regarding abatement costs i.e. the costs of the measures needed to prevent the re-occurrence of AW problems by improving farm management or the environment of the animals to a level where AW issues are minimised. The abatement costs  are the costs associated with a set of measures required to achieve an acceptable level of AW. The paper notes that a higher level of AW might also result in benefits through reduced costs due to improved productivity and animal health.

The paper’s method can be integrated in true cost accounting methods to calculate the external/hidden costs of poor animal welfare.

I also suggest reading a blog on this subject by Berk Özler, Lead Economist, Development Research Group, World Bank.   https://blogs.worldbank.org/impactevaluations/it-time-development-econo…