This article is part of a Synergies series on climate and trade curated by TESS titled Addressing the Climate Crisis and Supporting Climate-Resilient Development: Where Can the Trading System Contribute? Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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The production of food has had the largest impact on the planet of any human activity, responsible for 70% of biodiversity and habitat loss, 70% of freshwater use and 78% of water pollution, and up to 35% of global greenhouse gas emissions. Simultaneously, climate change is negatively impacting food production—global climate pre-harvest losses are 10% over the last decade, but 18% in Africa. Net primary productivity in agriculture is projected to decline globally, although this will vary by habitat, geography, and crop. By 2050, global crop yields could decline in key areas by up to 30%. In my lifetime, the world’s population has grown from 2.5 billion people to 8.2 billion while per capita income has soared, diets have changed significantly, and life expectancy has increased by nearly 30 years. All these factors exert pressure on the ability of renewable natural landscapes to regenerate themselves.

Global trade is quickly becoming a dominant force in food markets. As the amount of food produced globally doubled from 1980 to 2020, the amount of food traded globally more than quadrupled, from 7% of food produced in 1980 to nearly 30% in 2020. And while exports are critical to food security, environmental impacts are not currently addressed in the global food trade.

To address the environmental impacts of globally traded food, I have proposed the development of Codex Planetarius, a system of minimum environmental standards for global food production and trade. If implemented, Codex Planetarius will provide minimum environmental performance standards for six key impacts of food production—habitat and biodiversity loss, freshwater use, water pollution, soil health, and greenhouse gas emissions. We are also proposing a 1% Fund—a 1% environmental fee that would promote the resilience of the global food system. The goal is to ensure that global food trade does not erode the renewable natural resource base that exporting and importing countries alike depend on for food.

The rationale is simple. The performance of the least efficient 10–20% of food producers globally creates 60–80% of key global impacts but produces only 5% of the product. Codex Planetarius will help ensure that producers meet minimum performance standards for their products that are to be exported. What fails to meet the standards will be available on domestic markets—although experience shows in the case of Codex Alimentarius for example that once a standard is set for exported food, it often is adopted for produce made available on domestic markets as well. This approach is designed to minimize costs and trade disruption, maximize local environmental benefits, and ensure food security and sustainable production for future generations.

Over nearly 40 years, multistakeholder groups have created hundreds of voluntary standards in the attempt to manage the key impacts of producing food commodities. These were aimed at rewarding the best performers and helping them access markets that would recognize and reward them with higher prices for certified products. Most standards reward practices rather than results. But most important, the costs of achieving certification often were not rewarded in the marketplace. In short, many programmes were based on what better performers were already able to do.

In the end, voluntary programmes have not operated at the speed or scale needed to protect planetary health. They have failed for two reasons. First, they were aimed at the wrong end of the stick—e.g. rewarding the best performers rather than improving the least efficient ones, whose products are often preferred in the market because they are cheaper than that produced by the more environmentally advanced producers. This is particularly true in global markets, even in Europe and North America where most companies, with few exceptions, continue to buy uncertified product when higher priced certified product is available. Second, they did not consistently measure and reduce the key environmental impacts of food production.

Current efforts directed at agricultural production are separate from the internationally recognized codes that are accepted by governments regarding legality, subsidies, and trade policies as part of the World Trade Organization (WTO). They also are distinct from those that protect human health, such as Codex Alimentarius, which has been explicitly endorsed as the standard-setting organization for food safety by the WTO’s Agreement on Sanitary and Phytosanitary Measures

In 1963, doctors and other health experts finalized Codex Alimentarius to help governments assure consumers and other stakeholders that a system existed to promote food safety globally. Codex Alimentarius, which is housed in the Food and Agriculture Organization of the United Nations (FAO), focuses on key consumer health and safety standards as well as phytosanitary issues. It does not address the health of the planet, however. This is what makes Codex Planetarius necessary.

Codex Planetarius would provide governments, businesses, trade authorities, multilateral organizations, NGOs, civil society, and other key institutions minimum acceptable environmental performance standards for the production of globally traded food commodities. It would focus on the same key impacts, indicators, and methods of measurement globally. For example, while greenhouse gas emissions seem straightforward, there is no single life-cycle assessment methodology—even when two analysts use the same methodology they can have different results. Today we don’t just have apples-to-oranges comparisons, we actually have apples to fruit salad. The issue is even more complicated when talking about soil health or other key impacts.

In short, the ultimate level of performance allowed for any indicator might vary based on geography and level of development. The performance level that best reflects local conditions would need to be agreed to by researchers and then negotiated by countries. This has happened in the past with the WTO and various trade issues. However, in this case, the methodology for measuring (e.g. the metrics) would be the same and would promote an escalator of continuous improvement. To be traded and enter global markets, commodities would need to meet minimum environmental performance standards.

As with Codex Alimentarius, the best outcome would be that all domestic production is held to a higher standard, rather than products with the worst environmental impacts being held for domestic markets. This would happen for three reasons. First, it will be cheaper for countries not to segregate their products for domestic and export markets. Second, products that fail to meet export requirements will remain on the domestic market and thereby lower domestic prices—to the detriment of farmers if this is allowed to go on for very long. Third, production that is less sustainable erodes the natural environment, undermines food production, and makes food production less resilient.

As we are already seeing, climate change will result in significant shifts in where and how food commodities are produced. As food production shifts, so would the environmental impacts, because producers do not know how to produce the new crops as well as the old ones, and the new crops may need to be adapted to the new geographies.

The costs of addressing environmental externalities are not included in food commodity prices. To help pay for those costs, we are proposing the use of the market buy-and-sell mechanism to generate the 1% Fund. A 1% environmental fee would be collected in addition to the declared FOB price of globally exported food commodities. The revenues would be used to make the global food system more sustainable and resilient in the face of climate change. This would include helping the least efficient producers obtain clear land titles and other legal permits, reforest areas to comply with the law, address market traceability requirements, adopt better practices and technologies to reduce key impacts, retire marginal lands, and support the floor price of payments for environmental services, among other things.

The funds would be disbursed based on the export level of each crop, so the largest 15 exporting countries would receive the largest amount of funding, but it would be earmarked for each crop. It is assumed that the consumers paying the tax would want it to be applied directly to the “product” that they are purchasing. The funding would go to help improve the worst producers of that crop in those exporting countries. These are the countries that are the most important for global food security, as they are the ones that tend to fill the gaps during periods of shortages. But all of them will face resilience issues due to the impacts of climate change.

In the end, it will take governments to move the bottom—that is, the least efficient producers who create the biggest environmental impacts. Such actions will protect renewable natural resources for future generations and ensure that more of the actual cost of sustainability is passed on to the consumer. However, the costs will not result in significant increases in the cost of consumer goods. For example, roughly 5% of the cost of a $4 box of cereal goes to purchase the ingredients that are in the cereal. Shipping and handling and even advertising usually represent much larger sums, and the rest is for processing, packaging, transportation, marketing, and similar costs. The 1% Fund assessment would total 1% of that 5%, or 5/100ths of a percent for the total cost of the box of cereal. That works out to about 2/10ths of a penny on a $4 box of cereal.

Both the 1% Fund and Codex Planetarius are multi-year proof-of-concept projects at World Wildlife Fund’s Markets Institute that implicate dozens of other organizations and experts, involve in-depth research and analysis and case studies about the impacts, and are funded by the Gordon and Betty Moore Foundation. Research on impacts and indicators as well as a number of potential impacts of Codex Planetarius and the 1% Fund can be found on our website.

We are using several layers of expert peer review to ensure that the two programmes address global realities and to employ the peer review process to build consensus. We will also develop pilot programmes to test Codex Planetarius in target commodity markets and geographies and will test the 1% Fund in Brazil to look at the impact on multiple commodity exports. Each pilot will explore and analyze metrics and systems to measure them, estimate costs, identify gaps, address assumptions, and assess the impacts of the proof-of-concept research for globally traded food. Once the proof-of-concept work is completed, we will put the body of work in the public domain and help hand off the two programmes to governments through trade agreements and, eventually and ideally, to the WTO.

The ultimate goal is for governments to own both of these programmes. After being explored through bilateral and larger trade agreements, eventually Codex Planetarius will be launched as an entity and located within a suitable organization. The 1% Fund will likely have a “fund of funds” structure in each exporting country to ensure that the fees paid to improve the production of each commodity are used to reduce the impact of those producing them, making them more sustainable and ultimately more resilient.

With trade more critical to food security than ever before, it is incumbent upon us to find ways to use markets to make that trade more sustainable. That includes taking the products with the biggest impacts off of global markets, and also using the market to generate the funding needed to pay for reducing the biggest impacts of producing food. That will make food production more sustainable and make our global food system more resilient.

What is the alternative? If we do not reduce the biggest impacts of producing food globally, we will continue to mine the resources needed by future generations. Codex Planetarius and the 1% Fund are complementary strategies that use global food markets to reduce the biggest impacts of producing food. Over time, they will use production to begin to rebuild the renewable natural resource base. We must manage the planet as if our lives, as well as those that follow us, depend on it. Think about it.

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Jason Clay is Executive Director, Markets Institute, World Wildlife Fund.

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Synergies by TESS is a blog dedicated to promoting inclusive policy dialogue at the intersection of trade, environment, and sustainable development, drawing on perspectives from a range of experts from around the globe. The editor is Fabrice Lehmann.

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