The ever-increasing demand for agricultural products is leading to significant social and environmental consequences worldwide. The expansion of international trade has created global supply chains, directly linking consumers to geographically-distant impacts, including carbon emissions, biodiversity loss, freshwater depletion, soil degradation and labour-rights issues – all of which have local, regional, and global relevance.
Due to its vast size and consumer market, India is a global anchor of the trade in agricultural products. It has also undergone remarkable social and economic development over the last several decades. This has led to an increasing demand as well as supply of these products.
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Large land areas in India are used to service the international demand for grains, fruits, and vegetables, among other products, which puts pressure on national soil and water resources. At the same time, India’s vast consumer market means that large amounts of land, even outside its borders, are used to satisfy domestic demand.
What is food-based impact accounting?
The expansion of such imports has contributed to increasing the environmental pressure in the exporting countries. Recent studies have shown that a substantial share of the total ecological impact is due to the displacement of environmental damage through international trade.
Tackling these demand-supply dynamics is now a key aspect of international environmental governance and represents a great challenge in achieving the U.N. Sustainable Development Goals and other climate action and biodiversity conservation goals.
The current paradigm in measuring impacts and allocating responsibility is based on a production-based accounting method: it measures impacts in the place where the products are produced.
There are concerns about its limitations in managing ‘leaks’, fixing accountability, and ensuring equity and justice among producers and consumers.
One alternative that has emerged is consumption-based accounting.
What is consumption-based accounting?
Consumption-based accounting accounts for impacts at the point of consumption, attributing all the social and environmental impacts that occurred during production and trade to the final products and to the eventual consumers. That is, the approach urges the consumer (whether social groups or countries) to accept responsibility for the embodied or ‘virtual’ impacts of the product that is being consumed.
This approach has become prominent thanks to growing concerns around the divide between countries that are producers and those that are consumers, leading to a high degree of international co-dependence. The approach has also sparked calls to adopt sustainable consumption practices as a form of environmental action.
This has important implications for the coverage of impacts and to determine who has the primary responsibility to act.
What is the demand perspective?
From a demand perspective, the basis for this approach is straightforward: since the pressure on natural and human resources is largely the direct result of consumption practices in developed economies, the responsibility for any consequences due to the production process should fall on those consumers as well.
This also reflects arguments of equity and justice surrounding the issue of historical responsibility. Studies suggest that developing economies like India have contributed only 23% of global cumulative emissions and are responsible for about 20-40% of the global average temperature rise since the preindustrial era. So the approach acts to further decouple population and emissions by shifting substantial impacts from emerging markets like India to the much-less-populous economically developed countries.
A consumption-based approach thus highlights the responsibility of industrialised states to mitigate impact and the rights of developing economies to not carry an excessive burden. This is an extension of the principle of common but differentiated responsibilities that make up global climate governance.
This approach also accounts for a growing element of international trade: the existence of trilateral supply chains, where products are produced in one country, processed in a second country, and consumed in a third country. By tracing the flow of intermediate and final products through a global supply chain, it can establish links between where the product is eventually consumed and where its environmental impact is manifesting.
What is the supply perspective?
From a supply perspective, the proponents of consumption-based accounting claim that it can encourage cleaner production since producer countries are implicitly encouraged to implement strategies that lower the environmental footprint of their exports.
They also have an incentive to raise the living standards of actors in agricultural supply chains to safeguard their access to foreign markets.
The approach can also go a long way to fix ‘leaks’ in production systems, where production is often taken to jurisdictions that are relatively lenient about production standards (including India).
What are the benefits for environmental action?
The application of this approach to estimate carbon emissions, in the form of embodied emissions, and water use, in the form of virtual water, has also been around in the scientific literature for some time, but has only recently made inroads into policymaking.
For example, the European Commission recently initiated steps to ensure products consumed in the European Union have not contributed to deforestation in their country of origin. This measure is expected to significantly reduce carbon emissions from deforestation as well as biodiversity loss, since the European Union is a major consumer of agricultural and forestry products.
Even from a consumption-based accounting perspective, India finds itself in a unique position. Currently, major developed economies have an environmental footprint in India because of their consumption of Indian agricultural produce. Conversely, India’s own deforestation footprint outside its borders has increased over the last two decades and is rapidly growing, even if it remains below that of several G-20 countries on a per-capita basis.
If the environmental impacts of our consumption are outside our borders, it is easy to not consider them at all since they are not “our problem”. But the impacts abroad are an outcome of our demand, so we should be accepting a part of the responsibility.
Can impact attribution be more fair?
Since consumption-based emissions-accounting can identify the consequences of domestic and foreign demand for agricultural products, it may also be able to facilitate an agreement on global environmental action based on producers and consumers sharing responsibilities.
Current agreements are hampered by a lack of agreement on the historical and current role of developed and developing economies in the climate, pollution, and biodiversity loss crises. Having developed economies take responsibility for some of the impact presents an opportunity for coordinated action, while allowing developing economies like India the space to grow and improve their agricultural systems.
Finally, consumption-based accounting is not easy to implement thanks to liability, monitoring and compliance concerns, but it is useful, especially as a tool with which to voluntarily diagnose impact-intensive consumption patterns.
The approach can be applied domestically as well, since it helps shift focus from producers to consumers, and encourages individual and collective changes in consumption behaviour.
Manan Bhan is Fellow in Residence, Ashoka Trust for Research in Ecology and the Environment, Bengaluru.
