There are dozens, perhaps hundreds, of negative externalities of industrial animal ag. Negative externalities are documented on most of the pages of this site.[1]
This section, unlike most others on the site, includes some answers that are only lightly referenced. Some of these subjects are not extensively researched or analyzed in writings about the animal ag industry. To the degree that the ideas in this section are unreferenced, they should be taken as informed opinions rather than facts. In many cases, however, the site contains a multitude of references that back up the concepts on these pages, and the points made are essentially summaries of broad understandings. As always, we welcome any challenges, corrections, or suggestions for improvement.
By definition, for every negative externality of animal ag there are affected third parties that bear some of the costs of production.[1]
Depending on the externality, affected third parties can be people in small communities or large watersheds, groups of workers, species of wildlife, or all the inhabitants of a large ecosystem. The animals kept in tight confinement on factory farms are forced to pay with their suffering. Some externalities, regardless of where they originate, affect the entire world community and can last for generations.[2,3]
Andrew Barkley and Paul W. Barkley (2013) Principles of Agricultural Economics. Routledge, London. ISBN 978-0-415-54-69-8, p. 332. [An externality is “a consequence of an economic activity that affects unrelated third parties. The externality can be either positive or negative. Thus, an externality is a transaction spillover that creates a cost or a benefit not transmitted through market prices.”]
U.S. EPA (2011) Reactive Nitrogen in the United States: An Analysis of Inputs, Flows, Consequences, and Management Options, A Report of the EPA Science Advisory Board, p. ES-5. [Various compounds created by nutrient pollution “are distributed on a scale of hundreds to thousands of kilometers within the U.S. boundaries, and also distributed to downwind countries and oceans.”]
William Nordhaus (2019). Climate Change: The Ultimate Challenge for Economics. The American Economic Review, 109(6), 1991–2014. [“Global warming is the most significant of all environmental externalities. …affects the entire planet, does so for decades and even centuries…”] https://doi.org/10.1257/aer.109.6.1991
The industrial animal ag system, from feed crops to factory farms to slaughterhouses, generates negative externalities that are:
Without question the greatest cause of animal suffering. Likely the number one factor in the loss of biodiversity. Likely the largest contributor to the pollution of lakes, rivers, streams, and coastal areas. Likely the largest factor affecting water scarcity and aquifer depletion. By far the largest user of land and the largest factor in the degradation of natural ecosystems. Perhaps the largest contributor to fertile soil erosion and degradation. A significant contributor to increasing greenhouse gas emissions. A large contributor to antibiotic resistance and a significant risk factor for zoonoses. A significant cause of local and regional air pollution. A high source of injuries and poor health outcomes for workers. A large factor degrading drinking water. One of the largest factors compromising rural community health and quality of life. A factor in the disproportionate environmental and health impacts on disadvantaged communities. A major factor in the degradation of the rural landscape.[1]
Note: We do not address on this site two large categories of negative externalities: a) the degradation of our national character due to society’s implicit support for these abusive systems, and b) the societal health impacts from the over-consumption of animal-sourced foods and from the cheap by-products of feed crops used in highly processed foods.
There is an obvious injustice embedded in each negative externality.[1] The goal of this site is to identify and analyze those injustices in the hope that others will amplify those understandings and encourage mitigation.
While neither the producers nor the consumers of animal ag products are paying the full costs of production, third parties with no interest in the transactions are penalized, in many cases severely. This is often without their knowledge and always without their consent.
Forcing producers (and thereby their customers) to pay for those costs is a form of social justice. This is especially true when the affected third parties are relatively powerless, i.e., the farmed and wild animals, the precarious workers, or the people without the capabilities or financial means to challenge the companies that are compromising their air, water, and health.[2]
Tietenberg, T., & Lewis, L. (2018). The Economic Approach: Property Rights, Externalities, and Environmental Problems, Ch. 2, Environmental and Natural Resource Economics 11th ed. Routledge, p. 25. [“An externality exists whenever the welfare of some agent, either a firm or household, depends not only on his or her activities, but also on activities under the control of some other agent.” (Naturally, many sources focus on human values and ignore the interests of animals.)
von Braun, J., & Hendriks, S. L. (2023). Full‐cost accounting and redefining the cost of food: Implications for agricultural economics research, Agricultural Economics, 54:451-454, p. 453. [“Negative externalities can contribute to social injustice. They impact power relations and harm marginalized groups, including women, indigenous and minority populations, migrant workers, and other communities. Environmental harm, such as air and water pollution, is often concentrated in places inhabited by marginalized groups.”]
These are very complex tasks for the following reasons:
Valuations of animal pain and suffering are a particularly challenging area.[1,2] Agricultural externalities are not a common focus for researchers.[3] Even among those that report on agriculture, few attempt to specify the share of externalities attributed specifically to animal ag, despite its centrality. Many of the impacts of agriculture are cumulative and tend to slowly worsen over years or even decades.[4] Any valuations reflect subjective monetary approximations of worth.[5] (There are few methodologies for valuing the loss of a species.) Estimations of future impacts are particularly difficult, and calculating values on behalf of future generations is especially challenging.[6] Current valuations of natural resources can be wildly impractical or unrealistic.[7]
Lusk, J. L., & Norwood, F. B. (2011). Animal welfare economics. Applied Economic Perspectives and Policy, 33(4), 463-483. [“One of the thorniest issues arising in the study of consumer preferences for animal welfare is that people simply do not know much about how farm animals are raised.” at p. 16.“…we found most people placed only a very small value on the change (for example, the median bid to move 1,000 sows and all their offspring from a gestation crate system to a pasture system was only $1 or $0.001 per sow.” at p. 19]
Rusman, A., et al., (2023) External Costs of Animal Sourced Food in the EU, Impact Institute., pp. 27-29. [Report attempts to assign costs to animal suffering, “a first elaboration open to review,” estimating the figure at more than 3 times the total cost of animal-sourced food production in the EU. This is a dramatically different approach than the more common “willingness-to-pay” method, which assigns value according to consumers’ assessment of what higher animal welfare is worth to them.]
Lavaine, E., et al., (2020). Health, air pollution, and animal agriculture. Review of Agricultural, Food and Environmental Studies, 101, 517-528, p. 519. [“A manual literature search indicates that there exist few publications related to air pollution from agriculture in top generalist or public economics journals as well as in environmental economics journals, compared with air pollution from other sectors such as energy or transport.”]
Pretty, J. et al., (2001) Policy Challenges and Priorities for Internalizing the Externalities of Modern Agriculture, Journal of Environmental Planning and Management, 44(2), 263-283, p. 265. [“The types of externalities encountered in the agricultural sector have four features: (1) their costs are often neglected; (2) they often occur with a time lag; (3) they often damage groups whose interests are not represented; and (4) the identity of the producer of the externality is not always known.”]
McInerney, J. (2004). Animal welfare, economics and policy. Report on a study undertaken for the Farm & Animal Health Economics Division of Defra, p. 21. [“All this makes clear that animal welfare is in reality a subset of human welfare, the animals’ preferences and wellbeing having relevance only to the extent that they are important to us.”]
William Nordhaus (2019). Climate change: The ultimate challenge for economics. American Economic Review, 109(6), 1991-2014, p. 2005. [“Global warming is the most significant of all environmental externalities… Once discount rates are set below 3 percent per year, the impact on decisions becomes dramatically larger. This shows that discounting is perhaps the most important conceptual issue facing current climate policy.”]
Christopher Flavelle & Somini Sengupta (2023) How America’s Diet Is Feeding the Groundwater Crisis, New York Times. https://www.nytimes.com/interactive/2023/12/24/climate/groundwater-crisis-chicken-cheese.html [“Today alfalfa, a particularly water-intensive crop used largely for animal feed, covers 6 million acres of irrigated land, much of it in the driest parts of the American West.”]
Yes, but because of all the factors mentioned above, this is a very challenging exercise that often generates vastly differing estimates for the same externality. Additionally, reports focus on certain externalities and not others. We are not aware of a credible and comprehensive effort to prioritize or put price tags on the full array of negative externalities generated by U.S. animal ag.
There is a relatively new and evolving approach for assigning costs to externalities usually referred to as true cost accounting (TCA).[1] There is not much consensus regarding methodologies, and even the definitions can differ widely.[2,3] Most TCA reports focus on the externalities of the global food system.[4,5] Some have focused on, or included estimates for, the U.S. food system.[6]
Even though most of the negative externalities in agriculture stem from animal ag, few reports attempt to analyze those costs specifically.[7-10]
True Cost Initiative (2022). TCA Handbook – Practical True Cost Accounting guidelines for the food and
farming sector on impact measurement, valuation and reporting, p. 2. [“Scientific consensus on measuring the true cost of food is still evolving. The true cost accounting method proposed in this document contributes to an actionable framework towards a refined, (inter-) nationally agreed-on framework as the basis for food system impact accounting.”]FAO (2023) The State of Food and Agriculture 2023 – Revealing the true cost of food to transform agrifood systems. Rome, p. xvii. https://doi.org/10.4060/cc7724en [TCA is defined as “a holistic and systemic approach to measure and value the environmental, social, health and economic costs and benefits generated by agrifood systems to facilitate improved decisions by policymakers, businesses, farmers, investors and consumers.”]
Aspenson, A. (2020). True Costs for Food System Reform: An Overview of True Cost Accounting Literature and Initiatives. John Hopkins Center for a Livable Future, Appendix II TCA Definitions p. 18. [Among the many quoted definitions is one attributed to Lexicon of Food: “A practice that accounts for all external costs—including environmental, social and economic—generated by the creation of a product.”]
FAO (2023) The State of Food and Agriculture 2023, p. 33. [“Environmental costs, which are likely underestimated, have an expected value of nearly 2.9 trillion 2020 PPP dollars, corresponding to about 20 percent of total quantified hidden costs caused by agrifood systems. Of these, more than half pertained to nitrogen emissions (mostly from runoff to surface waters and ammonia emissions to air)…”]
Hendriks, S., et al., (2021). The true cost and true price of food. United Nations Food Systems Summit 2021, p. 3. [“The current externalities were estimated to be almost double (19.8 trillion USD) the current total global food consumption (9 trillion USD). These externalities accrue from seven trillion USD (range 4-11) in environmental costs, 11 trillion USD (range 3-39) in costs to human life and one trillion USD (range 0.2-1.7) in economic costs.”]
The Rockefeller Foundation (2021) True Cost of Food: Measuring What Matters to Transform the U.S. Food System, p. 15. https://www.rockefellerfoundation.org/wp-content/uploads/2021/07/True-Cost-of-Food-Full-Report-Final.pdf [Estimating GHG emissions, water use, and soil erosion at $350 billion, biodiversity loss due to land use and pollution at $455 billion, and impact of pollution on human health at $36 billion = $841 billion. This is ~76% of the size of the estimated $1.1 trillion “total food expenditures.”]
Rusman, A., et al., (2023) External Costs of Animal Sourced Food in the EU, Impact Institute., pp. 27-29. [Report attempts to assign costs to animal-sourced foods in the EU, including environmental costs and animal suffering, (“a first elaboration open to review,”) estimating the total external costs at more than 7 times the total cost of animal-sourced food production.]
Lucas, E., et al., (2023). Low-carbon diets can reduce global ecological and health costs. Nature Food, 4(5), 394-406. [Report broadly estimates per capita cost of some of the environmental damages of animal-sourced foods in the American diet at about $1,500 per capita annually. In “high income countries” ~84% of total food costs are due to animal-sourced foods. About 41% (or $.79/ $1.94 total of environmental plus health damages) is attributed to environmental factors. Broadly estimated, .84 x .41 x $4,380 = $1,508.00. see, pp. 395-396, and Figure 4, p. 397]
Kuruc, K., & McFadden, J. (2023). Monetizing the externalities of animal agriculture: insights from an inclusive welfare function. Social Choice and Welfare, 1-24, pp. 3-4. [“In other words, we estimate that the social loss generated from one individual’s annual meat consumption is greater than $100,000. The animal welfare externality accounts for nearly all of this large sum, underscoring the degree to which the results rely on difficult-to-test assumptions on the parameter governing the quality of farmed animals’ lives.”]
Funke, F., et al., (2022). Toward optimal meat pricing: Is it time to tax meat consumption? Review of Environmental Economics and Policy, 16(2), 219-240. [Estimates that selected environmental externalities of various types of meat range from 20-60% of the average retail price.]
No. The animal ag industry contributes a very small share of U.S. gross domestic product (GDP, or the total value of all goods and services). Including the output of animal slaughter and processing, dairy products, and eggs, the total value of shipments of the animal ag industry equals ~2% of GDP.[1,2]
US Census Bureau Tables (2022) [NAICS Code 3116 (Animal Slaughter & Processing) = $296.3B. Code 3115 (Dairy Product Manufacturing) = $159.9B. Code 3111 (Animal Food Manufacturing) = $70.2B. Total value of shipments = $526.4B. Plus $19.4B “Value of all egg production” per U.S. Poultry & Egg Assoc. Total = $545.8B for 2022. 545.8B/$26.14 trillion GDP (see below) = 2.09 %. A large portion of Animal Food Manufacturing is either non-meat or farmed animal feed, so the actual percentage is a little less than 2%. The value of shipments of feed crops and from factory farms is incorporated into this final figure of ~2% of GDP.]
U.S. Bureau of Economic Analysis (3/30/2023) Gross Domestic Product, Fourth Quarter and Year 2022 (Third Estimate) [U.S. GDP = $26.14 trillion]
Actually, total prices would go down. The sum of the costs to consumers and non-consenting third parties would shrink.
If viewed solely as prices at the checkout counter, then yes, prices will rise. But as reviewed throughout these pages, the total costs of animal ag foods are far larger than the costs at the checkout counter. When commodity producers are forced to internalize costs, they will then have strong incentives to reduce those costs through organizational and technological fixes.[1]
And since it is much more efficient for producers to stop environmental harm or mistreatment at the source, the costs of prevention will in most cases be much less than the costs to third parties or the costs of clean-up.[2] For example, worker injuries such as repetitive motion disorders can lead to a lifetime of reduced earnings and higher health care costs. Designing and implementing workloads that prevent disabilities is less expensive to society.[3]
If producers internalize costs, prices at the checkout counter would rise in the short term. But costs absorbed by affected third parties would decrease by a larger share in the long term.[4]
Tietenberg, T., & Lewis, L. (2018). The Economic Approach: Property Rights, Externalities, and Environmental Problems, Ch. 2, Environmental and Natural Resource Economics 11th ed. Routledge, p. 26. [“As long as the costs are external, no incentives to search for ways to yield less pollution per unit of output are introduced by the market.”]
Pretty, J., et al., (2001). Policy challenges and priorities for internalizing the externalities of modern agriculture. Journal of environmental planning and management, 44(2), 263-283, p. 269. [“An important principle is that it is more efficient to use limited resources to promote practices that do not damage the environment than to have to spend them on cleaning up after a problem has been created.”]
Frant, M., et al., (2024) Evaluation of Ergonomic Risks, Musculoskeletal Disorders, and Peracetic Acid Exposure Among Employees at a Pork Processing Plant in Michigan, CDC Health Hazard Evaluation Program, HE Report No. 2021-0117-3397, pp. 2-3. [“More than half of the job tasks we measured (61%) had hand activity levels and force at or above the ACGIH (American Conference of Governmental Industrial Hygienists) threshold limit value…32% of the harvesting side workforce had experienced work-related musculoskeletal symptoms during the past 12 months.”]
Note: Since farmed animal mistreatment is likely the largest negative externality, and it also provides producers with their largest cost savings, it will require a major shift in consumer preferences and regulations to enact significant change. As a society we will have to determine that granting farmed animals lives worth living and valuing their pain and suffering is worth a significant increase in costs at the check-out counter.
Yes. Internalizing negative externalities increases producers’ costs which leads to higher checkout counter prices which reduces demand. This is the natural result of the market integrating the full costs of production, placing those costs on producers and consumers rather than foisting them on non-consenting third parties.[1,2]
Tietenberg, T., & Lewis, L. (2018). The Economic Approach: Property Rights, Externalities, and Environmental Problems, Ch. 2, Environmental and Natural Resource Economics 11th ed. Routledge, pp. 25-26. [“…conclusions about market allocations of commodities causing pollution externalities: 1. The output of the commodity is too large. 2. Too much pollution is produced. 3. The prices of products responsible for pollution are too low.”]
Thomas Helbling (2010) Externalities: What happens when prices do capture all costs, Finance and Development, International Monetary Fund, p. 48 [“…so goods with negative externalities are overproduced when only private costs are involved and not costs incurred by others. To minimize social costs would lead to lower production levels”]