True Cost Accounting

Highlight positive and negative environmental effects monetarily

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Know & reduce true costs

True Cost Accounting (TCA) makes the environmental impacts of agriculture visible and comparable. This is because the innovative method translates environmental criteria into monetary figures. In this way, benefits and costs incurred by agricultural practices for the environment can be expressed in a very concrete way that is comprehensible to all.

We calculate the positive and negative externalities per crop at the agricultural level. In doing so, we go one step further than calculating carbon footprints. The TCA calculation also takes into account aspects such as water, soil and biodiversity. Our strength in the granular consideration of the agricultural supply chain also comes into play in the TCA. Of course, we calculate using primary data from the farms – supplemented by reference data if necessary.

What are externalities?

If forage maize is grown intensively without undersowing, the soil is largely uncovered in spring. Heavy rainfall in the increasingly dry spring then leads to topsoil runoff, which can silting up rivers and encourage flooding. Taxpayers pay the repair costs for flood protection, while fodder and meat are cheaply available elsewhere. True cost accounting corrects the cost calculation of products for these externalities, i.e. external costs. If benefits are created, these are also taken into account.

Food production can create environmental benefits
True Cost Accounting agriculture example calculation

Further development of True Cost Accounting

In the initiative “True Cost from Costs to Benefits in Food & Farming”, we are working together with partner companies from the agricultural, food and financial sectors on guidelines for uniform reporting of TCA. Our common vision is to make the costs and benefits of agricultural production for nature and society visible in business reports and for financial institutions.

In addition, we will be doing further homework in the future. After all, aspects of social and human capital cannot yet be adequately presented in true cost accounting.

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Interested in True Cost Accounting?
Michaele Kaiser
Clients & Partners