Climate dynamics impact food supplies and prices, and the health of whole populations. 

Civilization itself has long been organized around this foundational truth. There is evidence that cities first arose as a strategy for managing disruptions relating to the dependency of the human food supply on weather patterns, watersheds, complex ecosystems, and multi-year climate phenomena.

National budgets in all regions include infrastructure, subsidies, agency support for rural economic development, food assistance, crop insurance, and other measures, aimed at reducing the destabilizing effects that flow from food systems falling out of alignment with climate dynamics. 

The Food System Economics Commission found, after conducting the first global integrated assessment of the economics of food, in relation to planetary boundaries and the depletion of natural resources, that current practices are costing $15.428 trillion per year. These hidden costs are not sustainable, in a world where only two nations—the U.S. and China—have annual economic output exceeding that overall volume of cost and waste.

In 2020, the Commodity Futures Trading Commission (CFTC)—a leading U.S. financial regulator—found that unchecked climate disruption would eventually collapse the financial system and stop it from supporting the macroeconomy. In 2021, the Financial Stability Oversight Council (FSOC)—another leading U.S. financial regulator—published similar findings.

In that future of systemic financial failure, even a nation as seemingly secure as the United States, a leading agricultural producer, a leading energy producer, with world-leading technology and financial wealth, could find itself unable to maintain basic services or the everyday economy people have come to expect.

Agricultural landscapes are dependent on groundwater, watersheds, precipitation, or a combination of these. Irrigation systems must draw fresh water from somewhere, and the unsustainable depletion of aquifers, together with the retreat of mountain glaciers and loss of forest and soil water retention across watersheds, have all led to our entering an “era of global water bankruptcy“.

Lack of coordinated attention to the preservation of fresh water supplies, including through climate change mitigation, means water-related destabilizing risks are spreading. Not only is food production in dependent communities and regions affected; so are food supplies and regional economies in both industrialized and vulnerable countries. 

The Active Value Project has called for an integrated multidimensional metric based on assessment of the Balance of Hidden Costs and Co-Benefits (BHC). BHC calculations are crucial to undertsanding the real value of a given investment or industrial activity. To achieve this, an open, diverse, user-friendly networking of Earth systems science insights (NESSI) will be needed. 

BHC and networked Earth system science insights will need to be available to marginal and vulnerable communities, as leverage for accessing results-based financing. Governments could support this expanded access to science insights, and the related expansion of economic opportunity, by supporting micro-scale, small, and medium-sized enterprises (MSMEs) that translate data into funding and results into data.

The integration of value chains into traceable landscapes of producers, aggregators, distributors, and retailers, is crucial to providing consumers with the information they need to understand where their food is coming from, whether it is produced naturally or using chemicals, how workers are treated, and whether they face specific risks related to non-food ingredients. Much of this information is still not routinely available even in the most developed markets, as large companies lobby for the right to use misleading language, often obscuring key facts from customers. 

Information integrity is easier to achieve if the information system is rooted, locally relevant, and rewarding to diversified local economic actors. This is why we propose small businesses as a key intermediary, which can be rewarded both with public sector incentives and enhanced targeted financing from the private sector and from multilateral agencies. 

For example: 

• Local soil ecology finance corporations (SEFCO) can manage data systems, aggregate and disaggregate financial flows, and prosper by providing verifiably independent, factual insights, to both investors and producers. 
• Co-investment management agencies can operate as public or private-sector entities, to provide coordination services, including capacity-building and insight-sharing for development of climate-smart local and regional value chains. 
• Field service practitioners can function as extension agents, supporting onboarding of new small-scale producers to sustainable cooperatives, through the adoption of new practices, with verifiable metrics. 
• Regenerative practice-focused insurers can bring a new kind of financing to rural communities, by establishing their own function as best-practice propagators that successfully reduce costs for public agencies and corporates. 

Behind all of this new, diversified economic opportunity is the question of food security climate risk, at the local, regional, and national levels, and internally to specific value chains. Food Security Climate Risk (FSCR) profiles can provide important leading edge insights into emerging risks, allowing recalibration and reorientation of public spending priorities.

• Major banks can support SEFCO services, which in turn deliver needed capital to local small-scale producers and regional cooperatives, to support adoption of regenerative practices and delivery of climate-related and sustainable development co-benefits.
• The critical need is not for risk profiles to be public information, subjecting the vulnerable to capital flight. Instead, they should be used as critical insights for realigning operations with future climate resilience. 
• The delta between traceable risk and actionable innovation to build resilience can become an asset that attracts credit and investment. 
• Governments can create incentive structures that invite this diversification of local and national banking activity. 
• Insurers can capture and apply the data needed to prioritize resilience-building practices, and to reduce risk for their own clients, related local economies, and jurisdictions. 
• Food Security Climate Risk profiles, driven by data and oriented toward cooperative innovation and economic diversification, can provide the common understanding of risk and opportunity.

By reducing risk proactively and on the basis of evidence, across multiple dimensions of economic, human, and planetary health, leading localities and value chains can reduce barriers and create attractive environments for new outcome-focused investment. FSCR profiles should include elements of sustainable value chain planning, with cooperative de-risking and innovation incubation as central goals for short, medium, and long-term planning.