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Animal agriculture: addressing the impacts

Booming demand for food derived from animals has led to unprecedented increases in livestock production over the past few decades. This increase in production and consumption of animal products creates risks for both environmental and human health. Can actuarial science play a role in minimising these negative impacts?

Livestock production has a huge environmental footprint. Reducing the environmental impact of the animal agriculture industry would be one of the most effective ways to tackle climate change and a number of other sustainability issues our world is facing today.

The Livestock sector is the world’s largest user of land resources. Despite providing only 18 per cent of the calories consumed by the world, the production of meat and dairy products requires 83 per cent of the earth’s farmland. Demand for this land is often met through significant deforestation in developing countries.

The livestock sector has also been found to be a significant contributor to climate change, with the Food and Agriculture Organisation of the United Nations reporting that the sector was responsible for 18 per cent of human-induced greenhouse gas emissions. This is more than the combined exhaust from all transportation. The sector also has a significant water footprint, with the average water footprint per calorie for beef, being twenty times larger than for cereals and starchy root vegetables.

In addition to the environmental impacts, the consumption of some animal products has been associated with adverse health effects. The World Health Organisation has classified processed meat as a Group 1 carcinogenic to humans. This category is used when there is convincing evidence that the agent causes cancer. Tobacco smoking and asbestos have received the same classification. While there is limited evidence at this stage, red meat, including beef, veal, pork, lamb and goat, was classified as Group 2A - probably carcinogenic to humans. Efforts to reduce animal agriculture, as well as the consumption of food products derived from it, have the potential to improve performance across a whole range of the goals including climate action, zero hunger, good health and wellbeing, clean water and sanitation, responsible consumption and production, life below water and life on land.

Case study by Svilena Dimitrova, FIA

FarmingThere are a number of ways the work of actuaries could help to reduce the negative impacts of animal agriculture. Actuaries providing investment advice could recommend the divestment of funds from organisations involved in animal agriculture. An initial recommendation would be to divest from those organisations who do not follow sustainable principles and practices. Actuarial analysis could identify alternative investment opportunities with expected rates of return that are as good, if not better, to ensure there is no financial detriment. Future investment could be targeted at organisations involved in the production of plant-based food, development of sustainable food sources, or reforestation.

Actuaries working in insurance could also help to address the issue by designing innovative insurance products which alleviate barriers to plant-based food farming. Recently, Resonance Global and Jubilee Insurance partnered together and utilised newly available hyper-accurate climate data to successfully develop a weather-indexed crop-insurance product in Kenya. The accurate, verified, and reliable weather data enabled the partners to evaluate risk and price premiums in a way that is both affordable for the farmers and sustainable from a business perspective. In early 2017, the partners rolled out the new insurance product, called Kinga Kilimo (Protect Your Farm) in 10 counties across Kenya, with plans to roll out to the rest of Kenya in the following year. It is hoped that Jubilee’s affordable, easy-to-access crop insurance product will go some way to eliminating the financial risks to smallholder farmers enabling them to provide for their families and take calculated risks on innovations like improved hybrid seeds or fertilizers that can increase yields and raise incomes.

The insurance industry may also indirectly address the issue by discouraging individuals to eat meat, dairy and other animal products by recognising the health risks they pose. The amount of animal products the policyholder consumers could be considered alongside other rating factors. For example, Health I.Q., an American Insurance provider, offers special rate insurance products for health conscious vegans.

References

Image: Maxime Niyomwungeri https://unsplash.com/photos/UdhpcfImQ9Y

Food and Agriculture Organization of the United Nations, ‘Animal Agriculture’, http://www.fao.org/animal-production/en/.

Poore, J and Nemecek, T. (2018) ‘Reducing food’s environmental impact through producers and consumers.’ Science 360 (6392), pp 987-992. http://science.sciencemag.org/content/360/6392/987

Food and Agriculture Organization of the United Nations ‘Livestock's Long Shadow: environmental issues and options’, 2006. http://www.fao.org/docrep/010/a0701e/a0701e00.HTM

Mekonnen, Mesfin M. & Hoekstra, Arjen Y. "A Global Assessment of the Water Footprint of Farm Animal Products". Ecosystems (2012) 15: 401-415. http://temp.waterfootprint.org/Reports/Mekonnen-Hoekstra-2012-WaterFootprintFarmAnimalProducts.pdf

World Health Organization, ‘Q&A on the carcinogenicity of the consumption of red meat and processed meat’ 2015. http://www.who.int/features/qa/cancer-red-meat/en/

World Health Organization, ‘Obesity and Overweight,’ 2018. http://www.who.int/en/news-room/fact-sheets/detail/obesity-and-overweight

Food and Agriculture Organization of the United Nations, ‘Tackling Climate Change through Livestock: a Global Assessment of Emissions and Mitigation Opportunities’, 2013. http://www.fao.org/3/a-i3437e.pdf.

Resonance Global, ‘An Insurance Product for Rural Farmers’, 2017. https://resonanceglobal.com/insurance-product-designed-africas-rural-farmers/

Health I.Q., ‘5 reasons why vegans should get a lower rate on life insurance’. https://www.healthiq.com/life-insurance/research-vegan

 

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  • The Great Risk Transfer – Breakfast briefing and launch event

    Staple Inn Hall, High Holborn London WC1V 7QJ
    31 January 2019

    Spaces available

    Launch of the IFoA’s 2020 thought leadership campaign The Great Risk Transfer. The campaign will examine the trend of the transfer of risk from institutions to individuals, and how people can be better equipped to manage the financial risks they now face. At this breakfast event the IFoA will launch a call for evidence on this topic.

  • Sessional Meeting - Silent Cyber Assessment Framework

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    9 December 2019

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    The (re)insurance industry is faced with a growing risk related to the development of information technology (IT). This growth is creating an increasingly digitally interconnected world with more and more dependence being placed on IT systems to manage processes. Note: Registration is from 17.30 in time for the sessional to begin at 18.00.

  • CPD Member Event in Shanghai, China

    Function Room, F39, S1 Fuson Group, the Bund Finance Centre, No.600 Zhongshang East 2nd Road, Huangpu District, Shanghai Chinese address:BFC外滩国际金融金融中心,S1复星集团,39层报告厅,上海中山东二路600号
    9 December 2019

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    The IFoA’s President-elect Tan Suee Chieh will visit Shanghai. We will host CPD and Awards Presenting event on Monday 9 December 2019. The event is part of Mr Tan’s first presidential trip to China.

  • Professional Skills Training - London (10 December 2019)

    Staple Inn, High Holborn, London WC1V 7QJ  
    10 December 2019

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    This event will be of interest to students and recently qualified actuaries.

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020.  The content and discussion at this session is particularly tailored to actuarial students and newly qualified actuaries working in any area and the format is interactive, so you should come along prepared to take part in the discussions with your peers.

  • IFoA Joint Member Event with the Sunshine Insurance Group, Beijing China

    Room TBC, Kuntai International Plaza, No.12, Chaowai Street, Chaoyang District, Beijing 地址:会议室待定,北京市朝阳区朝外大街乙12号1号楼昆泰国际大厦
    12 December 2019

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    The IFoA’s President-elect Tan Suee Chieh will visit Beijing. We will co-host CPD and Awards Presenting event with the Sunshine Insurance Group on Thursday 12 December 2019. The event is part of Mr Tan’s first presidential trip to China.

  • ARC Sessional Research Event: Drivers of Mortality - Risk Factors and Inequality

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    6 January 2020

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    The authors will focus on a large dataset obtained from the UK’s Office for National Statistics (ONS) and related sources. Data are available at the level of Lower Super Output Areas (LSOAs) – small geographical areas with, typically, 1000-2000 residents and include death counts, exposures and a significant number of socio-economic variables including the index of multiple deprivation (IMD).

  • SIAS Event: My Journey to Data Science, Big Data and AI

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    7 January 2020

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    Patrick Lee is an actuary who has made the transition to working in software architecture and artificial intelligence (AI). He holds Microsoft Professional qualifications in Data Science, Big Data and AI and is currently working towards a DevOps (the automation of software testing and deployment) qualification. He is a member of the IFoA Council and is also President of the Wessex Actuarial Society. He is also a member of the IFoA and the RSS's joint Data Science Focus Group and will talk on the ethical use of AI. 

  • Spaces available

    This presentation covers the detail for how the matching adjustment is calculated. A small simple example spreadsheet is provided and discussed in detail.

    For actuaries wanting to get more involved with the matching adjustment, this is the opportunity to get a detailed description of the mechanics involved. This includes cashflows derisking, PRA tests as well as hypothecation.

    The presentation is provided by James Sharpe who has worked on a number of matching adjustment calculations with several firms.

  • IFoA Volunteer Recognition Reception

    Staple Inn, 4 High Holborn, Holborn, London WC1V 6DR, UK
    15 January 2020

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    As a thank you to all our Institute and Faculty of Actuaries (IFoA) volunteers, you are invited to join us at Staple Inn Hall, for an evening of drinks, canapes and networking, in London.

    IFoA President, John Taylor, will be attending and will make a speech

    If you support the IFoA as a volunteer (member or non-member), or in any other role, and you are going to be in London on 15 January, please book your place and join us at this reception.

     

  • Sessional Meeting - Operational Risk Dependencies

    Royal College of Physicians of Edinburgh 9 Queen St Edinburgh EH2 1JQ
    20 January 2020

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    The Operational Risk Working Party aims to assist actuaries and others in the modelling and management of operational risk. One of the key challenges in modelling operational risk is the modelling of dependencies between operational risks, and between operational and non-operational risks such as market, credit and insurance risk. Their paper seeks to assist in this regard, and help develop good practice in setting assumptions and modelling operational risk dependencies. 

  • KSS event in Glasgow: Public Sector Pensions

    Hymans Robertson, Glasgow 20 Waterloo St, Glasgow
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin will present this talk on 30 January in Glasgow, Stirling and Edinburgh. If you wish to register for another location please return to the Events Calendar.

  • KSS event in Stirling: Public Sector Pensions

    M&G Prudential, Stirling Craigforth Campus, Stirling
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin will present this talk on 30 January in Glasgow, Stirling and Edinburgh. If you wish to register for another location please return to the Events Calendar.

  • KSS event in Edinburgh: Public Sector Pensions

    Hymans Robertson 1, Exchange Place, Semple St, Edinburgh
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin will present this talk on 30 January in Glasgow, Stirling and Edinburgh. If you wish to register for another location please return to the Events Calendar.

  • Professional Skills Training - London (11 February 2020)

    Staple Inn, High Holborn, London WC1V 7QJ         
    11 February 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Sessional: Impact of E-cigarettes Working Party

    Royal College of Physicians, 9 Queen St, Edinburgh EH2 1JQ
    24 February 2020

    Spaces available

    This sessional meeting will be of direct interest to actuaries and others working in the in the Health and Care, Life or Pensions sectors or indeed actuaries with an interest in morbidity or mortality. Note: Registration is from 17.30 in time for the sessional to begin at 18.00.

  • Professional Skills Training - Edinburgh (25 February 2020)

    IFoA (Edinburgh), Level 2, Exchange Crescent 7 Conference Square Edinburgh EH3 8RA
    25 February 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Spring Lecture 2020, Edinburgh - Vicky Pryce

    Assembly Rooms, 54 George St, Edinburgh EH2 2LR
    25 March 2020

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    What next in Economic Policy?

    Please join us on 25 March 2020 for our annual Spring Lecture presented by Vicky Pryce in Edinburgh. 

  • IFoA Asia Conference 2020, Kuala Lumpur

    CCEC Nexus, 7, Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia
    24-25 June 2020
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    The sixth annual Asia Conference once again offers a prestigious line-up of home and international speakers discussing the insurance and financial industry’s innovation and change in Asia. This year's conference in Kuala Lumpur will be hosted by Tan Suee Chieh, IFoA’s first Asian President. He will also make his Presidential address at this conference and will expand on the important elements of IFoA’s new strategy. 

    Additionally, this landmark conference will showcase how the IFoA is reinventing itself to support its members to succeed and thrive in a digital age, within traditional businesses and beyond, as a global organisation. 

    Not to be missed by international industry players, opinion formers, academic and industry leaders, actuaries and non-actuaries.