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
There 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.
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. https://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
Filter or search events
Wicked Problems, Clumsy Solutions and Leading Change
Dr Catherine Donnelly will present the basics of the structures for pooling longevity risks and summarise recent research results in this area in addition to outlinging future research around this topic. This is work under a research programme funded by the IFoA's Actuarial Research Centre, called 'Minimizing longevity and investment risk while optimising future pension plans'.
Climate-Related Risk - This free to view webinar on Climate-Related Risk is the first in a series focusing on some of the ‘Hotspots’ identified in the JFAR Risk Perspective bringing the Risk Perspective to life with practical illustrations and insights from subject experts from the IFoA and other Regulators
Recent decades have seen institutions, such as employers and financial services, give people more choice and flexibility, but these freedoms have come with more responsibilities. Individuals are now responsible for managing more of their own financial risks, from ensuring they put enough money into their pension to securing affordable protection to be financially resilient.
Join us for this brand new IFoA webinar weries comprising of a fortnight of webinars, panel sessions and a hackathon, that showcase the range of ways in which the actuarial profession has added value, in the public interest, to the understanding and management of the current and future pandemics through insight and learning.
This event is now temporarily closed on Monday 26 April, but the session will be repeated on Tuesday 27 April, 09.00-10.30. Please click here to register your place.
Actuaries have a lot to offer biodiversity management over the next decade as the world develops more depth to its response to this global challenge. This sessional offers an opportunity to learn about this emergent risk, to contribute to our thinking as a profession and help us develop the next steps forward.
IFoA Immediate Past President John Taylor would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual Western Europe Town Hall, hosted by John Taylor with IFoA Council Members Alan Rae, Jennifer Hartley, Maribel Vasquez Flores and IFoA Chief Executive, Stephen Mann.
Mis-estimation risk is a key element of demographic risk, and past work has focused on mis-estimation risk on a run-off basis. However, this does not meet the requirements of regulatory regimes like Solvency II, which demands that capital requirements are set through the prism of a finite horizon like one year. This paper presents a value-at-risk approach to mis-estimation risk suitable for Solvency II work
This year's Finance and Investment Virtual Conference takes on the timely theme of ‘resilience’, something we have all learnt a lot more about in the last year! Our diverse range of talks will explore the theme of resilience in a variety of ways including in building robust investment portfolios, in the incorporation of ESG factors, in govern
IFoA Immediate Past President John Taylor would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual Central and Eastern Europe Town Hall, hosted by John Taylor and IFoA Chief Executive, Stephen Mann.
This talk will explore the potential benefits that wearable tech can bring to health & protection insurers and their customers. The traditional approach of integrating wearables into insurance has largely focused on measuring steps and using rewards-based incentive programs to encourage more activity.
Join us for this talk with Professor Sir Adrian Smith as part of the 'Dr Patrick Poon Presidential Speaker Series'. Professor Smith joined The Alan Turing Institute as Institute Director and Chief Executive in September 2018. In November 2020, he became President of the Royal Society, in addition to his leadership of the Turing. He is also a member of the government's AI Council, which helps boost AI growth in the UK and promote its adoption and ethical use in businesses and organisations across the country. He received a knighthood in the 2011 New Year Honours list.
We continue to live in a world of global uncertainty. Survival depends on our ability to simultaneously navigate through the diverse root-causes, ranging from: the consequences of Climate Change; on-going financial consequences of the COVID pandemic; or self-imposed changes in regulatory requirements and accounting standards.