Composting food waste produces significantly less methane emissions than landfilling, but most organic waste ends up in landfills. Economic incentives, such as pricing strategies for products nearing their expiration date or the provision of municipal composting services, can effectively reduce this waste.
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Food waste is a significant global issue with enormous economic and environmental impacts. According to the United Nations Environment Programme’s Food Waste Index Report 2024, approximately one-fifth (19%) of food available to consumers is wasted at the retail, food service and household levels, amounting to approximately 1.05 billion tonnes, leading to an estimated economic loss of $936 billion per year. According to the same report, 631 million tonnes (60%) of total food waste in 2022 will come from households, with the food service sector accounting for 290 million tonnes and the retail sector accounting for 131 million tonnes.
Food waste generates 8-10% of global greenhouse gas (GHG) emissions, nearly five times the total emissions from the aviation sector. Most of this waste is sent to landfills where it decomposes anaerobically due to lack of oxygen. This process produces methane, a potent greenhouse gas that is 21 times more effective at trapping heat in the atmosphere than carbon dioxide over a 100-year period. Landfills are the third largest source of anthropogenic methane emissions after fossil fuels and livestock, and account for about 10% of global anthropogenic methane emissions. Because methane stays in the atmosphere for a much shorter time than carbon dioxide, reducing methane emissions today has a more direct impact on reducing global warming. Reducing food waste in landfills can therefore have a significant impact on reducing greenhouse gas emissions and mitigating climate change.
Economic incentives can play an important role in reducing food waste and associated greenhouse gas emissions by influencing household behavior. By offering convenient composting options through the provision of goods such as curbside collection, governments can encourage the diversion of organic waste from landfills to composting facilities, thereby reducing methane emissions and promoting sustainable waste disposal. Policies that support dynamic pricing of products approaching their expiration date can help retailers reduce food waste. Clear and accurate food labels help consumers make informed decisions and reduce unnecessary food waste.
More on this topic: 25 Shocking Statistics About Food Waste
Composting possibilities
Composting is an important solution to reduce the amount of food waste in landfills. Composting organic waste provides an aerobic alternative to anaerobic decomposition in landfills, which can significantly reduce methane emissions. Composting food waste and yard waste prevents the production of methane due to the presence of oxygen, as methanogenic microorganisms are not active in such conditions. Instead, composting breaks down the organic matter into valuable compost that provides many environmental benefits, including soil fertility, increased agricultural production, reduced need for chemical fertilizers, and forest regeneration and habitat restoration.
Economically, composting is one of the most cost-effective ways to mitigate methane emissions from landfills. The composting process is relatively low-tech and inexpensive to implement, especially at the municipal level, making it an accessible solution for many communities.
Despite these benefits, most food waste ends up in landfills or incinerated. For example, in 2018 in the United States, 50% of food and yard waste was sent to landfills, 32% was composted, 12% was incinerated, and 6% was sent to other management channels. To combat this, governments are increasing investment in municipal composting services. In the European Union (EU), composted municipal waste increased from 11% in 2004 to 17% in 2018. Similarly, the number of US municipalities offering separate food waste collection increased from 24 in 2005 to 510 in 2021, and the number of Australian municipalities offering composting services jumped from 10% in 2012 to 25% in 2023.
The role of the economy
Financial incentives play an important role in reducing food waste by influencing behavior through monetary and non-monetary means. Financial incentives provide direct economic benefits to individuals and organizations that adopt waste reduction practices.
For example, by offering low prices on products approaching their expiration date, retailers can encourage consumers to purchase products that would otherwise be wasted. Non-monetary incentives, such as product or information offers, provide consumers with the information and the means to take action to reduce food waste, making them more likely to make decisions that benefit the public interest.
1. Direct government provision: The impact of municipal composting services
Municipal composting services are waste management programs offered by local governments that allow residents to dispose of organic waste, such as food scraps and yard trimmings, in designated compost bins. These programs typically involve curbside collection, where waste is collected from homes and transported to central composting facilities, where the organic waste is processed into compost.
These services reduce the cost and effort of home composting and make food waste disposal convenient. Without these services, individuals would have to manage their own composting, which takes time and requires space that not all households have. Additionally, municipal composting services increase composting rates and result in reduced emissions from landfills.
Landfills produce methane as organic waste decomposes.
A 2024 study demonstrated that municipal composting services are effective in reducing household waste sent to landfill. The study focused on a large-scale quasi-experiment in New South Wales (NSW), Australia, where 24 local governments introduced curbside composting services between 2009 and 2015. By comparing municipalities that introduced these services with those that did not, the study found that households redirected, on average, 4.2 kilograms (9.3 pounds) of waste from landfill to the composting stream each week. This diversion represents about a quarter of the waste that households had previously sent to landfill. The results suggested that curbside composting could reduce emissions from landfill by 6–26%.
2. Price incentives: The impact of pricing strategies on products approaching their expiration date
Pricing strategies for products approaching their expiration date aim to reduce food waste by discounting products close to their expiration date, making them more attractive to price-conscious shoppers. This allows retailers to sell products that would otherwise be wasted, reducing the overall amount of food wasted. Supermarkets already employ pricing strategies to sell foods approaching their expiration date, but these methods are often not applied consistently or to their full potential.
Discount labels on grocery store items.
Studies have shown that pricing strategies can effectively reduce food waste in retail environments. A 2022 study highlighted that dynamic pricing strategies can reduce food waste at the retail stage of the food supply chain. The study focuses on using real-time Internet of Things (IoT) sensor data to adjust prices at different stages of a product’s lifecycle. By adjusting prices based on freshness scores obtained from IoT sensors, retailers can optimize prices to balance inventory, sales, and waste reduction. The study found that appropriate pricing interventions can not only reduce food waste, but also boost sales and increase profits. Specifically, it was highlighted that a discount strategy applied at the right time could help use up on-hand stock before the product reaches its expiration date.
3. Providing information: The effect of food labelling
Food labels provide consumers with information about food quality and safety, but traditional date labels such as “use by” or “best before” dates often cause confusion for consumers, leading to premature disposal of safe and edible food.
Food labels reduce uncertainty about food quality and safety and act as an economic incentive by encouraging consumers to make the most of the food they purchase rather than discarding it prematurely. Clear and accurate labels increase the amount of information available to consumers, enabling them to make more informed decisions and saving money by reducing unnecessary waste.
A 2022 study highlights that many consumers misinterpret date labels, leading to increased food waste. The study explores the effectiveness of alternative labeling strategies, such as freshness indicators and simplified date labels, and evaluates their likelihood of causing food waste. Findings show that clearer date labels and freshness indicators, such as color-coded dots that indicate a product’s actual freshness, can reduce the likelihood of consumers throwing away food. For example, the use of a “best before” label with a green freshness indicator significantly reduced the likelihood that consumers would throw away food compared to traditional labels.
More on the topic: Food climate labels could change eating habits for the better: Study
Implications for policy and future action
It is clear that reducing food waste requires more than individual and household efforts alone. Comprehensive government and policy efforts are essential. While food waste reduction can be achieved through individual and community efforts, significant progress will depend on the implementation of economic incentives provided by governments through policies. These incentives can effectively change consumer behavior and business practices throughout the food supply chain, from production to consumption, making it easier and more economically feasible to reduce food waste and the subsequent emissions from landfills.
Expanding research and development into the effectiveness of different economic incentives and their scalability across different regions and populations is essential for future progress. Research should explore consumer behavior to fine-tune these strategies and make them effective and practical. Investment and adoption of technologies such as smart packaging and IoT sensors will also provide real-time information on food quality and help reduce waste. Governments should support these innovations through funding and policy frameworks. Continued efforts and innovation in these areas will not only help mitigate climate change but also support a more sustainable and efficient food system.
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