Food loss and waste (FLW) impose significant global economic, social, and natural resource costs. Shifting diets and climate change may increase these costs. At the same time, food demand is projected to rise by at least 20 percent globally. Hence, the 2015 UN Sustainable Development Goal Target 12.3 calls for halving per capita food waste and substantially reducing food losses by 2030.
To our knowledge, there exists no foundational economic model of FLW for various stages of the food supply chain on first principles. Our model considers consumers, processors/intermediaries, and producers, allowing each to choose their inputs and product output, waste, recovery and diversion, allowing markets at each stage of the food supply chain to clear. Such a model allows for examining the effects of targeted policies on other parts of the system and the potential for unanticipated consequences due to market incentives interacting with overly narrow policies. Food waste is a complex issue with many interrelated variables affecting it. Our framework allows to assess the efficacy of alternative initiatives, public or private, in either the vertical food supply chain or the market for leakage disposition, and determine the net effects on improved food security and the environment.