Michigan apples might cost New York state schools a little less than New York apples, but once you account for the environmental impact of shipping apples 800 miles, the nutrient loss after months of storage and the reduced farm industry income, those New York apples look much more appetizing.

When calculating the “true cost” of foods purchased by New York state agencies – which spend more than $1.2 billion a year on food, and are required to buy from the lowest bidder – the state could be better served by incorporating external costs such as nutrition, greenhouse gas emissions and job creation, said Mario Herrero, professor of sustainable food systems and global change in the Department of Global Development in the College of Agriculture and Life Sciences (CALS).

Herrero is principal investigator on a new 18-month study, funded by the Rockefeller Foundation and including researchers in CALS and the SC Johnson College of Business, to understand the true cost of food procured by public agencies in New York state.

“We are not really accounting for all the associated costs of the food system, so our goal is to create a system that would allow New York agencies to choose vendors based on the true cost of foods,” said Herrero, a Cornell Atkinson Scholar.

The U.S. spends $1 trillion purchasing food each year, but that number doesn’t account for the health care costs caused by diet-related illnesses, or the water, air and climate impacts associated with food production. As much as two-thirds of the true cost of food is hidden, according to the Rockefeller Foundation.

“New York agencies spend over $1 billion each year purchasing food – those dollars could provide a powerful local economic multiplier effect, if used to support local producers and processors and New Yorkers’ broader goals for agri-food systems,” said Chris Barrett, co-PI on the project and the Stephen B. and Janice G. Ashley Professor in the Charles H. Dyson School of Applied Economics and Management, and a professor in the Cornell Jeb E. Brooks School of Public Policy.

Currently, New York encourages school food authorities to buy local foods through quota systems. For example, schools can receive additional state funding if at least 30% of their food dollars are spent on in-state products. However, quota systems can reduce competition among suppliers and end up hurting both taxpayers and suppliers in the long run, said Todd Schmit, co-PI and professor in the Dyson School, which is part of the SC Johnson College.

“Since a local quota exists, suppliers who benefit from these quotas can raise their prices – which ultimately raises the cost for taxpayers – without having to compete or innovate,” Schmit said. “Policies like quotas often do long-run harm to the very firms they aim to help in the short run. Ultimately, we want to internalize the positive and negative externalities associated with food procurement so that all elements are considered when making food purchase decisions.”

Engaging with state and local agencies to understand their needs and current food procurement practices will be critical to the success of the project, said Brad Rickard, co-PI and professor in the Dyson School. After reviewing current bid protocols, researchers will create standard formulas that incorporate scientifically sound calculations to account for food’s true costs, and create a user-friendly, web-based tool that state agencies can use when purchasing food.

“Our goal is to support New York state’s economy, growers and taxpayers, and to reward those who produce healthy, high-quality foods efficiently and with minimal environmental impact,” Rickard said.

Krisy Gashler is a writer for the Department of Global Development.