Stefania Lovo, Mintewab Bezabiah and Gregor Singer explain the findings of their latest report, ‘Green agricultural policies and poverty alleviation’ published  by the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science. The report was produced as part of the Grantham Research Institute’s programme on ‘Growth and the economy’, sponsored by the Global Green Growth Institute. 

Since developing countries typically have large agricultural sectors, green agricultural policies can play a key role in helping shift to low-carbon economies. However, the challenge of greening agriculture in the developing world involves creating policies that also deliver wider development objectives – a task that is necessary to gain political support, but can be difficult to achieve.

Our study analysed 24 projects in 17 countries, including Brazil, China, Costa Rica, India, South Africa and Zimbabwe. We found that poorly designed projects can conflict with efforts to reduce poverty and, worse, some green agricultural projects actually increased levels of poverty.

It is undoubtedly a challenge to design and implement green agricultural initiatives that cut poverty and benefit the environment at the same time. So what do policymakers need to consider?

Design policies for poorest households 

For starters, we find that taking into account economic, social and cultural factors in the design and implementation of green programmes is fundamental for increasing participation of poor households. Our report outlines a range of factors, including: availability of credit; property rights; labour market conditions’ strength of local institutions; and social and cultural norms.

Offer farmers a ‘menu’ of policies

If efforts to protect the environment and reduce poverty are to succeed, we recommend policymakers to offer farmers in the developing world a ‘menu’ of green agricultural policy options. By being able to choose those policy best suited to their own personal circumstances, poor farmers are more likely to adopt green agricultural policies. This approach has the benefit of helping bypass local barriers to participation that governments and NGOs are often unable to overcome due to lack of technical, institutional and financial capacity.

For instance, the successful N’hambita Community Carbon Project in Mozambique allows participants to choose from agroforestry options including tree planting, orchards or intercropping. Similarly, the Silvopastoral Ecosystem Management Project in Nicaragua had a considerable number of poor people taking part, likely because participants could choose from schemes of varying costs.

Provide insurance for farmers 

As well as offering farmers a choice of policy options, our report finds insurance schemes could be major motivators for participation, especially by poorer households. It is clear from our study that uncertainty and risk are major barriers to improved agricultural practices. However, none of the 24 projects analysed provided an insurance scheme for participating farmers. If farmers from poorer households are to take part in green agriculture initiatives, they need to be assured that the welfare of their households will not be worse off as a result.

Address local economic conditions

Finally, we suggest that green agricultural policies should be complemented with measures that have an awareness of broader economic conditions and that tackle local market imperfections, such as low availability of credit or limited off-farm opportunities.

With smart and informed policy design, adverse impacts of green agricultural policies on cutting poverty can be greatly reduced, and potential synergies between the two can even be exploited. Indeed, our analysis suggests that green agricultural policies can reduce poverty, but only if a number of design and implementation issues are properly addressed.