Madhur Gautam, David Laborde, Abdullah Mamun, Will Martin, Valeria Piñeiro, Rob Vos POLICY SEMINAR Can agricultural policies deliver better value for money for people, the planet, and the economy? Co-Organized by IFPRI and World Bank Group FEB 2, 2022 - 9:30 TO 11:00AM EST

1. Repurposing Agricultural Policies and Support:
Options to Transform Agriculture and Food Systems to Better Serve
the Health of People, Economies and the Planet
Madhur Gautam*
David Laborde†
Abdullah Mamun†
Will Martin†
Valeria Piñeiro†
Rob Vos†
Policy Seminar
February 2, 2022
*World Bank, † IFPRI

2. Global policy question
Why do we want to repurpose current agricultural support policies?
Can they be reformed to simultaneously serve global goals of food
security, poverty reduction, and environmental sustainability?

3. Remarkable progress in food production over past 60 years
but strong headwinds emerging – hunger and malnutrition on the rise
Past growth driven by productivity, but
with large hidden costs
Food Production x 3.66
Population x 2.49
Agricultural land x 1.07
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018
Index:
1961=100
Production growth is slowing and
becoming more volatile
Source: Authors, using FAOSTAT
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
-0.2
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1981-90
1982-91
1983-92
1984-93
1985-94
1986-95
1987-96
1988-97
1989-98
1990-99
1991-00
1992-01
1993-02
1994-03
1995-04
1996-05
1997-06
1998-07
1999-08
2000-09
2001-10
2002-11
2003-12
2004-13
2005-14
2006-15
2007-16
2008-17
2009-18
2010-19
Volatility
in
annual
growth
rate
(%)
Trend
growth
(%)
Growth (10 year trend growth rate, left axis)
Volatility (10 year Std. Dev. of annual growth, right axis)

4. Effects of climate change are already being felt
Source: Ortiz-Bobea et al (2021). This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.
Agriculture in tropical zones most affected by global warming and yield losses

5. How much support? By whom? And for what?
• Total support of $638bn/year (2016-18)
• Most to farmers in China, EU & USA
• Most linked to output or input use
• Little support to consumers or for
public goods
237
113
48
115
55
China EU28 US Other
OECD (12)
Other
non-OECD
(37)
Green Subsidies
Public Goods & Services
Decoupled Transfers
Input/Output Subsidies
Market Price Support

6. Research methodology
How to assess impacts of repurposed support?
➢Global database of subsidies and emissions by commodity and country
➢Global economic model showing emission-intensity from production &
land use change and impacts on farm income, food security, diets &
poverty
➢Simulated policy change phased in during 2020-2025
➢Scenarios assess impacts over 2020-2040 relative to
“business-as-usual” baseline projection

7. Without policy change, emissions will grow rapidly
Business-as-usual scenario 2020-2040
• Net emissions from agriculture
and land-use change will
increase by 100%
• 80% of this growth comes from
livestock & rice
• Agricultural land use expands by
56 million ha
• Modest poverty
reduction
3.9
7.4
2020 2040
Agri Value Added
(US$ trn)
8.2
7.2
2020 2040
Poverty rate
(PPP$1.90, %)
4.8 4.9
2020 2040
Agric Land (Bill. ha)
5.8
9.1
-2.3 -2.1
2020 2040
Net Agric. Emmissions, Gt
Agric Production LULUC

8. Options for repurposing considered
What are the effects of removing all current support?
• Remove all domestic (budget) support
• Remove all domestic & market price support
Can we improve by reallocating support by…
• Making subsidies uniform?
• Shifting support away from emission-intensive commodities?
Can we change production technology to reduce emissions?
• Conditionality – support conditional on reducing emission-intensive
input use with current technology
• Repurpose for Green Innovation – invest in R&D and incentives for
adoption of practices that raise productivity & reduce emission-
intensity

9. Removal or rearrangement: do not produce game-changing reductions in emissions
Environmental conditionality: beneficial for climate (emissions) but not for nature
Investing in green innovation: emissions reductions (40%) and land use benefits
Repurposing scenarios: impacts on climate and nature
-40.0 -30.0 -20.0 -10.0 0.0 10.0
Repurposing for GI
Env. Conditionality
Removal of Dom. Support
CLIMATE
(Emissions from agr. & LUC
% change 2040)
-2.5 -1.5 -0.5 0.5 1.5
NATURE
(Agricultural land, % change 2040)

10. Repurposing scenarios:
Gains and tradeoffs for people and the economy
Eliminating existing
support:
• Negligible income
gains
• Farmers are hurt
• No gain for food
security
Low value-for-
money:
• $0.35 per $1 support
Repurposing for
Green Innovation
• Potential win-win-
win:
• Significant income
growth
• Less poverty, greater
food security,
healthier diets
-3.2 -2.2 -1.2 -0.2 0.8 1.8
Repurposing for GI
Env. Conditionality
Removal of Dom.
Support
ECONOMIC
(Real National Income, % ch. 2040)
-20.0 -10.0 0.0 10.0
DIETS
(Cost healthy diet, %ch 2040)
-1.3 -1.0 -0.7 -0.4 -0.1 0.2 0.5
Repurposing for GI
Env. Conditionality
Removal of Dom.
Support
SOCIAL
(Poverty at PPP$1.90, % ch. 2040)
Crops Livestock
-20.0 -10.0 0.0 10.0
FARM SECTOR
(Farm Production % ch. 2040)

11. Key Messages
➢Simply removing or rearranging support has mixed outcomes
• Small gains in economic efficiency and emission reduction
• … at cost of lower farm output and reduced affordability of healthy diets
➢Conditioning support to “climate smart” practices with existing technology
also faces trade-offs
• Reduces GHG emissions, but lowers productivity, raises cost of healthy diet, and leads to
agricultural land expansion
➢We need to invest in green innovations that raise yields & cut emissions
• Significant potential to deliver the “triple wins” for people, the economy
and the planet

12. The case for action
➢Current support delivers low value for money – strong case for better
policies
➢Current agricultural policies are inadequate to address global food insecurity, poverty,
and climate change
➢Potential gains notwithstanding, options need careful and context-specific
impact evaluation
➢Even the best-designed policy reforms will face political hurdles
➢ Multistakeholder dialogues needed to devise feasible strategies for smart repurposing
➢Climate change and environment sustainability are global challenges, but
policies are national
➢Internationally concerted action is needed