The agriculture sector across the globe not only feeds the world’s population but it also provides nearly 27 percent of worldwide employment. Yet the sector faces significant sustainability challenges: it is estimated to contribute more than one-fifth of global greenhouse gas emissions through a combination of agricultural activities and land use changes, and it consumes, on average, 70 percent of the world’s freshwater resources. These trends directly contribute to a vicious cycle in which smallholder farmers in less developed countries often bear disproportionate negative impacts, including soil degradation, erratic and increasingly intense rainfall patterns, droughts, pests and disease pressures.

In 2009, the Food and Agriculture Organization of the United Nations (FAO) introduced the concept of climate-smart agriculture (CSA) and the triple win: increased production, adaptation of agriculture to a changing climate and mitigation of the impacts of agriculture on the environment. Since then, improved agricultural practices and climate-adaptive innovations, such as drought-tolerant varieties, have increased yields, improved food security and resilience and reduced poverty for millions. Yet more than a decade later, global agriculture is still falling short of its potential contribution to reducing its environmental footprint.

Solutions to this grand challenge will not be simple or singular, partly because global agriculture is not a homogenous system. Innovations in technologies and practices will be an important component of sustainable, regenerative agricultural production. And innovations will need to be tailored to or adapted for different production system types across both developed and developing country contexts. For instance, the technologies and practices to address land degradation on a large-scale commercial soybean farm in the United States will clearly differ from those in non-contiguous mixed-crop smallholder plots surrounding a protected forest area in Tanzania.

Recognizing agriculture as a composite of complex market systems is necessary to understand the forces for change. Innovation is a market response to opportunity — and the production, distribution and uptake of innovative technologies is a function of various incentives and barriers — from formal rules of the game imposed by governments to feedback from evolving consumer demands or the informal or traditional norms that guide the decisions of agricultural actors.

With innovations like seed technologies, improved livestock breeds, drip irrigation and biological pesticides — to name just a few — many solutions to advance CSA in developing countries are known. However, the relatively limited uptake of innovative technologies and practices in less developed countries demonstrates the scale of the challenge and highlights the role governments can play in facilitating locally tailored solutions and their widespread uptake. The policies, regulations and standards set and enforced by government are an important incentive for both private investment and behavior change.

One problem is the disconnect between market forces for innovation and government rules. As new technologies emerge, they often fail to fit within existing regulatory schemes — slowing access and availability in the marketplace. New market entrants (disruptors) often face a rigid regulatory response ostensibly designed to protect consumers, but which essentially protects the status quo.

A Feed the Future Enabling Environment for Food Security (EEFS) survey of private investors across Africa, Asia and Latin America found that investors in new industries seek an enabling environment with a clear and supportive regulatory framework early in the investment lifecycle. Governments that are proactive, flexible and collaborative in their regulatory response to new technologies are more likely to attract innovation. For example, the quick response of policymakers in Kenya to the need for new regulations governing the use of live organisms for pest control stimulated rapid industry growth, and Kenya now exports biological pest control products throughout the region and in Europe. For other disruptive products or technologies, governments can employ a regulatory sandbox approach to co-create regulations that stimulate rather than hinder the growth of emerging industries.

Further, public sector investments — directly in public goods such as research and infrastructure or indirectly through tax policy — subsidies or low-cost financing can reduce the cost and risk of bringing new climate-smart technologies and products to market and influence who will be able to afford them. To date, the investments in agriculture by governments have been modest or politically motivated. For example, an estimated $2 billion per day is spent globally on farm subsidies, yet the World Bank estimates that developing countries could mitigate the worst impacts of climate change on their economies by spending just 0.2 percent of their projected revenues on climate adaptation measures between 2010 and 2050.

Achieving transformation of agricultural market systems will require a strong partnership between science and policy, as well as a collaborative dialogue between the private sector and multiple levels of government. A similar evidence-based, collaborative approach has been used at the national and regional levels to address micronutrient deficiencies through food fortification policies.

Quantitative metrics for agriculturally-driven environmental degradation are increasingly available to aid in evidence-based policymaking. For example, the World Resources Institute (WRI) maintains data and tools for calculating the environmental impact of agricultural activities. Benchmarking indices, such as the Yale Environmental Performance Index, evaluate nitrogen use efficiency as a proxy for soil management and pollution. Additionally, rapid analytical tools, such as the Water Governance Scorecard designed by EEFS, build on growing data regarding water resource management.

Still, sufficient data needed to support evidence-based policy making remain limited. Data tying specific agricultural sector policies to environmental outcomes have been elusive for smallholder production systems in developing country contexts. Further, qualitative research will also be necessary to understand and adapt policy responses to the local context. Political economy analysis and enabling environment studies can shed light on the unique legal, regulatory, institutional and social factors driving market behavior.

The scale of the task ahead is enormous, and the time horizon is long. Market systems are complex, but governments can play an important role in shifting market incentives toward climate-smart innovation and uptake on the ground. Developing country governments will need policy responses that are driven by evidence to address the interplay between economic, social and environmental considerations. The long-term sustainability of agricultural production and future prosperity of agricultural stakeholders, particularly smallholder farmers, will depend on the realization of all three pillars of the triple win for CSA.

In the next installment on this topic, EEFS will explore some of the mechanisms to change market incentives by harnessing consumer demand and the private sector for more sustainable agricultural practices.

The Feed the Future Enabling Environment for Food Security (EEFS) project is a precompeted blanket purchase agreement (BPA) for U.S. Agency for International Development (USAID) Missions and operating units to access evidence-based analysis of how the enabling environment influences agricultural market system performance, food security and nutritional outcomes. For further information on how USAID can access EEFS’ expertise, please contact the chief of party, Adam Keatts, at [email protected]. For additional information on qualitative diagnostic tools for the enabling environment, please visit the Agrilinks page to check out the various resources EEFS provides.