This post is written by Diane Russell [1].

Introduction

Market systems are an essential component of agricultural, food and natural resource management (NRM) systems. Market systems determine the form, scale and profitability of agriculture. Functioning markets are central to food distribution and thus food security. They also shape how natural resources are used and managed, which has the potential to exacerbate or mitigate climate change and biodiversity loss. In turn, markets are increasingly impacted by environmental degradation, biodiversity loss and climate change (Dumortier et al. 2021). Understanding and intervening in market systems is critical for implementation of USAID’s 2022–26 Global Food Security Strategy (GFSS) and the 2022–30 Climate Strategy. 

The blog first presents well-known connections between market systems and NRM, such as the impact of consumer demand on land and natural resource use. It then describes how land and agricultural market systems that persist from the colonial era underlie negative impacts on NRM and agrarian livelihoods, focusing on rural Africa. Finally, the blog suggests approaches to strengthen NRM and improve rural economies. 

Definitions

A market is a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services. Markets can be physical or virtual. Market systems encompass production, grading, processing, transportation, packaging, marketing and other elements of getting a product or service from the producer to the consumer. Specific value chains are embedded in market systems. They are “a series of consecutive steps that go into the creation of a finished product, from its initial design to its arrival at a customer's door.” (Source: Carla Tardi for Investopedia)

As environmental economists have argued for decades, the concept of a market system should incorporate the natural resources and ecosystems used and impacted at every stage. The study of food systems considers the impact of dietary choices, food availability and affordability, largely mediated by markets, on nutrition and health outcomes. There are important environmental dimensions to food systems as well, for example, the impact of food loss and waste on human health and ecosystems.

NRM is broadly defined here to include water resources management (WRM), approaches to mitigate and adapt to climate change and land and natural resource governance (LRG).

Well-Studied Connections 

A few of the well-researched connections between agricultural market and food systems and NRM include:

• The impacts on land and resource use — including extensification, land degradation and deforestation — of increasing consumer demand, often driven by marketing the “health benefits” of certain products (e.g., avocados, chocolate, almonds and quinoa);
• How markets for renewable and nonrenewable resources — oil and gas, minerals, charcoal, wood, local and international trade in wild animals, and tourism — drive land-use decisions and structures. In many areas, illegal markets and extractive industries threaten the well-being of Indigenous and local communities (UN 2022);
• The impact of food loss and waste in agricultural market and transport systems, including driving greenhouse gas emissions (Feed the Future 2021);
• How agricultural and logging feeder roads open up forestland and other natural areas to accelerated degradation (USAID 2018); and
• Depletion of fisheries by both foreign fleets and local fishers in differing ways in the context of the enormous importance of fish for local food security (USAID 2016).

Greening Commodity Value Chains and Certification 

Several efforts have involved industry-wide and continent-wide standards for commodity value chains to reduce emissions and pressures on biodiversity and ecosystems, for example: EUREPGAP (Euro Retailer Produce Working Group) standards of Good Agricultural Practice that include the following criteria, among others:

• Must conduct a risk assessment to determine impacts of new agricultural lands on adjacent crops and areas; 
• Must adopt cultivation techniques that minimize soil erosion; and 
• Must enhance environmental biodiversity on farm through a conservation management plan.

Producers who want to be EUREPGAP certified must meet these standards. (Source: GlobalGap)

USAID was a founder of the Tropical Forest Alliance in 2012; the initiative is ongoing with many private sector partners and donors. It covers a range of commodity value chains such as oil, palm and cocoa, and approaches to reducing deforestation and land degradation such as forest positive collective action.

Some initiatives appear to be working. Researchers examining the impact on deforestation of the Responsible Soy Project in the Amazon found that overall it had a positive impact on reducing deforestation but especially among smallholders who were more credit constrained (Jung and Polasky 2018).

Certification and standards face many hurdles, however, including complexity, high costs to farmers, difficulty in monitoring compliance and major market actors who do not recognize or require standards (de Freitas in Mongabay 2017).

A (Very) Brief History and Political Economy of Markets and their Impact on NRM in Africa

Certification, standards and other approaches to building more sustainable agricultural value chains face structural hurdles, many of which are grounded in colonial systems that persist. To evacuate valuable commodities and ensure food supply to urban populations, colonial powers constructed transit routes and crafted market rules that endure to this day. 

Impacts include:

• Creating commodity transit routes that often bypassed traditional trade routes and market areas, undermining local economies (Smith 1976). 
• Privileging Europeans over local traders in accessing lucrative markets and credit (Palmer and Parsons 1977). In post-colonial eras, national elites perpetuated these systems. This discrimination was a factor in the creation of “underground economies” based on the exploitation of natural resources (minerals, wildlife, timber, charcoal) by people with limited livelihood options.
• Along the same lines, restricting or prohibiting markets for some valuable commodities reduced rural income options (e.g., transporting charcoal was banned in Kenya (Okul 2021); felling and selling timber from private farms and plantations continues to be banned in Ghana (USAID). Such policies can create perverse impacts such as ringbarking trees (a dead tree can at least be used for firewood) or bribing officials.
• Imposing controls on food and commodity markets, including market boards, that kept farmgate prices low and captured value for elites (see the case of Swaziland/Eswatini).
• Over time, land markets in many rural areas of Africa have become a complex mix of private property, customary systems, concessions, eminent domain, efforts at formalization and titling, and land grabbing (Holden et al. eds). Such confusing and complex systems accelerate depletion of natural resources due to a vacuum in effective management. 

Concession Systems From the Colonial Era Persist and Cause Persistent Inequalities

Large and long-term concessions for commodities and agribusiness are common in many countries and can cover vast areas. To provide essential conservation and ecosystem service functions, many protected areas (PAs) restrict or forbid agriculture (IUCN Categories I-IV). In cases where much of the land is taken up for concessions and PAs, agrarian and pastoralist communities can be highly constrained in their land uses and livelihoods. These communities are then often blamed for deforestation and land degradation. Meanwhile, concessions mainly benefit elites, leaving rural areas impoverished. A study by the Cambridge, MA- based National Bureau of Economic Research concluded that “Historical exposure to the concessions causes significantly worse education, wealth, and health outcomes.” The images show that concessions are by no means going out of fashion. [2]

Impacts

Impunity and elite capture related to high-value legal and illegal commodities adds major costs and risks to markets, as well as to natural resources and the ecosystems that harbor them. In many countries, rural markets are also menaced by “security forces” that extract rent from those going to market through road barriers and other means (e.g., de la Sierra et al. 2022). 

The result is that agriculture is not remunerative for smallholders in many rural areas as markets are insecure, land use is highly constrained and local agriculture lacks infrastructure and investment. The highest value land is taken by concessions and elites. These forces precipitate youth flight to bursting cities and loss of critical mass for collective action to manage natural resources and to resist illegal incursions. These forces also can accelerate exploitation into areas lacking secure and clear governance and institutions for management. Loss of knowledge of NRM and traditional market and exchange systems that met local needs is another impact. 

Improving NRM Outcomes and Rural Economies

To counter the forces impoverishing rural areas, focus on rural towns and markets as a locus of jobs, value addition and consumer demand. Prioritize commodities with local demand and engage traders and merchants in dialog about NRM, for example, by holding trade fairs for natural and agroforestry products and innovating approaches to value and add value to sustainable production of commodities. To draw the attention of local merchants to these products, the World Agroforestry Center supported market approaches and value addition for agroforestry products such as kola nuts, on-farm charcoal, and fruits (Russell and Franzel 2004).

In many countries (e.g. Liberia, DRC), USAID has supported community forestry. Agriculture remains the major livelihood, however. Therefore, it is important to integrate sustainable agriculture into community forestry, encouraging value chains of diverse commodities within the context of land and resource use planning. In this process, we can draw on traditional NRM and farming systems to learn about the diversity of food crops and natural resources and ways that natural resources were protected and used sustainably (e.g., sacred groves, rotations, seasonal restrictions). 

A holistic approach would entail development and nurturing of landscape scale NRM-agricultural systems as described in Ravi Prabhu’s presentation for the May 24, 2023, Agrilinks webinar. USDA is supporting markets for climate-smart agriculture in the United States (USDA 2022), which should hold lessons for other countries. A landscape approach to certification is needed such that not only commodities but landscapes with diverse commodities are certified, building on the terroir/appellation system in Europe (Russell 2005). 

In sum, this blog seeks to interest readers to consider how structural constraints related to market systems can negatively impact agrarian livelihoods and NRM. Markets are the lifeblood of the rural economy. The blog proposes ideas for how to work through markets and reform market systems to improve the rural economy and foster stewardship of natural resources. There are many other factors to consider, such as the political power — or lack of it — of rural communities (see USAID’s Nature, Wealth and Power framework for examples). There are promising new approaches, so let’s continue the discussion! Reach me at [email protected].

References

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