Socio-economic issues and the policy context

Second Steering Committee Meeting, GIAHS project

Frédéric Dévé, ES Department

Introduction

• I work on the “Roles of Agriculture project” (RoA) of FAO in the ES Department, willing to share some lessons

• I am familiar with farming systems and with rural development issues of developing countries, and I know a few GIAHS potential candidates systems

• And I am grateful to be invited to discuss socioeconomic implementation issues of the GIAHS project

Outline

– What are the socio economic issues surrounding the launching of the GIAHS sites?

– What are the policy contexts of GIAHS?– What are possible incentives structures and

policies or relevance for the creation and viability of GIAHS sites?

1. Socio-economic issues

• Agricultural transformation and major pressures driving changes in agrarian systems: trade liberalization, poverty, and Multilateral Environmental Agreements (MEA)

• Externalities and public goods, non market roles of agriculture (not only, but more particularly in heritage systems)

• Out migration flows, economic crisis of household farming, abandonment of production patterns, of natural resources management, and of agricultural practices

• Loss of rural cultural capital and cultural diversity (styles of life and livelihoods, social institutions, social capital, solidarity networks, landscapes, artistic expressions, ”folklore”, traditions, indigenous knowledge, culturally embedded food, moral values, cultural identity)

Agricultural transformation

AGRICULTURAL TRANSFORMATIONPROCESS(P. TIMMER)

ResourceFlows

income p.c. ortime

Labour flows

Getting agriculturemoving.

Agriculture as an engineof growth.

Integrating agricultureinto the macro-economy.

Agriculture in industrial economies.

Resource flows without highagricultural protection

Resource flows with highagricultural protection

Financial flows:- rural savings tourban investments.

Transfer of incomesthrough- price policy- commodity policy- exchange rate policy- industrial price/tariffpolicy

Setting:

Global:

Poverty alleviation

Regional/National:Comparative advantage of agricultural growth in poverty alleviation,

Local:Employment effects on secondary and tertiary sectors

Global: Ecosystems resilienceClimate change mitigation (carbon sequestration, land cover)Biodiversity-global

Regional/National:Ecosystems resilienceSoils conservation (e.g. soil erosion prevention & off-site impacts) Water (water retention and availability, flood prevention, landslides prevention)Biodiversity (wild species and wildlife conservation )Air quality (reduction in green house gas emission, carbon sequestration)

Local:Ecosystem resilienceBiodiversity Water retentionPollution abatement/generation (air, water, soil)

Global: World Food Security

Regional/National:Access to food at household and individual levelsNational security (strategic)Food safety

Local:Local, Household and individual food security.

Global:

Buffer in times of crisisMigration regulation

Regional/National:Buffer: Remittances, return migration, and fiscal support at times of crisesBuffer: Welfare systems substitute (social security, state supported safetynets)Mitigation of excessive rural-urban migration costs (congestion costs and other social implications)Social capital formation

Local: Social viability effects at rural community level, (viability of rural areas through agricultural and rural employment).

Global:

Cultural Diversity.

Regional/ National:Cultural heritageCultural identity formationPerception of the roles of agriculture

Local: Landscape, recreation-tourism, other amenities Indigenous local knowledge (e.g., disaster prevention, biodiversity, medicinal applications)Traditional technology.

FOOD SECURITY Satisfaction of Human and Strategic Needs

SOCIAL VIABILITYRural-urban migration

and Buffer roles

CULTURAL ROLECultural diversity

POVERTY ALLEVIATIONEquity

ENVIRONMENTAL EXTERNALITIES

Public Goods and Externalities

Summary of RoA findings

• Comparative advantage of agricultural growth vis à vis other sectors for poverty reduction

• Informal insurance schemes and resilience of the economy

• More balanced urbanization, reduced costs of urbanization

• Positive and negative environmental externalities

• Contribution to the making of national cultures and identities, cultural diversity

Outmigration and the transformation of agriculture

0

1000

2000

3000

4000

5000

6000

Ethio

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Ghana

India

Indon

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China

Moroc

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Thail

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Repub

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South

Afri

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Mexico Chil

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0

20

40

60

80

100

%

Agriculture, value added (% of GDP) Rural population (% of total population)

Time, or per capita income

Social demand for

benefits generated

by agriculture

Poverty reduction

Environmental quality and

Cultural values

% of Agriculture in GDP

Social viability

Getting agriculture moving

Agriculture as an engine of growth

Integrating agriculture into the macro- economy

Agriculture in industrial economies

The demand for environment quality and cultural values

Connotation of rural culture and development

High development

Low development

Positive Connotation

Negative connotation

Mali

Ghana

China

Morocco

Dom. Rep

2. The policy context

• The trends in domestic and international public investment in agriculture in developing countries

• Marrakech Agreement on Agriculture and multilateral trade negotiations : opportunities (de minimis, safeguard, NTCs) and limitations

• OECD work on “multifunctionnality” : the conditions under which government intervention is justified

• Policy paradigms

OECD work on government intervention

1. Determine jointness (economies of scope)2. If jointness weak, can service provision be de-linked? 3. If it can be de-linked, were all non-governmental

provision possibilities explored ? (Priority for market provision through market creation and development and for voluntary or club provision)

• When no market, voluntary or club provision is ensured and when the need for government intervention has been established, then targeted payments are the most desirable option in view of equity, efficiency and international effects. Target is geograficaly defined and service specific. The measure must remain de-coupled, i.e. de-linked from the level of intensity of the commodity output.

Supported Agriculture

Liberalized AgriculturePublic Good Agriculture

Retail-Driven Agriculture ?

Exploited Agriculture Ignored Agriculture

Policy paradigms

Hypothesis : evolution of support to agriculture

Niveau de revenu / Level of income

Soutien et subventions à l’agriculture / Support and subsidies to agriculture

Pays en développement / Developing countries

Pays industriels / Industrialized countries

3. Incentives frameworks for the creation of GIAHS sites

• GIAHS incentives framework foundations: the claim for a public good approach (the system as a whole)

• The idea : “Agriculture in a GIAHS site is a Public Good” is based on the view that incomes deriving from farming are inadequate for the support of the considered system, which is a public good; and that the production of public goods and positive externalities by this system is being under-rewarded.

• The need for a public good approach, in order to justify intervention

• The need for international recognition such as Cultural landscapes and/or Biosphere reserve

A GIAHS site as a public good• The degree of rivalry in consumption and that of excludability of potential

consumers of the considered externalities and public good as well as their Scope (watershed impacts or global biodiversity) may have implications on instruments to be used to ensure a more optimal provision of a specific good or service from a given site

• In theory, provision of the public good can be ensured by one or more of various mechanisms: voluntary provision, market provision, club provision, local or central government intervention

• If a GIAHS site is per se, in its entirety and comprehensiveness, recognized as a public good whose provision requires government intervention, as well as regulations, protection and possibly other support measures, then its viability and sustainability has to be searched through a combination of government support and market mechanisms, possibly also club provision.

Exploring governement intervention

• Legal support: Site status, legislation, protection, regulation, label

• Lessons to be learnt from MAB, cultural heritage and other protected public goods and areas ?

• Direct Payment Schemes difficulties : Transaction costs, Information on externalities and monitoring of services, Governance,

• Experience from France and Japan, limitations• World prices trends limitations• There is a need for an ad hoc GIAHS pattern

Exploring market based incentives

• Creation of markets for services: education, leisure, agriturism, ecoturism, besides the biodiversity dimension etc.

• Development of diversified and more rewarding agricultural products markets: Labels, Geographic indication etc.

• Instruments of quality control and certification, niche markets development

Exploring Institutional issues

• GIAHS dwellers empowerment• Stakeholders dialogue frameworks

(definitions and implementation of status, regulations, etc.)

• GIAHS site management institutions: legal status, mandate

• Property rights issues (natural resources management, intellectual property rights, etc.)

Conclusion

• 孔子说：“我算有知识吗？其实没有。有个农夫向我提问，我却回答不出来。对他提出的问题我前后反复思考，也无法回答他”

• (Confucius said: “Am I a learned man? No. Once a farmer asked me a question, and I failed to answer it. I thought about it again and again, but still could not give him an answer.”)