This is the second post in the Feed the Future Enabling Environment for Food Security (EEFS) project’s blog series exploring the enabling environment for climate-smart agriculture. The first post discussed the role of government in facilitating innovation and the adoption of new climate-smart technologies and practices. This second installment discusses the importance of consumer-driven transformation, and the role private voluntary standards can play in providing market incentives for the adoption of climate-smart production practices.

Agriculture production practices may not only contribute to agro-climactic changes, but are also directly impacted by them. Impacts on agricultural production may include losses due to drought, diseases and pests, as well as the increasing intensity and unpredictability of rains. Adapting to these changes while mitigating the environmental impacts of production practices will be critical to achieving broad-based food security, poverty reduction and the long-term sustainability of the sector.

As described in EEFS’ first installment focusing on climate-smart agriculture, addressing these issues will require a comprehensive government response to shift market incentives, support scientific research and facilitate investment in technological innovation. But many market-driven forces already exist, albeit on a small scale relative to total global agricultural production, including a budding consciousness on the part of food consumers and investors toward good environmental and social governance (ESG).

To meet this demand, several private voluntary standards have emerged that require agricultural producers to meet production and/or processing standards based on targeted environmental and social criteria. Further, operationalizing standards to provide discerning consumers with assurances that products adhere to sustainable practices will require adopting digital solutions to improve traceability of eco-friendly products according to standards.

While government establishes mandatory regulations or reference standards to facilitate trade or protect basic human health and safety, the private sector establishes and/or adopts voluntary standards within certain market channels that are driven by consumer demand for specific production practices to mitigate environmental impact. For example, the Roundtable on Sustainable Palm Oil (RSPO) uses environmental and social criteria to certify palm oil products as sustainably produced. The products are then labeled and sold with the RSPO trademark. Voluntary sustainability standards, such as those established by the Rainforest Alliance, contain similar commitments to environmentally sound production methods. These initiatives not only reduce agriculture’s footprint on the environment, but may also include requirements for inclusiveness, as well as improved working conditions that restrict child labor or benefit women and the poor.

Although the aforementioned standards address production-level practices, greenhouse gas emissions from agriculture are not confined to the production stage. More than 20% of the world’s end-use energy consumption is attributable to post-production food chains. As consumer awareness of energy use in food systems expands, it is likely to drive future innovations in standards and traceability in the post-production food chain.

The uptake of both private voluntary standards and reliable traceability systems along food supply chains are only a first step. These market mechanisms can incentivize smallholder farmers and agribusinesses to transform agricultural practices in response to existing market demand. Regulatory approaches remain necessary where existing consumer preferences or purchasing power is insufficient to drive change toward ecologically critical climate-smart practices.

Governments will undoubtedly play an important role in stimulating incentives for climate-smart agriculture in developing countries through a broad range of investments in public goods and the various financial and social support policies at their disposal. Meanwhile, private sector-led initiatives, driven by market-based incentives and verification mechanisms, will and must play a significant complementary role in responding to consumer and investor demand for more ecologically sustainable practices.

The Feed the Future Enabling Environment for Food Security (EEFS) project is a pre-competed 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.