Continued agricultural growth is a necessity, not an option, for most developing countries. But this growth must not jeopardize the underlying natural resource base or impose costly externalities on others. It must also be equitable if it is to help alleviate poverty and food insecurity. These three goals—agricultural growth, poverty alleviation, and environmental sustainability—are not necessarily complementary, and achieving all three simultaneously cannot be taken for granted. Although much depends on the specific social, economic, and agroecological circumstances, a high degree of complementarity is more likely to be achieved when agricultural development is (1) broadly based and involves small- and medium-sized farms, (2) market driven, (3) participatory and decentralized, and (4) driven by technological change that enhances factor productivity but does not degrade the resource base. Such growth can reduce food prices while increasing farm incomes; is employment intensive; and increases the effective demand for nonfood goods and services, particularly in small towns and market centers. By reducing poverty and promoting economic diversification in rural areas, it also relieves livelihood demands on the natural resource base.

Back in the 1950s and 1960s, policymakers and agricultural development experts were primarily interested in growth, and the lessons that emerged from that experience can be summarized as the five I’s for agricultural growth.

Innovation. Strong national agricultural research and extension systems (both public and private) to generate and disseminate productivity-enhancing technologies.

Infrastructure, particularly good road and transport systems.

Inputs. Efficient delivery systems for agricultural services, especially for modern farm inputs, agroprocessing, irrigation water, and credit.

Institutions. Efficient, liberalized markets that provide farmers with ready access to domestic and international markets and effective public institutions to provide key services where these cannot be devolved to the private sector.

Incentives. Conducive macro, trade, and sector policies that do not penalize agriculture.

1. Promote broad-based agricultural development. There are few economies of scale in agricultural production in developing countries (unlike processing and marketing). Hence, targeting family farms is attractive on both equity and efficiency grounds. But small- and medium-sized farms must receive priority in publicly funded agricultural research and extension and in marketing, credit, and input supplies.
2. Undertake land reforms, where necessary. Such reforms, particularly market-assisted redistribution programs, may be needed where productive land is too narrowly concentrated among large farms.
3. Invest in human capital, such as rural education, clean water, health, family planning, and nutrition programs, to improve the productivity of poor people and increase their opportunities for gainful employment.
4. Ensure that agricultural extension and education, as well as credit and small business assistance programs, reach rural women, since women play a key role in farming and ancillary activities.
5. Let all rural stakeholders (not just the rich and powerful) participate in setting priorities for public investments that they expect to benefit from or to help finance.
6. Actively encourage the rural nonfarm economy. It is not only an important source of income and employment in rural areas, especially for the poor, but it benefits from powerful income and employment multipliers when agriculture grows. In many countries, these potential multiplier effects are constrained by investment codes and related legislation that discriminate against small, rural nonfarm firms.

1. Give higher priority to backward regions in agricultural development, even though many of these may be resource poor. Considering the rapid population growth and limited nonfarm opportunities, agricultural growth is the only viable means of meeting the food and livelihood needs of growing populations in many backward areas for the next few decades. Failure to do so will lead to excessive outmigration, which will add to the problems of already overloaded urban slums. It will also lead to worsening poverty and further degradation of hillsides, forests, and soils. The development of backward regions will require additional resources for agricultural development, not diversion of resources from favorably endowed agricultural regions, where productivity increases are still important.
2. Pay more attention in agricultural research to sustainability features of recommended technologies, to broader aspects of natural resource management at the watershed and landscape levels, and to the problems of resource-poor areas.
3. Ensure that farmers have secure property rights over their resources. This does not necessarily imply that governments should invest in ambitious land registration programs. In many cases (in Sub-Saharan Africa, for example), the indigenous tenure systems still work surprisingly well. They are better able to meet equity needs and to recognize the rights of multiple users than are fully privatized property rights systems.
4. Privatize common property resources, or where this is not desirable (because of externality benefits or for equity reasons), strengthen community management systems.
5. Resolve externality problems through optimal taxes on polluters and degraders, regulation, empowerment of local organizations, or appropriate changes in property rights. But note that free market prices are not always the best; externalities may require optimal tax or subsidy interventions.
6. Improve the performance of relevant public institutions that manage and regulate natural resources (such as irrigation and forestry departments). Devolve management decisions to resource users, or groups of users, wherever possible. This also requires transfer of secure property or use rights.
7. Correct price distortions that encourage excessive use of modern inputs in intensive agriculture. That is, remove subsidies on fertilizers and pesticides and charge the full costs of irrigation water and electricity. It may still be necessary to subsidize fertilizer in backward regions where current use is low and soil fertility is being mined.
8. Establish resource monitoring systems to track changes in the condition of key resources, educate farmers about the environmental effects of their actions, and delineate and protect sites of particular environmental value.

For more information, see Peter Hazell and Ernst Lutz, “Integrating Environmental and Sustainability Concerns into Rural Development Policies,” in Agriculture and the Environment: Perspectives on Sustainable Rural Development, ed. Ernst Lutz, with the assistance of Hans Binswanger, Peter Hazell, and Alexander McCalla (Washington, D.C.: World Bank, 1998).

Peter Hazell is director of the Environment and Production Technology Division at the International Food Policy Research Institute.