Nature-based solutions: bridging the gap between sustainability and economic viability

Nature-based solutions offer a promising pathway to transform our global food system. As we face the challenge of feeding 10 billion people by 2050, the focus must shift from maximizing output to prioritizing sustainable production.

Currently, governments worldwide spend $650 billion annually on agricultural policies that often promote unsustainable practices. These policies have led the food system to account for over 30 percent of global greenhouse gas emissions while generating up to US$10 trillion in hidden social and environmental costs. Under a business-as-usual scenario, greenhouse gas emissions from agriculture would increase by 58 percent, considerably worsening impacts on food supply. This burden falls disproportionately on low-income countries, which bear the heaviest environmental costs as a share of their GDP.

^{Figure 1: Hidden Environmental Costs of Agrifood Systems by Income Type
Source: Lord, S. (2023). Data for Background Report 2023 - FAO State of Food and Agriculture. University of Oxford.}

To address these environmental and economic challenges while ensuring food security, policymakers need innovative approaches that can transform agricultural practices. This is where nature-based solutions offer promising opportunities, particularly for vulnerable countries facing the dual burden of weather impacts and food system inefficiencies.

Nature-based solutions

Nature-based solutions, broadly defined as “actions to protect, sustainably manage, and restore ecosystems”, can help improve agricultural productivity, safeguard livelihoods, and build resilience while conserving the environment. They include agriculture practices such as agroforestry, biochar, crop diversification, reduced tillage, organic and reduced fertilizer use, and water management.

Despite their benefits to agricultural productivity, the rates of adoption of such practices remains low. This raises the question that researchers and policy makers grapple with: how can we encourage farmers to adopt these nature-based solutions quickly? The answer is far from straightforward.

A growing body of research is measuring tradeoffs and assessing the likelihood of “win-win” situations combining increased yields, improved ecosystem services, and social and economic benefits. One recent study found that crop diversification resulted in win-win situations 63 percent of the time (see Figure 2 below). Another study found that crop diversification improved crop production and the associated biodiversity by 14 percent and 24 percent, respectively (see Figure 3).

These studies highlight the pivotal role of nature-based solutions in fostering a more sustainable agrifood system. However, the effectiveness of such approaches clearly depends on local conditions and specific agricultural contexts. For instance, regulation practices like carbon sequestration work best in soils with high organic matter content. Without these conditions, farmers may face trade-offs between environmental benefits and crop yields. Similarly, while agroforestry significantly boosts biodiversity, it can reduce crop yields by up to 19 percent, if not properly managed.

^{Figure 2: Agricultural Diversification Trade Offs between crop yield response and ecosystem service response.}

^{Giovanni Tamburini et al. Agricultural diversification promotes multiple ecosystem services without compromising yield. Sci. Adv.6,eaba1715(2020).DOI:10.1126/sciadv.aba1715}

^{Figure 3: Impact of Crop Diversification Strategies on (A) biodiversity and (B) agricultural production
Source: Positive but variable effects of crop diversification on biodiversity and ecosystem services - D. Beillouin, T. Ben-Ari, E. Malézieux, V. Seufert, D. Makowski doi: https://doi.org/10.1101/2020.09.30.320309}

Farmers’ adoption of nature-based solutions often hinges on their economic viability. While a meta-analysis showed that nature-based solutions increased farmers’ profits by an average of 19 percent (Figure 4), the upfront costs can be prohibitive. For example, the study found that erosion control measures increased costs by 7 percent, while reduced tillage saw costs rise by 62 percent. Such upfront costs could alter cash flows and deter farmers from adopting approaches ranging from new planting techniques to the introduction of cash crops. The risks are especially high for smallholder farmers in low- and middle-income countries. 

^{Figure 4: Response Ratio ln (Experimental/Control)}

^{Dotted lines correspond to 50%, 100%, and 200% increase or decrease. Numbers indicate numbers of studies.}

^{Source: Steward P, Joshi N, Kacha G, Ombewa B, Mumo E, Muller L, Youngberg B, Magnan N, and Rosensotck T. 2023. Economic benefits and costs of nature-based solutions in low- and middle-income countries. Working Paper. Alliance of Bioversity-CIAT. Rome.}

The way forward

To address market failures, governments could assist farmers during the transition period, where costs are elevated, and profits remain uncertain. Measures such as matching grants for capital investments, credit guarantees, and temporary subsidies can help offset potential losses and overcome liquidity constraints.

In addition to financial assistance, other support measures could help farmers navigate change. Agricultural research can advance technologies suitable for and tailored to local contexts. Technical assistance, advice and training, and awareness campaigns can boost adoption rates. Further studies are needed to evaluate the farm-level costs of implementing these measures against their production and environmental benefits. To fund such initiatives and interventions, governments could repurpose a portion of the subsidies currently supporting unsustainable farming practices toward encouraging nature-based solutions.

Nature-based solutions offer the potential for triple wins: reducing emissions, improving food security, and increasing farmer profitability. However, since their technical feasibility and economic viability are highly context-dependent, development practitioners must explore how public policies can create the right incentives and enabling conditions to drive their adoption.