This paper was prepared for Stanford University’s Global Food Policy and Food Security Symposium Series, hosted by the Center on Food Security and the Environment, and supported by the Bill and Melinda Gates Foundation.

Sub-Saharan Africa (SSA) is home to two-thirds of the world’s ultra-poor today. This paper offers current thinking on the structural causes of the spatially concentrated, persistent ultra-poverty that has plagued Africa for a generation and some key entry points for facilitating Africans’ escape from persistent ultra-poverty.

The increased recognition of persistent ultra-poverty has rekindled long-dormant interest in poverty traps. The essence of a poverty trap is that there exists one or more low equilibrium level(s) of well-being in which people appear caught unnecessarily. Small adjustments fail to move people out of those equilibria sustainably. Rather, systems must change, major positive shocks must occur, or both. And in the absence of systemic change, recurring adverse shocks only drive more people into the trap.

The ultra-poverty trap that characterizes much of rural SSA today is intimately caught up with (i) the bidirectional interrelationship among hunger, ill-health, low productivity, weak institutions and natural resources degradation, all of which become manifest in low incomes, (ii) poor initial conditions associated with health and nutrition, especially early in childhood, but also with the state of infrastructure and the natural resource base on which rural livelihood disproportionately depend, and (iii) uninsured risk exposure, which is especially severe in rural areas and in agriculture. The closely coupled nature of these problems adds substantially to the challenge of addressing any one of them on its own and thereby makes integrated strategies essential. 

The available theory and evidence suggests that the policy focus must fall squarely on stimulating a smallholder food productivity revolution. Toward that end, the paper concludes by identifying and explaining key entry points for assisting the escape from persistent ultra-poverty in sub-Saharan Africa.

1. Build and protect the productive asset endowments of the ultra-poor
2. Improve the productivity of the ultra-poor’s current asset holdings
3. Improve risk management options for the ultra-poor
4. Facilitate favorable transitions out of agriculture

Although the topic of persistent ultra-poverty would seem to lend itself to a pessimistic ending, the future for Africa is actually rather hopeful. The East Asian experience demonstrates that mass, rapid escape from persistent ultra-poverty is feasible. Real agricultural output growth rates are accelerating in SSA, nearly doubling from the 1980s rate so that per capita food output is growing again, helping reduce rural poverty rates in countries enjoying increased agricultural productivity. Finally, the  policymaking and donor communities are now appropriately focusing on how best to stimulate investment incentives, productivity growth, risk management and productive transitions out of agriculture. These broad foci are appropriate and reasonably well-grounded in both theory and empirical evidence.  

The challenges of reducing global hunger and poverty are different today than they were 30 years ago. Current challenges include price volatility associated with increased integration of food, energy, and finance markets; the steady progression of climate change; poorly defined land institutions; and a failure to break vicious cycles of malnutrition and infectious disease. Farmland speculation is occurring globally—often at odds with rural poverty alleviation—and food insecurity remains a pressing issue with the estimated number of chronically malnourished people hovering around one billion. Given these patterns, food and agriculture are becoming increasingly ingrained in international security and policy discussions. This paper explores several ways in which the traditional field of agricultural development needs to expand to address the broader issues of international security and human welfare. It focuses on five key interrelated issues: the macroeconomic and energy contexts of agricultural development; climate change; deforestation, land access, and land markets; farming systems and technology for the ultra-poor; and food-health linkages with a specific focus on infectious disease. Recommendations for investments in capacity building, revised curricula, and development projects are made on the basis of evidence presented for each issue. It is clear that academic programs, government agencies, development and aid organizations, and foundations need to dismantle the walls between disciplinary and programmatic fields, and to find new, innovative ways to reach real-world solutions.

The increasing global demand for biofuels will require conversion of conventional agricultural or natural ecosystems. Expanding biofuel production into areas now used for agriculture reduces the need to clear natural ecosystems, leading to indirect climate benefits through reduced greenhouse-gas emissions and faster payback of carbon debts. Biofuel expansion may also cause direct, local climate changes by altering surface albedo and evapotranspiration, but these effects have been poorly documented. Here we quantify the direct climate effects of sugar-cane expansion in the Brazilian Cerrado, on the basis of maps of recent sugar-cane expansion and natural-vegetation clearance combined with remotely sensed temperature, albedo and evapotranspiration over a 1.9 million km2 area. On a regional basis for clear-sky daytime conditions, conversion of natural vegetation to a crop/pasture mosaic warms the cerrado by an average of 1.55 (1.45-1.65) °C, but subsequent conversion of that mosaic to sugar cane cools the region by an average of 0.93 (0.78-1.07) °C, resulting in a mean net increase of 0.6 °C. Our results indicate that expanding sugar cane into existing crop and pasture land has a direct local cooling effect that reinforces the indirect climate benefits of this land-use option.

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China's coal market is now in the midst of a radical restructuring that has the potential to change how coal is produced, traded and consumed both in China and the rest of the world.  The restructuring aims to integrate the coal and power sectors at giant "coal-power bases" that combined would churn out more coal annually than all the coal produced in the entire United States. 

Coal-power integration is now a focal point of the Chinese government's energy policy, driven by the dramatic "coal-power conflict".  Coal prices are market-based, but power prices are tightly controlled by the government.  This has caused massive losses for Chinese power generators in 2008 and 2010 and triggered government intervention in the coal market with attempts to cap the price of coal.  The pervasive conflict between coal and power is now driving the Chinese government to remake these markets.

Coal-power base policy aims to establish upwards of 14 major coal-power bases, each producing over 100 mt of coal with consuming industries on-site.  The plan envisions that roughly half of China's coal production would be produced at a handful major coal-power base sites that are controlled by key state-owned enterprises (SOEs) and the central government.    

PESD's new research analyzes China's coal-power base reforms and how they will impact Chinese and global coal markets.  Several key findings are:

First, the implementation of coal-power bases would enhance central government's control over the coal sector and over coal prices.  The government could control coal pricing in a large share of the market and mitigate power sector losses by mandating lower coal transaction prices within integrated SOEs.  Using this kind of internal transfer pricing at below market prices for up to half of China's coal would represent a meaningful shift in how coal is priced in China.  If a large share of China's coal were transacted in this manner, it might create an unofficial two-tiered pricing structure in the coal market.

Second, coal-power base policy would bring about modernization and mechanization of a larger share of China's coal production, in theory bringing larger economies of scale to the sector.  While up-front capital investment per ton produced will certainly increase, the marginal cost of coal production should decrease, all other things equal. 

Third, the massive rebalancing of China's coal market implied by coal-power bases is poised to have important impacts on the globally traded coal market.  Since 2009, China's import behavior has become a dominant factor determining the price of globally traded coal.  In simple terms, when Chinese domestic prices are higher than global prices, the country imports.  The development of coal-power bases could radically alter coal price formation in China and directly impact China's appetite for imports, and therefore has the potential to alter coal price formation globally.

Expanding croplands to meet the needs of a growing population, changing diets, and biofuel production comes at the cost of reduced carbon stocks in natural vegetation and soils. Here, we present a spatially explicit global analysis of tradeoffs between carbon stocks and current crop yields. The difference among regions is striking. For example, for each unit of land cleared, the tropics lose nearly two times as much carbon (∼120 tons·ha-1 vs. ∼63 tons·ha-1) and produce less than one-half the annual crop yield compared with temperate regions (1.71 tons·ha-1·y-1 vs. 3.84 tons·ha-1·y-1). Therefore, newly cleared land in the tropics releases nearly 3 tons of carbon for every 1 ton of annual crop yield compared with a similar area cleared in the temperate zone. By factoring crop yield into the analysis, we specify the tradeoff between carbon stocks and crops for all areas where crops are currently grown and thereby, substantially enhance the spatial resolution relative to previous regional estimates. Particularly in the tropics, emphasis should be placed on increasing yields on existing croplands rather than clearing new lands. Our high-resolution approach can be used to determine the net effect of local land use decisions.