The Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP) have prepared new estimates on the additional investments required for sustainably ending hunger by 2030, in line with the highest aspirations of the post-2015 sustainable development agenda and the draft Addis Ababa Accord, which clearly states that “Our goal is to end poverty and hunger”.

Despite progress in recent decades, including the near achievement of the Millennium Development Goal (MDG) target of halving the proportion of hungry people in the world by the end of 2015, about 795 million people – or around one in nine – still suffer from chronic undernourishment (dietary energy deficiency), or hunger.

The eradication of hunger by 2030 is a target of Goal 2 of the new Sustainable Development Goals to be approved in September 2015 at the 70th Session of the United Nations (UN) General Assembly. Ending hunger is also in line with the Zero Hunger Campaign promoted by the UN Secretary-General, and closely linked to the Sustainable Development Goal 1 target to eliminate poverty by 2030. Governments in various regions have responded to the call of the UN Secretary-General and have committed to eradicating hunger and poverty.

To achieve zero hunger by 2030, the international community needs to build upon approaches and options that have proven effective, and that ensure continuous access to food for the undernourished and improve livelihood opportunities for the poor and hungry. This report presents new estimates on investments required to eradicate poverty and hunger sustainably by 2030.

To estimate the additional investment requirements, we begin with reference to a “business-as-usual” scenario. In this scenario, around 650 million people will still suffer from hunger in 2030. We then estimate the investment requirements to sustainably eliminate poverty and hunger by 2030.
The report specifically considers how poverty and hunger can be eliminated through a combination of investment in social protection and targeted pro-poor investments in productive activities.

Estimates of the additional annual investment requirements in this report were originally prepared for the Third International Conference on Financing for Development, which took place from 13 to 16 July 2015, in Addis Ababa, Ethiopia, and revised for the UN Summit for the adoption of the post-2015 development agenda and the UN General Assembly Debate in September 2015.

Social protection

Extreme poverty, hunger and some types of undernutrition can be rapidly eliminated with adequate social protection to close the poverty gap between earned incomes and the poverty line. The poverty line has been defined as the income necessary to meet all basic needs, including enough food to avoid hunger.

As there has been some discussion over the sufficiency of poverty line income, for the purposes of this work a 40 percent band above the extreme poverty line income of US$1.25/day, in purchasing power parity (PPP) terms, is used. Hence, the estimated additional income required to lift the poor out of poverty is calculated on the basis of US$1.75 rather than US$1.25 PPP per day.

Accelerating pro-poor growth

Additional investments in productive activities are required to catalyse and sustain higher pro-poor growth of incomes and employment than in the “business-as-usual” scenario. To be pro-poor, investments in urban and rural areas, including in agriculture, should be targeted so that the poor earn enough to overcome poverty by 2030. Progressively, as the incomes of the poor increase because of earlier pro-poor investments, the need for social protection to close the poverty gap declines.

Consequently, the cost of implementing such an approach involves the additional requirements of both social protection and productive investments while recognizing the implications of the higher incomes generated. First, the average annual “gross poverty gap transfer (PGT)” from 2016 to 2030 – inclusive of a mark-up of 20 percent for administrative costs and leakages – is estimated. Second, the additional annual global investment requirements in productive activities are also estimated.

An average of US$265 billion per year during the period 2016–30 over and above the resources required for the “business-as-usual” scenario is estimated to be needed to fund the PGT for social protection and additional pro-poor investments to the raise earned incomes of the poor to the poverty line level by 2030. As the majority of the world’s poor live in rural areas, they will benefit from the bulk of this amount, estimated at US$181 billion annually. Initially, the poor are expected to mainly earn incomes from wage work and their meagre productive assets (such as land), but
are not expected to be able to invest much. To induce private investments, the additional investment required has to be adequately remunerated. Such remuneration is provided for in the calculations. However, as the poor save more, they are also able to invest more, and thus become more productive, and increase their earnings. Hence, public resource mobilization is key to both social protection and pro-poor investments in order to enable the poor to raise their earned incomes over the 15-year time period.

Both public and private investments can help to accelerate the poor’s transition from reliance on social protection transfers through additional earned income from productive investments. While private investors, notably farmers themselves, are, by far, the largest source of investment in rural areas, investment in public goods – such as rural transport and other infrastructure as well as productivity-enhancing research, development and extension – will be necessary.

To summarize, hunger and extreme poverty can be eliminated quickly with adequate investments in social protection. However, sustained and sustainable poverty and hunger elimination requires a combination of social protection and pro-poor investments, which will quickly take people out of hunger and extreme poverty, and progressively raise the poor’s earned incomes. Appropriate policies and coordinated programmes can ensure that the poor benefit from the growth and employment opportunities generated by the additional (public and private) investments.

However, low-income countries with higher incidences of poverty and hunger will find the resource requirements for such an approach beyond their means, and will need continuous external support until they can raise their domestic incomes and tax revenues sufficiently through growth and other policy reforms.