Pathfinding Paper 1

Structural Transformation, Agriculture, Climate, and the Environment – Christopher B. Barrett and Ariel Ortiz-Bobea

Traditional models of economic growth have relied upon investment and technological change to induce an endogenous process of structural transformation out of agriculture and into higher-return industrial and services activity. Typically, these assume away nature, ignoring potentially bidirectional interplay between the process of structural transformation and endogenous climate and environmental change. This pathfinding paper seeks to explore this interplay with a focus on sub-Saharan Africa, South Asia and other low-income agrarian regions.

The paper will first examine the current research frontiers surrounding this subject, including models that have endogenised the effects of structural transformation on climate or the environment in some way. This includes a sizable literature examining the effects of economic growth and structural transformation on land use, pollution, etc. but also less mainstream, but important topics including the rise of invasive species and infectious disease ecology. We then examine the feedback effects from climate and environmental change to structural transformation. Topics of particular interest include the heterogeneous impacts of climate change on both agriculture and the non-farm rural economy, on labour and labour productivity, including migration and conflict, on physical capital, including transport and energy infrastructure, and on major policy domains that support structural transformation, such as agricultural R&D investments, land and water rights, trade, and anti-trust policy. We explore the implications of more fully incorporating the feedback between structural transformation and natural systems for policy-relevant future research.