Trade enables producers to realize the economic potential of their produce, by linking production surplus to the market. The profitability of trade is closely linked to the maintenance of the long-term productive potential of inputs, i.e. natural resources. In other words, profit relies on the maintenance of natural resources’ environmental functions. SLM provides land users with a range of options through which to generate income without destroying the quality of the land on which their livelihoods depend.
SLM adds value to productive processes by increasing the reliability of supplies, reducing waste, optimizing the use of resources and improving product quality, for example by limiting the use of fertilizers and pesticides to compensate for weak environmental services provided by dysfunctional ecosystems.
Environmental concerns promoted through SLM can also be powerful marketing tools: the success of organic production and the growing number of eco-labelling and certification schemes are examples of the value addition created by adopting sustainable practices (read more at What are the linkages between trade, agriculture and SLM?).
The strong links between countries’ natural resources and their productive and supply-side capacity, especially in the agricultural sector, provide evidence for making SLM a far more prominent issue in initiatives that use trade as a development tool, such as the Aid for Trade (AfT) initiative which aims to:
• strengthen developing countries’ productive capacity;
• tackle their supply side constraints; and
• address their needs in trade-related infrastructure.
Most of the funding for AfT implementation comes from bilateral and multilateral donors, as part of their overall response to national poverty reduction strategies, and is delivered through standard Overseas Development Assistance (ODA) channels. Project-based delivery is the most common form of disbursement.
Nevertheless, as AfT evolves, donors and development partners are increasingly developing financing instruments, especially trust funds, to support specific AfT priorities.
There are several funds and facilities that can potentially support initiatives and programmes by drawing on the synergies between sustainable productivity and trade.