Last month on October 16 World Food Day1, an annual event that shines a spotlight on the urgent challenges of food security, was celebrated. Against the backdrop of our rapidly changing world, where population growth, climate change, and economic inequalities persist, the need to ensure access to safe, nutritious, and sufficient food for all has never been more critical.

G7 and the launch of a new initiative

According to a Food and Agriculture Organization’s (FAO) report, The State of Food Security and Nutrition in the World 20222, not only are we not on track to meet the UN’s Sustainable Development Goal (SDG) of zero hunger by 2030, we are actually moving backwards. In fact, the UN predicts that roughly 660 million people globally may still face hunger in 20303.

Last May, the Group of Seven (G7), the World Bank, and the Global Alliance for Food Security (GAFS) joined forces to organize a collective response to the world’s food crisis4. The war in Ukraine overlapped with an already complex set of challenges including the consequences of the COVID-19 pandemic and its impact on supply chains, global economic uncertainty, and the climate crisis. With some of the world’s most vulnerable populations being hit hardest, they called for a new global alliance specifically to unite countries and institutions to address food storages and higher food prices.

How is UBS addressing food security?

There are many ways we can work towards more equitable food access and ensure food security. It’s a multifaceted challenge that requires coordinated efforts. UBS Optimus Foundation supports a number of organizations who work with communities supporting food security through climate adaptation, grazing and rangeland management practices, climate-smart agriculture, and sustainable fisheries. Among them are Nuru International, Farm Africa, Blue Ventures, Choba Choba Foundation, Pretaterra, Peace Parks Foundation, and Global Communities.

Lessons from Paul Milgrom’s work on water allocation

In the pursuit of sustainable food security, innovative market design can revolutionize the allocation of precious resources. Paul Milgrom, an economist and Nobel Laureate, has made significant contributions in this field, particularly in the design of water markets. His work offers valuable insights into how market mechanisms can efficiently allocate resources and promote sustainability. Milgrom's research has shed light on the challenges associated with water allocation, a critical issue intertwined with food security. As water scarcity becomes increasingly prevalent, developing robust market structures that ensure equitable access to this vital resource has become imperative. By applying economic principles to water markets, Milgrom's work has demonstrated the potential for improved efficiency, environmental stewardship, and enhanced resilience.

In 2020, there were droughts on six continents. Places that used to have plenty of water didn't have it because of changes in the rainfall pattern. So that's problem one,” says Milgrom. “Problem number two is different. In many places water rights were determined historically.

In the US, water allocation rights were essentially given out on a first come, first serve basis meaning that anyone who established on a given piece of land first had priority over people who came later. And while this approach worked in the past, nowadays, these types of legacy rights are very hard to transfer. “Buying the old uses and creating new uses requires some market design. We have to create markets where there were none before because the prerequisites for markets didn't exist,” says Milgrom. “Finding ways that improve resource allocation, but also that avoid hurting people, those are the complicated problems.”

The principles and insights derived from Milgrom's work on water market design can be extrapolated to the broader context of food security. Just as water scarcity poses challenges to agricultural production, ensuring equitable access to food remains a pressing global concern. By leveraging similar market design principles in the form of auctions to allocate access to natural resources, stakeholders can create efficient and transparent food distribution systems that address issues of waste, accessibility, and affordability.

The road ahead

As we look back on another edition of World Food Day, it’s essential to acknowledge the interconnectedness of food security, sustainable development, and the pursuit of a greener economy. By aligning financial resources, economic principles, and innovative approaches, we can build a future where food security and equitable distribution are no longer aspirations but attainable realities. Together, let’s seize the opportunities at hand, embrace sustainable practices, and ensure that no one is left behind on the path to a hunger-free world.

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