Global food systems are deeply implicated in today’s interconnected crises, driving ecological degradation, climate change, declining public health, and persistent food insecurity. The dominant industrial model, focused on intensification, global trade, and economic growth, has become a major contributor to these crises. Recent research shows food systems are a leading factor in breaching seven of nine planetary boundaries, while over 2.3 billion people globally face moderate or severe food insecurity. Industrial agriculture contributes more than one-third of global greenhouse gas emissions and has caused widespread biodiversity loss. Despite massive public subsidies of roughly USD 670 billion annually, the societal costs of this model—including environmental damage, health impacts, and inequality—are estimated at USD 12.7 trillion each year. Continuing this trajectory threatens progress toward multiple Sustainable Development Goals (SDGs).
There is a growing consensus on the urgent need to transform food systems. Scholars and practitioners call for rethinking development paradigms and financial architectures, including the role of Public Development Banks (PDBs). PDBs, numbering over 500 globally, operate at national, regional, and multilateral levels and are mandated to promote social and economic development, particularly in low-income countries. They provide loans, grants, technical assistance, and policy advice to support development and tackle global challenges such as climate change, food insecurity, and public health crises.
However, PDBs have faced criticism for financing strategies that prioritize industrial production and profit over ecological sustainability and social equity. Investments often favor monocultures, intensive livestock systems, and export-oriented agriculture, perpetuating inequity, environmental degradation, and food insecurity. Narrow definitions of risk, return, and “bankable” projects reinforce these patterns, sidelining community-based and agroecological initiatives that yield long-term ecological, social, and economic benefits.
Agroecology offers a transformative framework for food system resilience, centering social, ecological, and economic sustainability. It prioritizes the role of farmers and civil society in shaping food systems, supports biodiversity, strengthens climate adaptation and mitigation, and improves livelihoods and nutrition. Agroecology also advances multiple SDGs, including zero hunger, gender equality, climate action, life on land, and poverty reduction. Evidence shows agroecological approaches can match or exceed conventional yields, enhance profitability, empower women, and strengthen rural economies through local markets and small- and medium-sized enterprises.
Despite its demonstrated benefits, agroecology remains underfunded within PDBs due to structural biases favoring industrial-scale projects, standardized financing models, and short-term financial returns. Governance structures are often opaque and concentrated among major shareholders, limiting participation from affected communities. Environmental and social safeguards are insufficient and inconsistently enforced, leaving communities vulnerable to displacement, labor exploitation, and ecological harm. PDBs’ historical reliance on structural adjustment policies and land tenure reforms has further entrenched inequities and advanced corporate agricultural interests.
Promising examples demonstrate that PDBs can support agroecological transformations when projects adopt participatory, gender-responsive, and context-specific approaches. The Pró-Semiárido Project in Bahia, Brazil, co-funded by IFAD and the state government, engaged over 70,000 farming families to implement agroecological practices, strengthen livelihoods, empower women, and advance multiple SDGs. Using innovative evaluation methodologies, the project showed multidimensional improvements in ecological resilience, economic justice, and social inclusion, highlighting the potential of PDBs to finance transformative food systems.
To fully leverage this potential, PDBs must fundamentally reform internal structures, investment frameworks, and accountability mechanisms. This includes adopting robust monitoring systems grounded in agroecological principles, strengthening grievance and conflict-resolution processes, and shifting financing portfolios away from destructive industrial agriculture. By doing so, PDBs can become genuine enablers of equitable, resilient, and sustainable food systems while advancing global climate, biodiversity, and development goals. Continued empirical research and tools like the Agroecology Finance Assessment Tool (AFAT) can guide PDBs to align investments with agroecological principles and ensure long-term systemic impact.
