Economic consequences of micro-nutrient status: Challenges and opportunities for food fortification John Hoddinott International Food Policy Research Institute Washington DC

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 2 Introduction Micro-nutrient deficiencies are pervasive in the developing world. It is estimated that: 2 billion people suffer from iron deficiencies 140 million pre-school children are deficient in Vitamin A 17.6 million children are born annually with mental impairments resulting from iodine deficiency Improving micro-nutrient status has intrinsic value: Reductions in mortality, in morbidity and improvements in health status that result from such improvements are “a good thing”.

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 3 Introduction, cont’d Improving micro-nutrient status via fortification and other means also has instrumental value where : Improvements in micro-nutrient status lead to improvements in economic outcomes While the intrinsic motivation for improvements in micro- nutrient status are important, it is their instrumental value which are the focus of this presentation.

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 4 The economic consequences of improved micro-nutrient status Improvements in micro-nutrient status conveys economic benefits through the following pathways: Improvements in certain forms of micro-nutrient status reduces infant mortality. This conveys economic benefits in terms of the resources that would otherwise be needed to avert infant deaths and/or the present discounted value of future incomes earned by this person Improvements in certain forms of micro-nutrient status reduces infant and pre-school morbidity. This conveys economic benefits where households no longer incur costs (time, money) associated with these illnesses

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 5 The economic consequences of improved micro-nutrient status, cont’d Improvements in certain forms of micro-nutrient status assist in enhancing physical growth. This conveys economic benefits where increased stature in adulthood is causally linked to productivity. Improvements in certain forms of micro-nutrient status (iron) enhance physical productivity This conveys economic benefits where physical productivity is linked to micro-nutrient status Improvements in certain forms of micro-nutrient status (iodine, iron) can enhance cognitive development and learning. This conveys economic benefits where cognition and schooling are causally linked to productivity. Some of these benefits may be transmitted intergenerationally

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 6 The economic consequences of improved micro-nutrient status, cont’d Assessing whether these potential benefits justify, on economic grounds, interventions to improve micro-nutrient status requires quantifying: The benefits, The costs, and The distribution of these benefits None of this is straightforward. For example: What is the value of a death averted? $500? $100,000? How do you quantify reduced expenditures on treating illnesses in environments where all medical services are publicly provided? Where few, if any, households seek medical treatment? How do you value future benefits derived from improvements in cognitive function when the returns to cognitive ability are highly uncertain? What is the appropriate discount rate?

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 7 The economic consequences of improved micro-nutrient status, cont’d Mindful of these caveats, measures to improve micro- nutrient status – fortification, supplementation, and biofortification appear to have high benefit: cost ratios both in absolute terms and as compared with other investments that can be made to improve the well-being of poor people in developing countries

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 8 Fortification: Snapshots of successes A key component of strategies to reduce micro-nutrient deficiencies is fortification. The last 10 years has seen significant advances in food fortification, particularly that of iodine. For example: China, with an estimated 40 per cent of the world’s at-risk population, reduced low iodine status in school children by 75 per cent Madagascar went from no iodated salt in 1992 to 98 per cent coverage by 1998

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 9 Fortification: Four Challenges Measuring impact Do we truly know what the baseline looks like; how much of a difference are interventions really making Technical and regulatory Fortification requires an appropriate mix of partnership and regulation Political economy Convincing Finance Ministers that they should worry about micro-nutrients Distribution Ensuring fortification is pro-poor

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 10 Conclusions Efforts to redress deficiencies in micro-nutrients has both intrinsic and instrumental value Fortification has an important role to play in such efforts and has already shown some significant benefits Nevertheless, significant challenges remain