John Hoddinott International Food Policy Research Institute Washington DC

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

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”. Page 2

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. Page 3

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 Page 4

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 Page 5

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? Page 6

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 Page 7

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 Page 8

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 Page 9

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 Page 10