Impacts of COVID-19 on global poverty, food security, and diets: Insights from global model scenario analysis

Abstract

This study assesses the impact of coronavirus disease 2019 (COVID-19) on poverty, food insecurity, and diets, accounting for the complex links between the crisis and the incomes and living costs of vulnerable households. Key elements are impacts on labor supply, effects of social distancing, shifts in demand from services involving close contact, increases in the cost of logistics in food and other supply chains, and reductions in savings and investment. These are examined using IFPRI's global general equilibrium model linked to epidemiological and household models. The simulations suggest that the global recession caused by COVID-19 will be much deeper than that of the 2008-2009 financial crisis. The increases in poverty are concentrated in South Asia and sub-Saharan Africa with impacts harder in urban areas than in rural. The COVID-19-related lockdown measures explain most of the fall in output, whereas declines in savings soften the adverse impacts on food consumption. Almost 150 million people are projected to fall into extreme poverty and food insecurity. Decomposition of the results shows that approaches assuming uniform income shocks would underestimate the impact by as much as one-third, emphasizing the need for the more refined approach of this study.

Keywords: CGE analysis; COVID‐19; dietary change; food security; poverty.

FIGURE 1

Implementation of the Covid‐19 scenarios [Color figure can be viewed at wileyonlinelibrary.com] Source: Authors’ depiction.

FIGURE 2

Engel's law: Declining food expenditure shares with rising incomes [Color figure can be viewed at wileyonlinelibrary.com] Source: POVANA database. Authors’ computation. Note: The blue line represents the estimated share of food consumption in total expenditures estimated through a polynomial of degree 3 on the log of individual income household, normalized by their own country's poverty line.

FIGURE 3

Global and Regional Poverty Impacts of MIRAGRODEP‐COVID 19 scenario (April 2020) by selected regions (Absolute and percentage change from 2020 baseline values) [Color figure can be viewed at wileyonlinelibrary.com] Source: MIRAGRODEP and POVANA Simulations.

FIGURE 4

COVID‐19 impacts on diets (average effect for world) (percentage change in average global household consumption by product) [Color figure can be viewed at wileyonlinelibrary.com] Source: MIRAGRODEP Simulation (April 2020 scenario). Note: Global average based on weighted changes at the estimated at the country or regional levels. Weights are based on base value of consumption, while changes are computed on the evolution of the volume of consumption for each national representative household.

FIGURE 5

Decomposition of the simulated macroeconomic impacts by main transmission channel [Color figure can be viewed at wileyonlinelibrary.com] Source: MIRAGRODEP simulations results (April 2020 scenario). Note: Each bar in the graph represents 100% of the change in each variable in the COVID‐19 scenario and shows for each driver's positive or negative contribution (in percentage shares) to the overall change.

FIGURE 6

Simulated changes in extreme poverty by cause (shares of total impact) [Color figure can be viewed at wileyonlinelibrary.com] Source: MIRAGRODEP simulations results (April 2020 scenario). Note: Each bar in the graph represents 100% of the change in each variable in the COVID‐19 scenario and shows for each driver's positive or negative contribution (in percentage shares) to the overall change.

FIGURE 7

Decomposing the simulated changes in extreme poverty owing to COVID‐19 by average income and distributional shock (shares of total impact) [Color figure can be viewed at wileyonlinelibrary.com] Source: MIRAGRODEP simulations results (April 2020 scenario). Note: Each bar in the graph represents 100% of the change in each variable in the COVID‐19 scenario and shows for each driver's positive or negative contribution (in percentage shares) to the overall change.