Improving Food Aid: What Reforms Would Yield the Highest Payoff?

Abstract

This paper develops an integrated model of the food aid distribution chain, from donor appropriations through operational agency programming decisions to household consumption choices. We use this model to simulate alternative policies and to perform sensitivity analysis to establish how varying underlying conditions - e.g., delivery costs, the political additionality of food, targeting efficacy - affect optimal food aid policy for improving the well-being of food insecure households. We find that improved targeting by operational agencies is crucial to advancing food security objectives. At the donor level, the key policy variable under most model parameterizations is ocean freight costs associated with cargo preference restrictions on US food aid.

Keywords: cargo preference, local and regional purchases, monetization, targeting, tying

JEL Classification: 011, 021, Q18