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Sustainability performance is determined by the behaviour of the diverse stakeholders involved in the food system. All stakeholders shape the overall performance of the food system by adopting certain behaviours, which are determined by their capacities and incentives. The structure of the system influences the behaviour of the stakeholders, and the behaviour of these diverse stakeholders in turn influences the structure of the system, generating feedback loops (Bain, 1956). For example, the development of cold chains has spurred the production and consumption of refrigerator-dependent foods; and the growing presence of refrigerators in homes, particularly in high-income countries, has increased the range of and demand for such foods (Garnett, 2011). Understanding the incentives and capacities of the diverse stakeholders involved in food systems is important when designing effective climate-smart agriculture interventions and expanding their uptake.

The sustainability performance of food systems must be appraised holistically with consideration of the potential trade-offs and synergies in the economic impacts (e.g. incomes, profits, taxes and food supply), social impacts (e.g. gender equality, nutrition, and animal welfare), and environmental impacts (e.g. the conservation of ecosystems, biodiversity, soil and water). In the SFVCD approach, SFVCs occupy the area where the economic, social and environmental dimensions of sustainability intersect, as depicted in Figure B10.3. Developing SFVCs requires the careful analysis and weighting of the economic, social and environmental dimensions of sustainability. Interventions designed based on these analyses will be context-specific and aligned to the priorities of other national climate-smart agriculture programmes. The feasibility of implementation will depend on the capacities and incentives of the various food system stakeholders. In developing climate-smart value chains for sustainable food systems, the priority will likely be placed on reducing negative environmental impacts at all stages of the food value chains, particularly the carbon footprint, as well as improving the resilience of the stakeholders that are the most vulnerable to climate risks. To make food systems more environmentally sustainable and enable them to make a meaningful contribution to global efforts to curb climate change, it is important to examine the carbon footprint of food value chain stages and where possible identify more efficient, less carbon-intensive options.

In value chain development, there will inevitably be trade-offs between the elements within the three dimensions of sustainability (Ericksen, 2008; Ingram, 2011; FAO, 2014). For example, some value chain development projects may deliver economic benefits, such as improved profits and job creation for some food system stakeholders, but have negative environmental impacts, such as changes in land use associated with the conversion of forest land to agriculture. Some interventions, if they rely on a monoculture cropping systems, may have a positive economic impact for some stakeholders, but erode genetic diversity and increase the system's vulnerability to climate change (Alteiri et al., 2015). Other interventions may have negative social impacts, such as decreased nutrition, if they promote calorie-rich but nutrient-poor, ultra-processed foods over fresh produce or perishable goods. Equally, food value chain interventions that prioritize environmental elements, such as the reduction of carbon emissions through reduced fertilizer use or the introduction of a new technology, may lead to negative economic impacts in terms of reduced profits and potential job losses, as well as negative social outcomes, such as an unwillingness to embrace the introduction of non-traditional foods. 

Climate-smart interventions aim to harness synergies among the different dimensions of sustainability to deliver environmental, social and economic benefits. Climate-smart agriculture interventions may bring additional income to value chain actors and increase their household food and nutrition security; build resilience to market fluctuations; and safeguard ecosystems by protecting biodiversity, reducing soil erosion, and increasing soil carbon sequestration (CGIAR, 2016). To ensure that the outcomes of climate-smart agriculture interventions are sustainable and scalable, it is critical to examine all factors within the economic, social and environmental dimensions of sustainability to minimize trade-offs and capture synergies.