Agriculture needs to be seen as an interaction with wider ecosystems – so that farming becomes a renewable rather than an extractive activity

Want to fly more? Face more climate change. Want lower taxes? Receive less public services. Because economists can provide logical, bottom line figures for returns on investments, this "trade-off" thinking permeates public policy-making.

This is why most policy-makers think they have to choose between feeding the world and protecting the environment – a straight choice. Does it have to be this way? No. To the contrary – we can and must achieve both, or we will fail on both.

In the long run, continued agricultural production cannot be sustained at the cost of undermining natural assets. In most parts of the world, we are seeing the environmental costs of unsustainable agriculture: 15 out of the world's 24 main ecosystem services are being used unsustainably; agriculture accounts for 70% of freshwater use and of that 15%-35% is used unsustainably; 75% of crop diversity has been lost since 1900; 70% of fish stocks are being harvested unsustainably; about 5.2m hectares of forest are lost every year; and agriculture and land use change account for 14% and 17% of global greenhouse gas emissions respectively.

While large-scale agriculture is a major driver of environmental degradation, 500m smallholder farms are an important part of the equation. They account for 60% of global agriculture, manage vast areas of land, and through ingenuity and sweat manage to feed about one-third of humanity (providing up to 80% of food in sub-Saharan Africa and Asia). They also make up the largest share of the developing world's undernourished. Large numbers of smallholders are women heads of households or indigenous peoples – they live in the most ecologically and climatically vulnerable landscapes, such as hillsides, drylands and floodplains, and rely directly on weather-dependent natural resources.

For some years now, a combination of enlightened government officials, community groups, civil society organisations, thinktanks and international aid agencies such as the International Fund for Agricultural Development (Ifad) have been developing a more sustainable approach to agriculture, with great success and huge potential to include smallholders. Examples (often overlapping) include sustainable land management and conservation agriculture, agroforestry, sustainable forest management, watershed management, integrated pest management, and organic agriculture.

Baffled? In essence, these typically create or maintain healthy landscapes with maintained groundcover, diverse production systems and fertile soil that can retain moisture and nutrients.

Back to trade-offs. As much by lucky coincidence as design, these techniques typically increase yields, reduce poverty, increase resilience to climate change, enhance biodiversity, and reduce greenhouse gas emissions. These are the "multiple-benefit", or "multiple-win" approaches that poor rural people need. Take the example of agroforestry – planting "fertiliser trees" in the smallholder maize fields of Malawi has doubled yields, increased the resilience of the soil to land degradation (by improving its organic and nitrogen content, water retention capacity and moderation of micro-climate), reduced soil carbon emissions, and increased biodiversity by being a source of food for insects and animals.

Such techniques are already being successfully scaled up. For example, agroforestry is now practised on between 12.5%-25% of total agricultural land worldwide. Brazil currently practises minimum-tillage for about 60% of its cultivatable area. Conservation agriculture is used in about 100m hectares worldwide (about 8% of arable land). Current trade in organic food, drinks and cotton amounts to about $60bn a year. India, Indonesia and the Philippines have removed insecticide subsidies and reduced insecticide use on rice by 50%-75%, while rice production continued to increase annually.

We can work with smallholder farmers in developing countries to do this even faster. Ifad's new Environment and Natural Resource Management Policy (pdf), launched on Wednesday, describes how our organisation will support an "evergreen revolution".

The main challenge is to change mindsets. Agriculture needs to be seen as an interaction with wider ecosystems – allowing agriculture to be practised as a renewable rather than extractive activity. In addition, the real value of natural assets, including cultural values, needs to be recognised. Government ministries (and international governance structures) can seek multiple-benefits rather than compete around trade-offs. From this will flow the change in policies needed to reward better stewardship of the planet.

The problem of environmental degradation in agriculture is more serious and systemic than many previously thought. Thankfully, we have the tools and knowledge for smallholder agriculture to play a key role in feeding a growing population in a way that is good for the poor and good for the planet. Let's invest in them.

• Elwyn Grainger-Jones is director of environment and climate at Ifad