As the Landscapes Blog has highlighted topics related to climate change and agriculture, the issue of funding has surfaced a number of times, including a post at the beginning of the month on Navigating Finance for the Farmer. Landscapes Initiative Co-Organizer, The World Agroforestry Centre (ICRAF) posted their take today on the finance roundtable at Agriculture, Landscapes, and Livelihoods Day, noting the main points made by each of the panelists. This post is an excerpt (specifically focusing on ICRAF’s panelist) and the full news piece can be found on the ICRAF website.
With temperatures rising and warming expected to continue or accelerate in many parts of the developing world, smallholder farmers face increasing challenges on environmental and economic fronts.
Climate finance – public and private sector-sourced finance to support climate change mitigation and adaptation initiatives – has the potential to drive a shift to low-carbon, climate-resilient and sustainable agricultural practices. Yet making this finance work for the rural smallholders is no mean feat.
Fortunately, when it comes to climate finance, Dr. Henry Neufeldt, leader of the Global Research Project on Climate Change at the World Agroforestry Centre (ICRAF), isn’t thinking small. His vision is an integrated and robust system that extends from smallholder farmers all the way to public and private funding at the global level.
“We want to build evidence of a climate finance architecture which connects farmers to global carbon and other climate finance initiatives, to people who are interested in investing in land and doing the right thing.”
This was the vision that brought together five diverse panelists representing public and private finance and civil society in a Roundtable Session entitled Climate finance for agriculture and livelihoods as part of Landscapes and Livelihoods Day. Led by ICRAF in partnership with CARE International and the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS), the session looked at the challenges faced in delivering the benefits of carbon finance to farmers and discussed how many and diverse climate finance projects could be combined to reduce risks and costs and attract investments.
Neufeldt noted that an analysis of seven large-scale biocarbon projects in East Africa indicated that to work for smallholder farmers:
1) Upfront public-sector funding is essential. Unlike carbon projects in the forestry sector, agricultural projects must combat low initial carbon stocks and very high project costs. “That’s basically two thirds of the whole project during which we have debt. No private investor is going to invest directly in that kind of a project,” Neufeldt pointed out, stressing the need for public sector funding to bridge this initial barrier.
2) ‘Co-benefits’ are more important than carbon. With droughts, floods and food insecurity knocking at the door, farmers will not be motivated simply by the mitigation benefit.
3) Building the connection between farmers and carbon projects is key. Neufeldt described a value chain to be constructed between farmers and the carbon market to address the disconnect between individual farmers and carbon projects. Within this infrastructure, Community Based Organizations (CBOs) act as intermediaries between farmers and the project implementers, who can then engage directly with the carbon market. “Building this kind of value chain will enable individual farmers to go and speak with the marketplace.”
“Farmers aren’t doing it for the carbon and they aren’t doing it for the mitigation; they only invest in carbon projects because they recognize that clear benefits for their livelihoods and food security arise from these projects,” Neufeldt explained. These co-benefits include everything from increased agricultural productivity as a result of increased soil fertility and reduced erosion, to reduced labour of collecting firewood, to income from the sale of tree products. The result is not only improved livelihoods and food security for farmers, but consequently greater resilience in the face of climate change.
An important part of this picture is long-term investment of project implementers – by building on preexisting relationships, it is possible to both smooth technical implementation and avoid high project costs. “You can’t just parachute into an area and believe that a carbon project will work,” said Neufeldt.
As the floor opened for discussion, ICRAF’s Director General, Tony Simons, said the lack of robust metrics for adaptation indicators was an important barrier to public- and private-sector investment.
“We can measure productivity, we can measure sequestration, we can measure reducing emissions…How can we measure adaptation? How can we unequivocally say that this landscape or this farming practice or this farm is better adapted than the other?” he posed.
However, these metrics do exist. Recent research based on a project in western Kenya showed that involvement in agroforestry practices for only four years reduced food insecurity due to a drought and a flood by 25 percent.
Neufeldt described the need to sell biocarbon projects as a package containing innovative agricultural practices for increased productivity and long-term returns from fruits, fodder and fuel.
“By selling this package together with insurance against a default, we can leverage a lot of investment and develop a system that can help farmers uplift their livelihoods. The system must have many different actors, including researchers, NGOs, development organizations, public- and private-sector investors, and involve farmers fully in decision-making.”
Read the full article online for descriptions of the other panelists’ contributions to the discussion.