Climate finance that makes sense to farmers
Agricultural carbon projects involving smallholder farmers can take up to 16 years to generate a profit from carbon credits. Meanwhile, farmers’ direct income from poles, timber and fuelwood could be 50 times higher than the value of carbon revenue.
These statements are just a snapshot of the evidence presented in a new World Agroforestry Centre (ICRAF) policy brief, Climate Finance for Agriculture and Livelihoods, which calls for an innovative and integrated approach to financing sustainable smallholder agriculture.
The policy brief is a collaboration between ICRAF, the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and experts from the public sector, private finance and civil society that draws on evidence from project experiences to date.
We face the immense challenge of shifting to low-carbon, climate-resilient and sustainable agricultural practices that benefit farmers’ productivity, food security and livelihoods. We need climate finance – public- and private-sector finance that supports sustainable development, reduced climate risk and the reduction of greenhouse gases from the atmosphere – to drive this transition.
Yet project evidence tells us we need to re-think our approach if finance is to benefit smallholder farmers. So what are the criteria for finance that works for agriculture and livelihoods? According to the policy brief, we need to think in integrated ways, across disciplines and sectors, if we are to achieve development, adaptation and mitigation aims. We need:
Up-front public sector funding is to overcome high start-up costs, reduce investment risk and leverage private capital towards sustainable agriculture.
To build on pre-existing local development institutions, strengthen local institutional capacity and secure land tenure to help ensure that project benefits reach farmers.
Investment in smallholder agriculture that takes a holistic approach, focusing on the issues of food security and livelihoods and regarding mitigation as a co-benefit.
To improve climate change adaptation schemes by focusing on developing pro-poor insurance markets, ensuring affordability for poor farmers, building human resource capacity and using distribution channels that have a large outreach.
- To combine investments in sustainable practices across a wide range of countries, landscapes, farm types, crop cycles and sizes to overcome the high risk associated with smallholder farmers and drive investment to promote sustainable practices at large scales.
Read the full policy brief: Climate Finance for Agriculture and Livelihoods