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Financing Climate-Smart Agriculture in Smallholder SystemsBrussels 27 Sept 2012ACP-EU Meeting

Dr Charlotte Streck1

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Financing Climate-Smart Agriculture

Key issues• For ACP countries adaptation and climate

resilience is a priority to achieve increased productivity and food security, with mitigation as a co-benefit.• Climate finance is often divided in

mitigation and adaptation finance. Mitigation finance is (or seems) easier to access and private sector finance easier to leverage.

Climate Focus, Sept 27 Charlotte Streck

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Climate finance policy context

Global United Nations Framework Convention on Climate Change (UNFCCC), Kyoto Protocol, Cancun Agreements, Durban Platform

Regional (Africa)

AUC-NEPAD Agriculture Climate Change Adaptation-Mitigation Framework Comprehensive Africa Agriculture Development Programme (CAADP)

National

National development, food security and climate plans

Climate Focus, Sept 27 Charlotte Streck

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CSA ProgramsAssessment of Risks and Opportunities• Climate Change Impacts• Adaptation Needs• Mitigation Opportunities

Pilot Programs• Identify mitigation/adaptation

activities• Test them in smaller areas

Institutional Readiness• Capacity building• Building of new institutions• Support extension services

Investment Programmes• Scaling-up of successful pilots• Leveraging commercial and

larger sums of finance• Long-term and sustainable

benefits

Climate Focus, Sept 27 Charlotte Streck

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Barriers to the adoption of CSA practices

Climate Focus, Sept27 Charlotte Streck

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Financial Incentives- Output and results-based payments

– PES, Carbon markets- Direct access to loans or other financial

products– Debt, Grants, Tariffs, Taxes

- Risk sharing mechanisms– Insurance, guarantees

- Other incentives for enhanced private investment– PPPs, labelling & certificationClimate Focus, Sept 27 Charlotte Streck

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Supporting Policy Interventions

Set up transition

funds. • Funds to reimburse costs for adopting climate change mitigation activities could address the lack of available credit

Pay for ecosystem services.

• Where upfront finance is not needed, public support can be used to make payments for environmental services for sustainable agriculture activities.

Cover insurance and

guarantee costs.

• Climate finance can also help to reduce climate-related agricultural production risks with insurance strategies.

Support capacity

building and transaction

costs. • Climate finance can support climate-finance specific costs, such as costs associated with aggregation of smallholders, MRV systems, or training of extension systems, financial institutions, or certification bodies.

Climate Focus, Sept 27 Charlotte Streck

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Lender

Insurer / Guarantor

Buyer

Ag Entities (Farms, Coops,

Processors)

Input supplie

rExtensio

n

Certifier

Payments and/or in-kind support Products, services

ODA/Fast-track climate financeNAMAs, NAPs, NAPAs

Jurisdictional or Sectoral MRV

C

Climate mitigation & adaptation value

Consensus land-use planningData gathering and management (MRV)Capacity buildingExtension support

Leveraging existing supply chain relationships

Source: CAF, Climate Smart Agricultural Finance Facility

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Thank you!Charlotte Streck

c.streck@climatefocus.comphone +31 20 760 12 61| mobile +31

621177478

Climate Focus, Sept 27 Charlotte Streck