1 Financing Climate- Smart Agriculture in Smallholder Systems Brussels 27 Sept 2012 ACP-EU Meeting Dr Charlotte Streck 1

2 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 27Charlotte Streck

3 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 27Charlotte Streck

4 CSA Programs Assessment 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 27Charlotte Streck

5 Barriers to the adoption of CSA practices Climate Focus, Sept27Charlotte Streck

6 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 & certification Climate Focus, Sept 27Charlotte Streck

7 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 27Charlotte Streck

8 Lender Insurer / Guarantor Buyer Ag Entities (Farms, Coops, Processors) Input supplier Extension Certifier Payments and/or in-kind supportProducts, services ODA/Fast-track climate finance NAMAs, NAPs, NAPAs Jurisdictional or Sectoral MRV C Climate mitigation & adaptation value Consensus land-use planning Data gathering and management (MRV) Capacity building Extension support Leveraging existing supply chain relationships Source: CAF, Climate Smart Agricultural Finance Facility

9 Thank you! Charlotte Streck phone | mobile Climate Focus, Sept 27Charlotte Streck