Project Description
Climate-Smart Agricultural Finance (CAF) is meeting economic development, poverty alleviation, and food security needs in Africa while providing climate adaptation and mitigation benefits. There are currently two pilot projects in Ghana and Ethiopia.
Rockefeller Foundation grantee Forest Trends, a U.S.-based international NGO, is leading the CAF project. Forest Trends promotes sustainable forest management and conservation around the world by creating and capturing market values for ecosystem services.
Two of the greatest challenges facing the world this century are interrelated: feeding 9 billion people by 2050 and preventing dangerous build-up of green-house gases (GHGs) in the atmosphere. At present, many agricultural areas are facing changes in mean temperature, precipitation, and increasing climate va-riability, and it is uncertain how this will affect agricul-tural yields. At the same time, agriculture contributes to GHG emissions, between 10% and 12% of all emis-sions.
Looking forward, the opportunity is to identify path-ways for agricultural production to occur within a changing climate without further contributing to climate change. Agriculture must also contribute to rural economic development, while considering food security as well as climate adaptation and mitigation. In many areas, for many crops, new “climate- smart” agricultural practices will need to be identified and made available to farmers. Adoption by farmers, however, will require financial, human, and social capi-tal as well as the capacity to take the risks required for learning, innovation, and dissemination.
Forest Trends, the Katoomba Group, Climate Focus, UNIQUE, and the Nature Conservation Research Cen-tre (NCRC)—in collaboration with additional African partners and with funding from the Rockefeller Foun-dation—are designing “Climate-Smart Agricultural Finance” (CAF) models that can (1) deliver climate resi-lience and mitigation gains, (2) improve agricultural productivity, (3) protect natural ecosystems, and (4) leverage public as well as new private sector finance.
Key components of this process are:
- Assessing and identifying a technical management package based on feasibility studies, as well as eva-luating existing management systems reviews, yield and climate benefits, and sensitivity and risk man-agement analysis.
- Building the investment case for the private sector supported by public-sector climate finance; the mod-els seek to engage commodity supply chain actors as well as agricultural input suppliers, financial institu-tions, and insurance companies that are interested in improving the security of sustainable supply and de-veloping new business models and products.
- Forging partnerships to gain political support at na-tional and sub-national levels. The goal of this work is to catalyze action in the agriculture sector by demonstrating practical designs and building political support for climate finance that leverages private sector investments. These investments are aimed at providing smallholder farmers in developing countries with access to technological and financial resources.
Ghana Pilot Project
Ghana has lost approximately 85% of its forest cover over the past 100 years. One of the main drivers of deforestation and degradation in the high forest zone is clear-ance for cocoa farms. Ghanaian national policy seeks to increase annual cocoa pro-duction and to Reduce Emissions from Deforestation and Forest Degradation (REDD). However, under current farming practices, cocoa production cannot in-crease without further deforesting gazetted forest reserves on a significant scale. Investment is needed to achieve cocoa production targets while significantly reducing carbon dioxide emissions from land-use change.
The pilot project aims to use climate finance to spur a sector-wide transformation to a climate-smart cocoa production system by:
- Promoting biodiversity conservation and ecological resilience of the cocoa-farming landscape. The project will introduce a sustainable intensification strategy that includes increased shade cover. The new cocoa management practices will result in higher productivity and increased climate resilience of the cocoa systems. Fertilizer and shade trees contribute to higher yields via intensification, better litter decomposition rates, and higher drought resistance.
- Reducing emissions from deforestation and degradation of carbon stocks on forest reserves and cocoa farms. Ad-ditionally, planting new shade trees will enhance carbon stocks in highly degraded areas.
- Improving livelihoods by providing cocoa farmers and cocoa-farming communities the opportunity to benefit from climate finance linked with improved access to agronomic, economic, and information resources.
Ethiopia Pilot Project
Ethiopia is the second most populous country in Africa. Agriculture is the back-bone of the Ethiopian economy and about 95% of the agricultural output is pro- on small-scale subsistence farms in the highlands of Ethiopia. Most of the crop production increases within the last decade are related to area expansion, while per area productivity remains low. Globally, Ethiopia is the sixth largest cof-fee producer, with a global market share of about 4%. Nationally, coffee contri-butes about 40% of the nation’s entire foreign exchange earnings. Most of this, 95%, is produced by smallholder famers. However, the agricultural sector as a whole suffers from frequent droughts and poor cultivation practices resulting in nutrient mining. Climate-smart coffee practices—including improving agronomic practices and implementing shade tree planting—can lead to increased productivity and carbon stock enhancement while enhancing livelihoods and climate resilience of smallholder farms.
A CAF pilot project for climate-smart coffee in Ethiopia has three components:
- Securing public climate financing to support private sector investment in order to train extension intermediaries and partners in implementing climate-smart coffee-intensification.
- Gaining and maintaining support from the national government.
- Developing measurement, reporting, and verification systems as well as climate-
