Financing climate smart agriculture

Financing climate smart agriculture

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  Financing Climate SmartAgriculture Central Asia Climate Smart Agriculture Workshop Bishkek, 12-14 July 2016 Astrid Agostini Climate and Environment Division, FAO 1
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  Investment and financein the agriculture sectors Agricultural investment • Private investment, in particular on farm investment in agricultural capital, is the dominant source of agricultural finance • ODA is a fraction of public investment in agriculture – domestic budgetary resources for public investment are significant Climate finance • ODA for climate finance exceeds ODA for agriculture sectors • Domestic public finance for climate action is significant/may exceed international finance ODA Domestic public investment Private investment Domestic finance is key – use your own resources!
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  Public international climatefinance flows increasing… especially since 2010… • USD 16 bn cumulative 2002-2015 • Major increase since 2010 – fast start • Predominantly grants, in particular bilateral and dedicated multilateral funds Figure 3 Annual international climate tagged commitments over time by reporting source and donor type (2002-2014) Source: OECD DAC (2015) Credit Reporting System (CRS)[1] and Climate Funds Update, 2015 [1] https://stats.oecd.org/Index.aspx?DataSetCode=CRS1 0 500 1000 1500 2000 2500 3000 3500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 FinanceinmillionsofUS$ Bilateral CRS Multilateral CRS Multilateral CFU
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  Agriculture receives mostfinance overall, but forestry receives the greatest share of dedicated climate funds… fisheries marginal…. • Bilateral public finance is dominant source for all three sub sectors – Approx 25% tagged as “principally” supporting CCAM outcomes • Annual averages (bilateral): – US$1.9 billion for agriculture, – US$552.7 million for forest conservation – US$37.5 million for fisheries • Five main donors: GER, EU, USA, UK, JAP; for fisheries: Norway International public climate finance commitments by funder, source and sector (2010-2014) 0 500 1000 1500 2000 2500 3000 Bilateral CRS Multilateral CRS Multilateral CFU FinanceinmillionsofUS$ Agriculture Forests Fisheries Source: OECD DAC (2015) Credit Reporting System (CRS)[1] and Climate Funds Update, 2015
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  Adaptation finance exceedsmitigation finance, but in forestry mitigation dominates How different donors and sources support climate mitigation and adaptation outcomes in the sector (total finance in millions of US$ between 2010 and 2014) Source: OECD DAC (2015) Credit Reporting System (CRS)[1] and Climate Funds Update, 2015 [1] https://stats.oecd.org/Index.aspx?DataSetCode=CRS1 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Agriculture Forestry Fishing Agriculture Forestry Fishing Agriculture Forestry Fishing Bilateral CRS Multilateral CRS Multilateral CFU FinanceinmillionsofUS$ Mitigation Adaptation Both
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  What is beingfinanced Limited availability of aggregate data/information. Some indications: • Capacity development, including policy and institutional strengthening – Particularly pronounced in forestry – dedicated climate funds allocated approx. 75% of forest finance to REDD+ readiness • Bilateral finance programmed to deliver multiple benefits – biodiversity and gender commitments, especially in agricultural and fisheries adaptation programmes
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  Prospects and pledges •USD 100 billion in annual climate finance to developing countries by 2020, more after 2025 – reiterated in Paris • COP21 USD 5.6 billion pledged to new and existing initiatives – unclear how much to ag sectors • Renewed commitments to cross cutting forestry and ag sector programmes, especially GEF (USD 3 billion climate finance across focal areas) – at least US$300m dedicated to coastal and marine issues over the next four years. – US$250 million to flow through the GEF’s SFM/REDD+ Incentive Mechanism, which will mobilize US$750 million in grants from other focal areas to tackle the drivers of deforestation and forest degradation, while supporting the role of forests in national and local sustainable development plans – USD 45 m –address key global drivers through sustainably managed commodity chains – more than US$116 million - food security, resilience, carbon sequestration in SSA
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  Multilateral climate fundslikely to support CSA • Green Climate Fund (GCF) • Global Environment Facility (GEF) – Climate change focal area – Land degradation focal area • Least Developed Countries Fund (LDCF) – Funding National Adapation Programmes for Action (NAPAs) • Special Climate Change Fund (SCCF) (adaptation) • Adaptation Fund (AF) – Developing countries particularly vulnerable to climate change – Funded by CDM; direct access for national entities
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  What is theGCF? • Established in 2010 as a financing instrument under the UNFCCC. • important role expected in reaching the USD 100 bn per year climate finance target. • Secured USD10.3 billion in pledges. • Aiming to allocate USD2.5 billion in 2016 • allocated USD 424 million to 16 projects (USD 256 million to 8 projects in 2016). • The GCF Secretariat submits decisions to a 24-member Board (split 50:50 between developing and developed countries). Mitigation (50%) Adaptation (50%)
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  GCF priorities • Programmesand projects are expected to contribute to one (or more) of the following strategic impacts
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  GCF Engagement Infrastructure 11
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  accredited entity cansubmit project and programme proposals for funding no-objection(s) from the NDA(s) or focal point(s) for funding proposals GCF Secretariat evaluates funding proposals against its investment criteria quality proposals are submitted to the Board for consideration/potential approval GCF project development process
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  Identifying viable projectideas (1 of 2) • Alignment with the GCF Results Management Framework • Make a substantial contribution to low-emission and/or climate- resilient development. Mitigation Adaptation Energy and power generation Vulnerable people and communities Low-emission transport Health, well-being, food & water security Buildings, cities, industries and appliances Infrastructure and built environment Forestry and land use Ecosystems and ecosystem services
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  Identifying viable projectideas (2 of 2) • Contribute to a paradigm shift in the response to climate change. – Projects should be innovative, and have a catalytic impact. • Focus first and foremost on climate change. – Clear differentiation from other projects aimed at (e.g.) developing the agricultural sectors, reducing poverty and food insecurity. • Ensure alignment with national climate change policy priorities – including INDCs, NAPs, etc. • Country ownership and leadership are vital – Close collaboration with National Designated Authorities (NDAs) from an early stage is a pre-requisite to further work. – Involvement of national stakeholders during project design is essential. Their involvement in project implementation is desirable. Co-financing!
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  Project Preparation Facility(PPF) • Provides up to USD 1.5 million (or 10% of requested GCF funding) to support project development. • All accredited entities can submit requests for PPF resources. – The Secretariat approves PPF requests, ensuring a fair geographic distribution and balance between international and direct access entities. • PPF request must be built on a well developed project idea (e.g. concept note and PPF form). • PPF to finance e.g. feasibility studies, E&S screenings, gender studies and action plans, risk assessments and M&E framework
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  GCF Readiness Programme •up to USD 1 million per year to capacitate local stakeholders and support the development of a programme/project pipeline (maximum USD 300,000 per readiness project). • wide range of delivery partners can develop and implement readiness initiatives, - with the explicit consent of (and in close coordination with) the country’s National Designated Authority (NDA) • four ‘activity areas’ for readiness support. 1. Capacitating the NDA 2. Building a country programme framework 3. Supporting accreditation of regional, national and sub-national entities 4. Building the project pipeline
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  GCF projects inagriculture - examples • Scaling up the use of modernized climate information and early warning systems in Malawi ($12.3 million). – climate phenomena (flooding, droughts, storms) which have been worsening in recent decades, while 85% of the population mainly rely on agriculture for a living in rural areas. • Increasing the resilience of ecosystems and communities through the restoration of the productive bases of salinized lands in Senegal ($7.6 million). – low rainfall levels are threatening groundnut production which is a crucial sector in the country’s economy. – GCF is funding the ecological monitoring centre (CSE), a State body whose mission will be to “develop knowledge and the spread of suitable technologies” to farmers and to “reduce the salinity” of arable land.
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  Making a littlego a long way ….… invest climate finance strategically • Enabling environment/public goods and services to underpin climate-smart agricultural development • Supporting climate mainstreaming into domestic investment – Public expenditure reviews; Budgeting process; Project/investment appraisal • Unlocking private capital for climate-smart agricultural investment – Prove viability of CSA investments – Funds with layered capital structures where public funds partially de-risks private capital for innovative investments with public benefits – Strengthen capacity of financial services providers to manage agricultural risks and
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  Thank you