What is Climate-Smart?
‘Climate-smart agriculture’ is a term that has emerged since 2010 to describe agricultural systems designed to simultaneously improve food security and rural livelihoods and support climate change adaptation and mitigation efforts. Meeting the financing requirements for climate-smart agriculture implementation will be a significant challenge.
How Do We Pay For It?
Given overlapping and interrelated investments required to meet the multiple objectives of climate-smart agriculture, the financing systems that support these objectives must be closely linked to maximize the efficiency of climate-smart investments and to manage the fragmentation of sectoral solutions. However, funds for climate adaptation, mitigation, agricultural development, and the closely related goals of food security and sustainable land management generally come from different sources. Without a coordination framework of these funds, there can be a tendency towards inefficiency and insufficient access to financing for climate-smart agriculture.
To identify potential sources of funds for climate-smart agriculture, a template was developed for collecting data on sources of funds for climate-smart agriculture in the developing world, with a focus on sub-Saharan Africa. Funds were split into two broad categories climate and agricultural development, and then further refined into narrower sub-categories. Data was collected through literature searches and expert consultations. Collecting this data was difficult due to challenges, including a lack of clarity on whether funds are grants or loans, double counting, and standardization of terminology (e.g. how is agriculture defined).
An inventory of climate and ag finance
This paper presents the findings of an inventory of the scale and structure of flows of climate and agricultural finance in the developing world, with a particular focus on sub-Saharan Africa – a region of the world for which climate-smart agriculture will be especially critical to overall economic development and social welfare. Analysis of the inventory is used to develop recommendations on how the systems of finance can be better integrated to support climate-smart agriculture.