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FEATURE: Agriculture needs streamlined approach to climate finance

Many programmes fund adaptation and mitigation activities separately, often leading to fragmented and less effective approaches, particularly in the agricultural sector. Supported by CDKN, Michel Köhler of Perspectives, together with Lisa Junghans of Germanwatch, have been assessing the problem and forming practical proposals to overcome it. Mairi Dupar of CDKN interviewed them, to find out more.

“Today’s institutional structures for climate change mitigation and adaptation are very fragmented, preventing an integrated and synergistic approach. The agricultural sector, key for millions of people in developing countries, is particularly prone to such a fragmentation on various levels,” said Michel Köhler of Perspectives.

He and Lisa Junghans of Germanwatch have been assessing the problem, together with analysts in Kenya (African Centre for Technological Studies), Bangladesh (Bangladesh Centre for Advanced Studies) and Honduras (Fundacíon Vida). Together, they have been working with policy-makers and other stakeholders to develop the evidence base and form solutions.

In the worst cases, the team found that adaptation and mitigation funding are on different tracks and this can lead to projects that are a cross-purposes to each other. The answer could lie in establishing so-called national gatekeeper institutions to channel climate finance for agriculture and food security – without separating mitigation and adaptation funding, they conclude.

These gatekeeper institutions would not only ensure that the joint mitigation and adaptation potential of agriculture projects was spotted and pursued at country level. Such national institutions might also be best attuned to a country’s diverse farming types. For example, they might be better than international financial institutions at supporting smallholder farmers who depend heavily on their agricultural lands for food security.

The research team identified smallholder farmers as among the most climate-vulnerable populations. They tend to live in remote areas, are politically and economically marginalised and have poor access to finance and other resources. They need access to appropriate, intermediary institutions to help them obtain finance.

Köhler and Junghans suggest a number of criteria that the national gatekeeper institutions must fulfil to overcome fragmentation and strengthen food security in a climate-friendly way: they need to meet high fiduciary standards to receive and manage international funds;  they should be ready to use different financial instruments and have experience in doing so;  they should be able to consider smallholders’ interests and even be ready to deliver compensation mechanisms if certain climate-smart strategies lead to decreasing yields in the short term.

Gatekeeper institutions should be able to build on the strengths of existing institutions and they should have the capacity to identify projects and programmes and to involve multiple stakeholders.

How could streamlined climate finance boost food security in Honduras?  

Honduras was one of the study countries – along with Kenya and Bangladesh.  In Honduras, the Perspectives-Germanwatch team identified a range of barriers and solutions to achieving food security, climate adaptation and mitigation in the farming sector.

The team suggests that regional adaptation plans could be developed, to pinpoint climate-related weaknesses in agricultural product chains – and where critical investments are required. Climate training programmes for Hondura’s agriculture and food security officials would strengthen the management of any new funding to the sector.

Meanwhile, whether they are working at small- or large-scale, farmers need clear, accessible information. Further investment in basic climate- and weather-related communication would improve farmers’ ability to adapt. Elements of the financial system could also be strengthened to bolster climate resilience – giving small and large farmers better access to credit could enable them to make improvements that would both increase production and build resilience.

Read more in the project’s final reports:

Visit the CDKN project page for more information.

Image courtesy CIAT: The International Centre for Tropical Agriculture.

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