Aslihan Arslan Natural Resource Economist, EPIC Team
ESA - FAO http://www.fao.org/climatechange/epic/en/
October 2, 2012
Climate-Smart Agriculture
(CSA)
An Overview
Overview
I. Basic CSA principles
II. SLM
III. Role of climate finance
IV. FAO-EC CSA project
2
I. Basic Principles
3
* agricultural sector includes crop, livestock, forestry, fisheries and aquaculture.
• The agricultural sector* of
developing countries is expected
to produce food and income to
support food and nutrition
security, and poverty reduction for
a growing world population.
• At the same time, climate change
(CC) is posing new threats to
world food systems.
• To achieve global development
and food security objectives we
need to transform agricultural
systems, aiming for higher and
more stable returns to agricultural
production and more sustainable
food systems.
Three pillars of CSA
• Prioritizing the multiple objectives of CSA depends on the role of agriculture in economy and society.
• In low income, highly agriculture-dependent economies, where CC impacts are estimated to be significant and negative, CSA involves agricultural growth for food security that incorporates necessary adaptation, and captures potential mitigation
HOW DOES CSA DIFFER FROM CONVENTIONAL
AGRICULTURE?
• Conversion of energy sources from
human to animal and fossil fuel
dependent machinery.
• Increased use of fertilizer, pesticides
and herbicides (highly dependent on
fossil fuels) generally very
inefficiently applied.
• Expansion of agricultural land area
through deforestation and conversion
from grasslands to cropland.
• Increased specialization in
agricultural production and marketing
systems.
•Emphasizing improved and hybrid
crop varieties
Key features of conventional
agriculture intensification
• Use of energy efficient technologies
for agricultural power (irrigation or
tillage).
• Increased efficiency of fertilizer and
wider use of organic fertilizer.
• Intensification on existing land
areas as main source of production
increase rather than expansion to
new areas.
• Greater diversification in
production, input and output
marketing systems.
• Valuing the resilience of traditional
varieties
Key features of Climate-Smart
Agriculture
9
II.
Focus on Sustainable Land Management
(SLM)
Sustainable Land Management (SLM):
key component of CSA
• Poor soil fertility is a key constraint to agricultural productivity growth and thus food security/poverty reduction
• Increasing soil fertility is an important component of many developing country ag. development strategies
• Increasing soil fertility has potential adaptation and mitigation benefits
• Years of attempts to promote adoption of SLM have shown there are considerable barriers that have generally not yet been overcome
Question: If SLM is so good for farmers as well as the environment, why is the adoption rate so low?
• Tenure Security: lack of tenure security and limited
property rights (limits on transfer), may hinder
adoption of SLM
• Limited Access to Information, e.g. very low levels
of investment/support for agriculture research and
extension. CC adds uncertainty.
• Up-front financing costs can be high, whilst on-farm
benefits not realized until medium-long term
– Local credit markets very thin
– Local insurance options very limited
Classic barriers to technology adoption
Adoption Barriers:
Short run trade-offs & long run win-win
B. Investment Barrier to Adoption
Time ==>
Baseline net income Current net income
•Temporary net loss to farmer
•New management practices introduced
Source: FAO 2007
Short-run tradeoffs stronger for
poorer farmers
Baseline net
income
NPV/HA over 20
years
No years to positive
cash flow
No of years to positive
incremental net income
compared to baseline
net income
($/ha/yr) ($/ha) (number of years) (number of years)
Small 14.42 118 5 10
Medium 25.21 191 1 4
Large 25.45 215 1 1
Source: Wilkes 2011
Size of herd
III.
Role of Climate Finance
to Support CSA
14
What is climate finance?
• Finance to support adaptation or mitigation
activities
• Includes public (GEF) and private (carbon
markets) sectors
• Green Climate Fund (GCF) $100
billion/year by 2020
15
The role of climate finance for CSA
• Can bring a small, but significant share of new finance
to agricultural sector of developing countries.
• Financing mechanisms and institutions are only now
being developed – so there is opportunity to shape
them to support CSA
• Needs to support specific features of CSA:
– Financing for long term transitions
– Focus on resilience vs. average productivity gains
– Attention to efficiency of input/resource use
– Focus on adaptive capacity/flexibility
Climate finance can represent a significant,
but small share of overall investment
requirements for agricultural growth
•Source: FAO (preliminary estimates)
0
50
100
150
200
250
300
Current
investment
Meeting demand
in 2050
Public
Private
•US$ billions per year (gross)
142
209
30
Additional
Funding for
Mitigation
Climate-Smart Agriculture: main points
• CSA involves multiple objectives; food security and
poverty reduction are priorities for LDCs
• Need to improve institutions to support the adoption of
CSA activities (e.g. SLM, diversification, SRI)
• Important to design emerging climate finance
mechanisms to support specific needs of agricultural
sector in developing countries
19
IV. FAO-EC Project
Climate Smart Agriculture: Capturing synergies between
food security, adaptation and mitigation
20
•2009 FAO initiates program of work on FS and CC for Copenhagen
•Indicating considerable potential to capture synergies and link CC finance to agriculture
•2010 Initiation of discussion between EC, FAO & potential natl. partners
• Driven by need for action at country level
•2011 Project development; background technical studies
•2012 Project initiated in Malawi, Zambia and Vietnam
Background on the project
21
Core Need
Develop a policy environment & an agricultural investment strategy to attain increased food security and provide resilience under climate uncertainty
Potential entry points:
• Conservation agriculture
• Livestock/crop mix
• Agriculture/Forest interface
• SLM in uplands
• Role of climate risk and uncertainty
• Role of legal and institutional environmental
• Input support efficiency
OUTCOMES RESEARCH COMPONENT
NEEDS
Statistical analysis: climate shocks, producer behavior, adoption and
institutions
•2
Policy simulations: using cost/benefit surveys of CSA “entry points”
•3
Legal & Institutional appraisal: mapping institutional relationships.
•4
Climate data: Climate variability and uncertainty in predictions
•1 Climate smart agricultural
solutions for different contexts
Appropriate instruments for
prioritization, financing, and
adoption
Development of an investment
proposal.
Capacity to implement a CSA
strategy
•An evidence base for implementation for climate smart agriculture.
•A strategic framework to guide action and investment on CSA.
•
Outputs
POLICY SUPPORT COMPONENT
Horizontal coordination across relevant national ministries
•1
Vertical coordination between national and international
•2
Capacity building for more evidence-based and integrated policy-making
•3
•Climate smart agriculture investment proposals and possible financing sources, including climate finance.
Project Framework
Thank you!