Presentation for Smallholder Mitigation: Mitigation Options and Incentive Mechanisms - Expert Workshop 7 - 8 July 2011


1. 1
Dr. Charlotte Streck
8 July 2011
1Incentives and Benefits for Climate Change Mitigation for Smallholder Farmers

2. 2
Agriculture is special…
–Caters for basic needs
–Agriculture is directly affected by climate change
–Site and context specific
–Source and sink of carbon
–Adaptation and mitigation intrinsically linked
–Complex links between trade, food security, and climate change
–Close relation to emissions from forestry
–Agriculture can generate multiple benefits for food security, adaptation, mitigation and development
Climate Focus, July 8Charlotte Streck

3. 3
Introduction: Climate-Smart AgricultureFood Security
DevelopmentAdaptation
Mitigation
Climate Smart Agriculture10-12% 18%*
Agricultural
Emissions
Forestry Emissions* Includes land-use change

4. 4
Climate-smart agriculture: sustainable intensification and livelihoodsCropland ManagementGrazing land Management
Restore organic soilsRestore degraded landsCoffee carbon
-increasing yield
-converting sun grown to shade coffee-soil and nutrient management
Forest carbon
-REDD+ -“releasing natural forests” for synthetic or organic fertilizer
Smallholder agricultural carbon-increasing yield-sustainable land management-Soil and nutrient managementRangeland carbon-preventing desertification
-land restoration by providing incentives to reduce overstocking
-efficient feeding practices

5. 5
Smallholder Agriculture
Highly diverse -> no uniform solution

6. 6Removing Barriers to Implementing CSA
-CSA must provide net benefit to farmer
-Farmer must be able to overcome barriers to implementation
Financial
Social/Institutional
Technological
Lack of assetsand savings
Poorly functioning markets
Lack of technical expertise
Little access to credit
No or limited market access
Lack of baseline data
Lack of infrastructureand equipment
Limited marketing information or understanding
Existing resource degradation
Little access to insurance
Weak tenure security

7. 7Overcoming Investment BarriersDirect Financial Incentives
•PES Schemes
•Carbon Markets
•CreditRisk-sharing Mechanisms
•Insurance
•Crop-based
•Index-based
Private Sector Investment
•Public-Private Partnerships
•Labeling & Certification

8. 8How can climate finance help overcoming these barriers?
-New $$$
-New actors
-New partners
-New financing paradigm
Climate Focus, July 10Title, Presenter

9. 9Climate Focus, July 8Charlotte Streck

10. 10
Climate Finance (Mitigation) Project based (CDM type) Project based (programmatic/landscape level)
Landscape level / sectoral(market based, fund based) NAMA crediting path (fund/market based) NAMA support path (fund based)

11. 11Risks and Opportunities of Climate Finance
CDM type
PoA/
landscape
Sectoral/ market
NAMA (crediting)
NAMA
(support)
Ultimate beneficiary
Farmer –beneficiary
Level of change
Incentives on the project level
Incentives for changes at the landscape level
Policy change
Incentives for the gov to adopt PoMs (can involve project incentives)
Policy change
Policy change
Enabling activities
Contractual partner
Project owner
Aggregator
Govmnt
Govmnt
Govmnt
Finance
Ex post
Directly to the farmer
Ex post
To be distributed by aggregator
Ex post
To be distributed by gov
Ex post
To be distributed by gov
Ex ante
To be distributed by gov
MRV
Project level
Project level but standardized
Sector (MRV, high tier)
Sector (possibly lower tier)
Policy level MRV

12. 12A basket of approaches
NAMA support pathPoA/landscape level projectsDemon- strationactivitiesFund based finance (can be market linked) Market financeNAMA support finance:
•Allows govs to access climate finance
•Can support ag extension systems
•Advance finance possible (farmer level subsidies)
Market finance:
•Demonstration activities
•Voluntary market PoA/landscape level interventions

13. 13International Climate Finance Options

14. 14Implementation Phases1stphase: Readiness
•Activity: Strategy development, capacity building, training
•Goal: Build knowledge and ownership in the government and among stakeholders
•Finance: High proportion of public finance. 2ndphase: Demonstration
•Activity: Project scaling and limited commercialization; consolidate project and financing institutions.
•Goal: Prove and expand project, program and policy concepts; attract private capital to agricultural communities; build supply chains
•Finance: Large but falling fraction of public finance. 3rdphase: Scaling up
•Activity: Direct private capital into landscape-scale activities; integrate agpolicies in Low Carbon Development Strategies
•Goal: Scaling up of CSA practices, full implementation
•Finance: Most investment from private sources; Ongoing public finance for certain infrastructure and services.

15. 15Climate Finance & Smallholder SupportFinance
•Context Specific
•Tailored and targeted to where it can be most effective
•e.g. ex-ante vs. ex-post paymentsInstitutions
•Utilize existing structures in innovative arrangements
•Improve coordination across institutions and financial sources
•Need to identify coordinating body, recipients, & delivery mechanismMRV
•UNFCCC National Inventories and Reporting
•Growth of Life Cycle Analysis (LCA)
•Role of NAMAs

16. 16
Example
Climate-smart agricultural finance
facility (CAFF)
An initiative supported by the Rockefeller Foundation
Presented by Charlotte Streck, ClimateFocus &
Timm Tennigkeit, Eduard Merger UNIQUE forestry consultants

17. 17ConclusionIdentify priority actionsDevelop MRV systemsLeverage private fundsTime matters! Next Steps
•Conduct interviews
•Identify case studies
•Distill lessons for climate finance

18. 18
-Thank you!
Climate Focus, July 8Title, PresenterCharlotte Streck