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Agricultural Investment
in a Time of Climate Change
New Tools and Approaches
for Improving Investor DecisionMaking and Producer Uptake
Recent, Ongoing FAO Work on
Climate Change Tools
• Mitigation: EX-ACT (Ex-Ante Carbon-balance
Tool) – Determining the carbon balance of
investments
http://www.fao.org/tc/tcs/exact/ex-act-tool/en/
• Adaptation: CLIMPAG – Assessing the
impacts of climate change on agricultural yields
http://www.fao.org/nr/climpag/
EX-ACT Background
• Agriculture is a major source of GHG, contributing 14% of global
emissions. CC mitigation potential for the sector is high, and for the
largest part (ca. ¾) located in developing countries. Many technical
options are available, that however require changes in agricultural
technologies and management practices:
 Reducing CO2 emissions through reduction in the rate of
deforestation and forest degradation, adoption of improved cropland
mgmt. practices (reduced tillage, integrated nutrient & water mgmt.);
 Reducing CH4 and N2O emissions through improved animal
production and mgmt. of livestock waste, more efficient mgmt. of
irrigation water on rice paddies, improved nutrient mgmt.; and,
 Sequestering carbon through CA and improved forest mgmt.
practices, afforestation and reforestation, agro forestry, improved
grasslands mgmt., restoration of degraded land.
EX-ACT Background (cont.)
• Nevertheless, there is a lack of methodologies to guide the
integration of significant mitigation effects into the
project/programme design process, and hence the decision making
on funding aspects, complementing the usual ex-ante economic
analysis of investments projects.
• To fill this gap, three FAO divisions (Policy and Programme
Development Support Division, Investment Centre Division, and
Agricultural Development Economics Division) joined efforts to
develop the EX-ACT tool, aimed at providing ex-ante estimations of
the impact of agriculture and (agro)forestry development projects on
GHG emissions and Carbon sequestration, indicating its effects on
the Carbon balance.
EX-ACT: Logic, Contents and Outputs
C balance
(reduced GHG
emissions and
C sequestered)
The logic behind the EX-ACT tool
(with/without project situation comparison):
x2
With project
x1
Without project
x0
Implementation phase
Capitalization phase
Time (years)
t0
t1
t2
•
EX-ACT consists of a set of linked Excel sheets in which the project designer will
insert basic data on land use and management practices foreseen under the project
activities;
•
The main output of the tool is the C-balance resulting from project activities. The
environmental services supplied by the project could then be priced, valued and
incorporated in the economic analysis. Also, a set of indicators will complement the
economic analysis providing information about the efficiency of the project in providing
environmental services or the potential contribution of such services to farm incomes.
EX-ACT: Testing and Wide Scale
Implementation
•
EX-ACT went through a peer-review process in order to be
adopted in international organizations and donor agencies
involved in agriculture and (agro)forestry investment projects.
•
After testing in a series of real-life cases (mostly IFAD
projects) the tool is now available for free use by donors/IFI,
technical agencies and development practitioners worldwide.
Appropriate training, software updating and technical quality
monitoring framework are being put in place.
•
Initiated for being used at project and program level, the tool
will also be tested to be used in national sector strategies
and policies (e.g. to compute the C-balance of aggregated
agriculture sector strategies and policy options) or for regional
initiatives.
CLIMPAG: Evaluation of Climate
Change Impacts on Agricultural Yields
•
Adaptation practices require extensive high quality data and
information on climate, and on agricultural, environmental and
social systems affected by climate, with a view to carrying out
realistic vulnerability assessments and looking towards the
near future.
•
CLIMPAG is aimed at bringing together the various aspects
and interactions between weather, climate and agriculture in
the general context of food security.
•
It contains methodologies and tools (including modeling)
for a better understanding and analysis of the effect of the
variability of weather and climate on agricultural yields as well
as data and maps.
CLIMPAG: Overall Picture
Climate Projections – based on modeling
Physical impacts on main crops and rangelands –
livestock activities
Impacts on farming systems
Economic impacts
Policy adaptation options – investment decisions
CLIMPAG: Data Available
• A variety of data and tools are made
available including:
 climate indicators;
 global climate grids, climate maps;
 rainfall variability data;
 climate monitoring;
 climate risk and spatial interpolation.
CLIMPAG:
Hotspots/Natural Disasters
• Specific analyses provided on hotspots, i.e.
areas where conflicts between the environment
and agriculture disrupt agricultural production
 For example, global water stress maps indicate areas where an
excess or deficit of rainfall will have adverse impacts on
agriculture
• Analyses of natural disaster impacts on
agriculture also provided through CLIMPAG
 RADAR (Rapid Agricultural Disaster Assessment Routine)
CLIMPAG: Advice and Warnings
• Recommendations provided based on
synthesized data analysis;
• Advice and warnings section provides
information on:





Communication to farmers;
Crop insurance;
Frost protection;
Response farming;
Crop monitoring and forecasting.
CLIMPAG: Conclusions
• Variety of information, easily accessible;
• Useful tools in making agricultural policy and
investment decisions;
• Climate projections and modeling require
reliable country-level agro-meteorological data
series, adequate grid size;
• Assumptions on technology trend may be
predominant factor in models.
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
• Illustrative List of Projects (total resources mobilised US$1.6 billion):
Country/Project
IFI
Project Objective
Brazil: Santa
Catarina Rural
Competitiveness
WB
Increase the
competitiveness
capacity of family
producer
organizations to
compete and open
markets,
contributing to
increase incomes
and wellbeing in
the rural area
(6-sector SWAp,
US$189m)
Mainstream Method (entry point to CC)
(i) Pre–investment activities (technical, extension
and training services), includes formulation of
business plans by Family Agricultural Producer
Organizations (FAPOs); (ii) Productive and added
value investments: capital grants under a State
Fund, to support implementation by FAPOs of
viable Business Plans; (iii) Complementary public
investments for rural competitiveness, including
support to strengthen capacity to (a) water
resource management; (b) ecosystems and corridor
management; (c) environmental monitoring and
education; (d) rural infrastructure; (e) regulatory
framework compliance; (f) rural technical
assistance, extension and SPS services; and (g) rural
tourism; (iv) Support to the Rural Competitiveness
Program so as to (a) strengthen Central
Administration; (b) implement RBM at the Project,
Rural and Environmental Sector Levels; and
(c) support Program Coordination, Monitoring and
Evaluation, including of climate–related indicators.
N.B.: EX–ACT was applied during project
preparation.
CC Measures and Indicators
Measures:
(i) Implement more resilient farming systems through
diversification and improvement (annual crop/no till, LUC
from degraded crop or pasture to agro–forestry, forestry
and perennial fruits; pasture management, etc);
(ii) Design of new agro–processing plants to taking into
consideration CC adaptation and mitigation; (iii) Support
to meet legal environmental and sanitary requirements
for market access (riparian zones or legal reserves
rehabilitated or protected); (iv) Implement alternative
off–farm/non–agricultural investments;
(v) Rehabilitation of degraded lands into protected
forests; (vi) Support to legalize private legal reserves;
and (vii) PES.
Indicators:
20,000 climate–resilient production systems
implemented as part of business plans; 100% of new
agro–industries implemented taking into consideration
CC adaptation and mitigation; 2,500 ha of riparian zones
or legal reserves rehabilitated or protected
(environmental compliance); 953 ha of forests under
“Conservation Credits” within ecological corridors.
• (cont)
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
Country/Project
IFI
Project Objective
Mainstream Method
CC Measures and Indicators
China: Xinjiang
Turpan Water
Conservation Project
ADB/
IFAD
Increase productivity for
irrigation and reduce
ground water overdraft
in arid areas in
Northwest China
(i) ET-based Integrated Water
Management, including studies,
development of KM systems,
Plan on Irrigated Agriculture
Water-Savings, and
Development of WUAs and
Allocation of ET Targets to
WUAs in the Field; (ii) Civil
works to Increase Upstream
Storage Capacity; (iii) Real
Water Savings in irrigated
agriculture (civil works;
agronomic measures and
irrigation management);
(iv) Preservation of a Supply
System (pilot); (v) Institutional
Capacity Building
Measures:
Activities under Components (i) and (iii) were designed to help to
cope with drought and to reduce the current imbalance between
water consumption and renewable supply.
Design and construction of reservoirs under Component (ii) will
consider the expected impact of CC on the snowmelt from the
mountains.
Remote sensing activities under Component (i) will incorporate
benchmarking and trend measurements on snow pack and glaciers,
to support identification and quantification of CC impacts and will
provide the basis for to develop further adjustment measures.
(i) River basin/watershed
management and investment
planning and (ii) Smallholder,
commercial and institutional
investments; (iii) Capacity
strengthening for river basin
management
Pilot demonstration activities for CO2 emission reductions related
to LULUCF and REDD, including community-based forest
protection, agricultural intensification, community forest
management, and commercial forest management
(US$189m)
Philippines:
Integrated NR &
Environmental
Management Project
(US$154m)
GEF grant to finance
inv. in REDD for
mitigation relating to
LULUCF
ADB/
IFAD
To reduce and reverse
the severe environmental
degradation taking place
in the four representative
basins
Indicators:
Economic losses from flooding mitigated (RMB million);
Groundwater overdraft reduced in project irrigation areas & in the
basin; Increased water productivity in irrigated agriculture,
measured in terms of ET.
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
• (cont)
Country/Project
IFI
Project Objective
Mainstream Method
CC Measures and Indicators
Tanzania:
Accelerated
Food Security
Project
WB
Contribute to higher
food production and
productivity in
targeted areas by
improving farmers’
access to critical
agricultural inputs
(i) Improving access to agricultural inputs
(fertilizers and seeds) to scale-up the on-going
National Agricultural Inputs Voucher Scheme
(NAIVS), balancing the Government’s goal of
reaching the maximum number of farmers,
budgetary constraints and ensuring the program
is put on a more sustainable footing (both fiscally
and physically); (ii) Strengthening input supply
chain to facilitate the functioning of the input
voucher scheme through: (a) strengthening of the
agro-dealer network and (b) strengthening of the
national seed systems to improve to immediate
and longer-term availability of quality seeds for
maize, rice and other crop species; (iii) support
project management, monitoring and impact
evaluation.
N.B.: EX–ACT used to put forward the mitigation
as an externality generated by the project
(i) Promotion of integrated soil nutrient and water
management (i.e. conservation farming) would yield
reduced risks involved with weather variability at farmer and
global level. Additional investments in extension services are
required to ensure the most efficient and sustainable usage
of fertilizers and seeds in the longer-term.
(ii) The Additional Financing for Agriculture Sector
Development Program (ASDP), processed simultaneously
with AFSP but separately, proposes specific incentives to
help interested farmers to change their production system
from traditional practices (burning of crop residues, hoetillage and ridging) to conservation farming practices
(retaining crop residues as mulch and reduced or zero
tillage). Farmers practicing conservation farming also have a
reduced risk o f total crop failure in the case of drought.
(iii) Finance the rehabilitation of two seed farms’ irrigation
facilities to irrigate 200 ha for foundation seed production
only.
WB
Reduce NR
degradation and
deforestation by
increasing the ec.
efficiency and income
generated by sust. and
legal livestock, ag. and
forestry production
In this case the project is not yet fully prepared;
three studies have been conducted during the
project identification phase: a) sustainable
livestock production, b) sustainable agriculture
and c) sustainable production of timber and nontimber forest products in 10 municipalities of the
south of the State of Amazonas.
Measures:
Improvement of: industrial and small scale timber harvesting
through low impact harvesting techniques to conserve
forest environmental services; Brazil’s nut production and
commercialization; Enhance cassava flour production; Native
cocoa harvesting and post-harvesting techniques;
pasture/soil improvement to increase carbon storage in
soils and reduce NH4 emission through ruminant digestion.
(US$299m)
Brazil:
Sustainable
Development of
the Southern
Amazonas State
(project under
formulation)
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
• (cont)
Country/Project
IFI
Project Objective
Mainstream Method
CC Measures and Indicators
Zambia:
Smallholder
Productivity
Promotion
Programme
IFAD
(GEF
tbc)
Sustainably
increase the
productivity of
smallholder farmers
while using as entry
point selected
commodities that
are targeted by
existing
programmes for
improvement of the
overall value chain
Component 1: Adaptation of appropriate technologies
Component 2: Participatory extension approaches
Component 3: Community level participatory planning
and implementation processes
Measures:
Comp 1: R&D activities, for instance planting material,
sustainable land management techniques, etc.
Comp 2: Conservation farming techniques will be
mainstreamed.
Comp 3: Focus on investments that improve local
farming systems, food security, land and water
management and access to markets
Increase ag.
productivity and
incomes of
participating
households by
improving the
performance of
agricultural
research and
advisory
service systems
(i) Developing Ag. Technologies and Strengthening the
NARS, (ii) Enhancing Partnerships between Ag.
Research, Advisory Services, and other stakeholders
through better technology development and
dissemination, (iii) Strengthening the NARS to support
improved delivery of demand-driven and marketoriented advisory services to farmers, (iv) Promoting
integration of smallholders in value chains by supporting
collaboration between agribusiness, farmers, advisers,
and researchers to create viable, sustainable market
and agribusiness linkages, (v) support project mgmt
(under prep.
US$25-30m)
Uganda:
Agricultural
technology and
agribusiness
advisory
services project
(US$655m)
WB/
GEF
Indicators:
(a) The number of male and female small-scale producers
that have adopted improved agricultural technologies
that reduce vulnerability to climatic variations.
(b) The extent to which local institutions are empowered
to participate in the development and dissemination of
improved agricultural and sustainable land
management technologies.
Enhance the environmental sustainability and
resilience of agricultural production to land degradation
and climate risks.
N.B.: EX–ACT used to put forward the mitigation as a
project co-benefit.
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
• (cont)
Country/Project
IFI
Project Objective
Mainstream Method
CC Measures and Indicators
Malawi: Shire
Management
Project, Phase 1
WB
Program:
Significant progress
in achieving socially,
env. & ec. SD in the
Shire Basin;
Project: Develop a
strategic planning
and dev. framework
for the basin and
support targeted
investments to
improve land and
WRM
Component 1: Shire Basin Planning, to lay the
foundation for a more integrated investment
planning and system operation for the. The project
will promote integrated climate resilient investment
planning in the basin.
Component 2: Catchment Management, to initiate
the rehabilitation of selected critical sub-catchments
and build local capacity to sustainably manage
natural resources through a participatory livelihoods
based approach.
Component 3: Water Related Investments, to
mitigate risks posed by droughts and floods and to
reduce the uncertainty of access to water due to
rainfall variability
Measures:
Comp. 1: (i) Develop basin plans for investment and operation
& management; (ii) Improve hydro-meteorological systems
(iii) Collaborative mechanism to implement shared vision
(basin institute or agency);
Comp 2: (iv) Harmonized and integrated catchment planning,
monitoring and evaluation; (v) Catchment rehabilitation: soil
and water conservation for more sustainable and productive
agriculture, rehabilitation of forests, rural energy alternatives,
stream and water control; and (vi) Alternative livelihoods.
Comp 3: (vii) Construction of the upgrade of Kamuzu Barrage,
which control the level of Lake Malawi; (viii) Implementation
of key priorities within the Shire Basin Flood and Drought
Management Master Plan; (ix) Design of priority waterrelated investments.
(under
preparation,
US$70m)
Indicators: not yet defined
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
•Summary:
Country/Project
IFI
Project Objective
Mainstream Method
CC Measures and Indicators
Malawi: Shire
Management
Project, Phase 1
WB
Program:
Significant progress
in achieving socially,
env. & ec. SD in the
Shire Basin;
Project: Develop a
strategic planning
and dev. framework
for the basin and
support targeted
investments to
improve land and
WRM
Component 1: Shire Basin Planning, to lay the
foundation for a more integrated investment
planning and system operation for the. The project
will promote integrated climate resilient investment
planning in the basin.
Component 2: Catchment Management, to initiate
the rehabilitation of selected critical sub-catchments
and build local capacity to sustainably manage
natural resources through a participatory livelihoods
based approach.
Component 3: Water Related Investments, to
mitigate risks posed by droughts and floods and to
reduce the uncertainty of access to water due to
rainfall variability
Measures:
Comp. 1: (i) Develop basin plans for investment and operation
& management; (ii) Improve hydro-meteorological systems
(iii) Collaborative mechanism to implement shared vision
(basin institute or agency);
Comp 2: (iv) Harmonized and integrated catchment planning,
monitoring and evaluation; (v) Catchment rehabilitation: soil
and water conservation for more sustainable and productive
agriculture, rehabilitation of forests, rural energy alternatives,
stream and water control; and (vi) Alternative livelihoods.
Comp 3: (vii) Construction of the upgrade of Kamuzu Barrage,
which control the level of Lake Malawi; (viii) Implementation
of key priorities within the Shire Basin Flood and Drought
Management Master Plan; (ix) Design of priority waterrelated investments.
(under
preparation,
US$70m)
Indicators: not yet defined
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
• (cont)
Country/Project
IFI
Project Objective
Mainstream Method
CC Measures and Indicators
Madagascar:
Irrigation and
Watershed
Development
Project, Phase 1
WB/
GEF
Establish a basis for
irrigated agric.&
NRM in four main
irrigation sites and
their surrounding
watersheds.
Component 1: Development of
Commercial Agriculture, to lay the
foundations for improved market
access and sustainable
intensification and diversification of
irrigated and rainfed agriculture in
the project watersheds.
Component 2: Irrigation
Development
Component 3: Watershed
Development, to lay the foundations
for sustainable management of
watersheds including irrigated and
rainfed agriculture, conservation of
the natural heritage, and improved
productivity of natural resources
Measures:
Comp. 1: (i) Strengthen supply of technology to develop sustainable
agricultural production systems in the uplands of the watershed, that can
be productive and profitable (e.g. agro-forestry, agro-ecological and
horticultural techniques).
(ii) Support to productive investments (grants and matching grants) to
develop and or apply agro-ecological production techniques.
Comp. 2: (iii) Rehabilitation of irrigation schemes that are affected
(amongst other factors) by land degradation in the watersheds and
cyclone induced damage.
Comp 3: (iv) planning and capacity building for sustainable management
of watersheds: participatory watershed management plans,
communication and negotiation platforms, sustainable land management
groups, improvement of land tenure security; and
(iv) investments in watersheds: strategic erosion control (hot spots), reestablishing vegetative cover (pasture, river banks, forests),
improvement of degraded soils, agro-ecolog. production techniques
(US$40m)
GEF: to improve the
environmental
sustainability of
land management
practices in four
targeted
watersheds
CC-related Indicators at outcome level
Increase in land area under sustainable management in targeted project
intervention areas, as a percentage of baseline, to be checked by satellite
image.
Increase in vegetative cover (as a percentage of baseline) in targeted
project intervention areas, to be checked by satellite image and field
verification.
Mainstreaming Climate Change
Adaptation/Mitigation in Investment Operations
with FAO Investment Centre Involvement
• Sample summary:
Country/Project
CC-related Measures
Brazil
Santa Caterina
Rural
Competitiveness






China:
Xijiamg Turpan
Water
Conservation
 Assistance in coping with drought and to reduce the current imbalance between water consumption and renewable
supply;
 Design and construction of reservoirs considering the expected impact of CC on the snowmelt;
 Remote sensing activities incorporating benchmarking and trend measurements on snow pack and glaciers, to
support identification and quantification of CC impacts.
Tanzania:
Accelerated
Food Security
 Promotion of integrated soil nutrient and water management (i.e. conservation farming) to reduce risks involved
with weather variability;
 Specific incentives to help interested farmers to change their production system from traditional practices (burning
of crop residues, hoe-tillage and ridging) to conservation farming practices (retaining crop residues as mulch and
reduced or zero tillage). Farmers practicing conservation farming also have a reduced risk o f total crop failure in
case of drought.
Implement more resilient farming systems through diversification and improvement;
Design of new agro–processing plants taking into consideration CC adaptation and mitigation;
Support to meet legal environmental and sanitary requirements;
Rehabilitation of degraded lands into protected forests;
Support to legalize private legal reserves; and
PES (Payment for Environmental Services).
For additional info, queries on this topic, please contact Ms Katia Medeiros (FAO/TCI), EM: [email protected]
Key Issues
• Intensified experience sharing and stocktaking between
practitioners and development institutions on how to address
perceived needs/issues to foster adoption of novel CC related tools
and approaches, which include:
 Usually the main objectives of the investment project are not to
mitigate or adapt to CC (stand-alone CC projects are still rare in our
work);
 Need for more clear and measurable CC adaptation/ mitigation
elements for use in project design and implementation; inclusion of
specific indicators;
 IFI CC policies are clear at the conceptual level, but guidance on
how to incorporate them into project design is lacking;
 In some cases, better defined countries’ key priorities, enabling
policies and operational regulations are needed.
Thank You