This is a busy week for environment causes.
World Environment Day is Wednesday, and governments kicked off on Monday the next round of U.N. climate change talks in Bonn.
But both events will largely ignore the plight of millions of smallholder farmers, among the most vulnerable to global warming and its consequences.
Elwyn Grainger-Jones, climate and environment head of International Fund for Agricultural Development, makes a case for the farmers and asks the international community to not ignore them in the discussions on climate change.
Their lives and livelihoods are at stake, and they need to be taken care of. After all, the 500 million smallholder farmers around the globe feed about a third of world’s population.
What they need, according to Jones, is a predictable and adequate flow of funding for projects that may help them adapt to climate change, like IFAD’s Adaptation for Smallholder Agriculture Program, currently a $340-million facility capable of funding 30-35 programs a year.
But financing adaptation is not a simple task — it requires an “institutional” change and a lot of money, notes the IFAD official: “Development, without consideration of climate change, cannot be truly called development, because we are ignoring one of the main contextual challenges.”
Devex spoke with Jones to learn more about the changing dynamics of climate finance, smallholder finance and IFAD. Here are a few highlights from our interview:
How much adaptation will cost us?
On the global level, UNFCCC and the World Bank produced a series of estimates and they ranged from $41 billion to $170 billion per year by 2030. IFPRI (International Food Policy Research Institute) estimated the annual cost for climate change adaptation in a developing country, agriculture sector, and they estimated that to be about $7 to $8 billion per year. But that’s a narrow view. It could be higher.
Currently how much are we financing adaptation?
It’s hard to measure what is adaptation expenditure, because there is a very blurry line between a good regular development project and what is a climate adaptation project. What is pretty clear is that most of the money that specifically dedicated for climate finance, most of that goes to mitigation. Not that much goes to adaptation and developing countries want more.
How do we generate money that is commensurate to the problem?
We have a real problem generating money for the problem. A lot of money for climate change has been driven by pledges made under the auspices of the climate negotiation process, the UNFCCC. And there was a surge in financing in 2009 emanating from Copenhagen. And now there are concerns whether we will be able to maintain or to increase existing level of finance for climate change.
There are various innovative ideas to increase finance for climate change — things like taxing untaxed activities such as aviation fuel, shipping fuel. There have been a lot of efforts to make that happen and so far, they have not succeeded. There’s a lot of potential there, but this requires a high level of international cooperation.
Climate change is a hot topic and many are trying to make their cases or their voices heard. But are the smallholder farmers overlooked by people and donors on the climate finance negotiations?
I think they are. The majority of the dialogues on climate change are focused on energy and energy extraction and energy use. They are not generally at the forefront of global discussions. And we would like to change that because we see them as essential constituency to be included in these discussions and also be a major recipient of climate finance.
Financing adaptation is one thing. But tracking where the money goes is another story. So how do we make sure that the funds really go to the most vulnerable? How do we ensure that the funds are spent effectively?
This is where climate finance is actually not different from development finance. In IFAD we have rigorous systems to ensure that our funds are targeted on the poorest members of society, because we have seen how local elites can capture finance so that they benefit and that their families benefit. We have seen examples that there might be some corrupt practices. But we have rigorous oversight.
What we cannot afford to see is that segmentation of causes, of uses of development, climate finance at the international level to create incoherence on the ground, of competing priorities on the ground, where it’s hard enough to pull its resources together.
One of the functions IFAD serves and one of the reasons we receive funding under ASAP is we reintegrate the finance, so that it can achieve multiple objectives and be coherent. We take climate finance, we take agriculture finance and some cases, we take finance on remittances, and on risk insurances and we integrate it as a package for governments, so that when it hits the ground, it kind of achieves multiple objectives.
Apart from accountability and efficiency challenges, the other concern is predictability of funds. What solutions can generate an adequate and predictable flow of funds?
One is for aid donors making forward pledges for climate finance, as they did in Copenhagen. That really helped provide a predictable flow of funds from 2009 to 2012. Another is the Green Climate Fund, with focus in part on smallholder farmers. The third is instruments such IFAD’s ASAP (Adaptation for Smallholder Agriculture Program), where we take some of the pledges and integrate it into our agriculture development programs in a way it provides predictable flow of finance lasting five to eight years to help communities plan ahead.
Currently, how much is total pledge for the ASAP?
ASAP is basically a stream of finance that once we know what we’ve got, we look at all our country programs, we look at where we can use that finance. At the moment we’ve got $340 million. Frankly, we can double that and spend the money well. At the moment, $340 million will finance about 30 to 35 projects over the next three years. Very quickly, this money will be committed and we’re looking for new finance. In fact, we even have 10 projects that are currently underfunded in the poorest countries like Ethiopia, Laos, Zambia. We currently have about $110 million of unfunded projects.
An ASAP investment does not happen on its own. Generally, it’s adding investment into a larger IFAD or government-supported program. So its objective is to leverage additional money. Our objective through ASAP is to reshape the $1 billion a year of IFAD investment and $2 to $3 billion of co-financing of investment generated in countries.
Should we generate new and additional adaptation financing schemes?
I think we clearly need more finance coming into this issue. I think many of the mechanisms are there to deploy this finance, because fundamentally adaptation is the other side of the coin of development.
There are two things that need to change. One is we need to genuinely integrate climate thinking in everything we do in development. I don’t think many organizations are there yet. And secondly, we need to maintain or increase flow of regular development finance, earmarks specific climate finance, which is important because it’s going to get harder to sustain poverty reduction.
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