Farmers harvesting coffee in the countryside of Brazil.
Agriculture is both a driver of climate change and on the frontlines of climate impacts. A variety of farming practices, technologies and system changes can reduce emissions to help stabilize the climate and build resilience to help protect global food production. However, a lack of access to fit-for-purpose finance keeps farmers from transitioning to climate-smart farming practices.
This year at COP29 in Baku, Azerbaijan, countries will gather to set a new global climate finance goal, known as the New Collective Quantified Goal (NCQG), for how much money high-income countries will provide to low-income countries for climate action.
This negotiation presents an opportunity to elevate farmers’ needs in financing the climate transition in agriculture.
Agriculture needs significantly more climate financing
Increasing access to and availability of climate finance for farmers and agricultural value chains is vital for fostering resilience, food security and sustainable agriculture globally in the face of climate change. Yet, less than 5% of climate finance today — around $28.5 billion USD annually — goes to agrifood systems even though the sector contributes nearly one-third of global emissions and has a pressing need for adaptation.
UNEP finds that the world needs $350 billion per year by the end of this decade to close the funding gap for transforming food systems and meeting climate mitigation and adaptation targets. Agriculture is critically underfunded when it comes to climate finance, and an urgent increase in dedicated funding is essential to safeguard our food system.
Farmers also need higher quality climate financing
As the global community works to finalize a new climate finance goal, boosting the quality of climate finance is just as important as scaling the quantity of climate finance. We need to ensure money is accessible to the countries and communities that need it the most without creating more financial burdens on them.
EDF’s new report, Quality Matters: Strengthening Climate Finance to Drive Climate Action, further outlines why strengthening the quality of international climate finance is essential.
Agriculture has unique financing needs, and the transition to climate-smart agriculture at scale will require transformative investment from both the public and private sectors. For farming systems to shift, the market, finance and insurance systems that are the bedrock of farm businesses must also change. Yet, at present, these systems leave many farmers locked in the status quo and increasingly vulnerable to devastating financial losses. In addition, many other farmers do not have access to basic finance and market services.
High-quality climate finance, which considers the criteria below, can bridge these gaps.
- Accessibility: Finance should directly reach farmers when they need it to help them invest in on-farm practice changes and technology for climate adaptation. Funding should be easy for farmers to access by reducing application burdens and delays and, ideally, distributing it through trusted local partnerships.
- Impact: Finance should be targeted toward practices, technologies and system changes that reduce emissions or improve climate resilience. Systems for measuring, monitoring, reporting and verifying environmental impacts must be both accurate and practical for farmers and their partners.
- Concessionality: Given the thin margins of most farming systems, finance providers should expect that below-market rate returns will often be required to achieve desired environmental and social impacts. Finance should address inequities in farmer access, while not increasing the burden of unsustainable debt at either the country or farmer level. Concessional finance should be leveraged to encourage more private sector finance to participate in solutions, helping to improve climate finance quantity and quality.
As the global community strives to set and meet ambitious climate finance targets, both quantity and quality must remain at the heart of discussions. Climate finance providers need to increase the total amount of financing available for investing in agriculture’s climate transition. At the same time, finance providers must assess how the structure of the financing they offer measures up against indicators of quality — accessibility, impact and concessionality.
The only way to ensure that both quantity and quality priorities are met is by listening to and learning from farmers, farmer organizations and their supporting partners.
By strengthening our collective focus on delivering sufficient high-quality climate finance, we can turn ambition into action — enabling farmers to build a low-carbon, resilient and abundant food system.