Three months to go: Adapting our view of climate finance

Been on the COP27 website recently? Alongside the words of welcome, portraits of youth envoys, and booking tools for sustainable hotels, there’s no missing the four big goals in Sharm El-Sheikh: Mitigation, Adaptation, Finance, and Collaboration. Less immediately visible is the great news that November 12th will be COP27’s “Adaptation and Agriculture Day”.

The Day’s aims, the organizers declare, include “deep discussions” on topics such as agricultural productivity and smallholder resilience. Participants, the website continues, will also examine lots of “adaptation-related issues”.

Sounds good. But somehow also rather familiar. We want to avoid November 12th being a “Hot Air Day”. Rather we would like to ensure that – in partnership – it enables big actions to move ahead.

Adaptation and Agriculture Day brings together two agendas that many people only view as bad for each other: climate and food production. Their interplay, however, is multi-faceted and critical. I see November 12th as an excellent opportunity for policymakers, investors, companies, researchers, and civil society to commit to actions that will significantly improve the livelihoods of vulnerable people facing climate risks.

That improvement won’t be easy. It requires shifts in policy and funding. Major stakeholders need to commit to helping smallholders to pursue climate adaptation. There are also many topics involved, not least of which is how to define, recognize and reward good adaptation. Today I focus on just one: climate finance. It’s one that worries me.

Agreed: Climate finance is needed to support solutions, and much more finance than the pitifully small amounts committed to date, needs to flow into the wallets of smallholders and organizations working with them on adaptation.[1] But to unlock that finance, the schemes depend on Measurement, Reporting & Verification (MRV). And sensible though that sounds, it’s the bit that gets me worried. Why? Surely, financial incentives for environmental improvements must be a good idea. And one should only hand out cash after some rigorous MRV!

Equality has priority over processes

Well, yes and no. In my eyes, payment schemes that depend on MRV can be very unfair. Rather than smooth inequality, they can all too easily worsen it. That’s because providing the evidence to claim incentives is much easier on big commercial farms. If you’ve got more advanced technologies, you can more readily adapt your practices and you can more easily afford to capture the needed MRV data. Large-scale farmers typically also have the financial stamina to wait for longer-term benefits. Smallholders don’t. And, to date, the MRV data collection costs for smallholders are likely to outweigh the accessible climate payments (if any are available). To avoid increasing farmer inequality, we desperately need climate schemes tailored to smallholders’ needs.

Those needs include becoming more productive, which is ever more challenging as weather volatility increases and soils degrade. To help smallholders raise yields, many organizations push what I’d call “low-tech” approaches. Sadly, there’s limited evidence of their impact on productivity or resilience.[1] Smallholders can efficiently improve their harvests by the well-trained use of suitable technologies. Unfortunately, many such technologies are associated with emissions – for example when using machinery or producing mineral fertilizer. International climate policy may have the best of greenhouse gas intentions. But, in striving to limit emissions increase per unit of land, there’s a huge risk that most smallholders will remain poor and increasingly vulnerable, while their countries’ import bills continue to climb.

November 12th must take a new look at this conundrum. In my personal view, stakeholders need to address trade-offs related to sustainable intensification by smallholders. For example, developing countries could enable modest additional use of chemical and mineral inputs on small farms and yet still have net national carbon and climate benefits thanks to land restoration and afforestation. Suppliers who then sell more inputs can commit to various forms of compensation, both through what they manufacture and how they do so. Advanced country governments could offer to use climate finance benefits of emissions reductions from their agricultural sectors to structure financing for adaptation that reaches smallholders in low-income countries.

What could hold things up? Some organizations may criticize sustainable intensification as a way to let developing countries off the ‘net zero’ hook. Others may accuse input suppliers of pushing their products and thus increasing emissions. And even if advanced countries do commit to addressing inequality in climate financing for smallholders in principle, current MRV approaches will limit smallholders from benefiting in practice. These are important objections, and we can’t just start discussing them on Adaptation and Agriculture Day. Success in Sharm El-Sheikh will require solid preparation. Open debate in advance can highlight concerns and help include them in COP27 commitments. The discussions can also point to new solutions.

There is plenty of room for such debates before November 12th, so that meaningful action commitments can be made on the day itself. Formal opportunities include the upcoming Africa Climate Week, AGRF, UNGA/New York Climate Week, and the Borlaug Dialogue in Des Moines. At Syngenta Foundation we are leaning in to support constructive dialogue at any time. We’re eager to identify partners willing to engage for greater equality. Please get in touch!

[1] See for example https://www.climatepolicyinitiative.org/publication/climate-finance-small-scale-agriculture/