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Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
Investment needs for Climate-Smart Agriculture
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Investment needs for Climate-Smart Agriculture

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In this presentation Jane Feehan from the European Investment Bank shows the EIB & lending priorities, why climate-smart agriculture is something to be invested in and which type of investment this …

In this presentation Jane Feehan from the European Investment Bank shows the EIB & lending priorities, why climate-smart agriculture is something to be invested in and which type of investment this special form of agriculture needs whilst prioritising the basics, and strengthening natural resource management for resilience and productivity.

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  • Thank you, ChairFellow speakers, ladies and gentlemen
  • Climate action is a key priority for the EU. Over the past five years the EIB invested almost 80bnin climate change mitigation and adaptation projects, including afforestation, reforestation, sustainable land use, erosion control. We support low-carbon and climate resilient growth in Europe and in the emerging countries outside Europe. Moreover, our funding acts as a catalyst to mobilise finance for climate action, encouraging others to match our long-term investment. We complement our innovative financing instruments with a range of technical assistance tools to provide rounded solutions for commercially promising climate initiatives.  We support low-carbon and climate resilient growth in Europe and in the emerging countries outside Europe lending- With our global outreach and experience, we are best placed to facilitate transfer of expertise and know-how- We believe that an investment into green growth is an investment into competitiveness and jobs- We are a cornerstone investor in innovative green technologiesWe are a catalyst for climate action investments  blending- We partner with the public and private sector- We lever financial resources and complement grant funding for projectsWe develop innovative financing instruments  advising- We use our financial expertise to fill market gaps- We put our technical know-how at the service of project preparation, development and implementation
  • The challenge for us is to ensure that these investments are directed to provide better support for the development of a more resilient and productive sector. John Deere: Farming and harvesting technology; safety improvements; energy efficiency. Morocco: Upgrading and modernisation of irrigation systems to improve efficiency of water useAlthelia: A sustainable land use investment fund which includes investments in certified agricultural commodities alongside REDD+ - addressing both forest protection and the drivers of deforestationUkraine: Grain and soybean processing, soya treatment and storage. New grain silos to enhance storage capacity, buffer inter-seasonal and inter-annual fluctuations and enhance resilienceAfrica: Microfinance for the agricultural sector.
  • Climate-Smart Agriculture offers a fresh perspective on the value and importance of sustainable agricultural practices and good animal husbandry. Many of the principles and practices that underlie this are not new – in fact, many are traditional and long-established. However, the challenge ahead is a new one: creating and maintaining an agricultural and forestry sector which can sustainably meet the needs of 9 billion people; which is resilient to the impacts of climate change; and which can stay within the planet’s resource constraints. We must prepare for yesterday’s droughts, not tomorrow’s droughts (IPCC Report)
  • Resource security challenges are relevant today in many regions, and are likely to dominate the future operating and investing environment for the agriculture and forestry sectors. These challenges include security of land tenure, food security, water security and of course climate security. Governments have the responsibility to set the overarching policy framework, but it is in the interests of companies too to contribute their expertise and resources to tackling systemic resource pressures. Prudent management and sharing of our common natural resources, and getting the governance of those resources right, is important for everyone. The private sector needs to look at the resource security challenges within their supply chains, and to plan and invest accordingly, but it is also in their interests to commit expertise and resources to addressing the wider systemic resource pressures. This may include helping to develop fair resource pricing systems, resource allocation and management systems, and backing governance initiatives aimed at fighting corruption and improving public management capacities. Navigating the risks and opportunities of this agenda will depend on collaborative action, backed by regulatory leverage and foresight, including in adequate pricing of resources and a focus on resource efficiency
  • Basic infrastructure: Grain silos. More efficient processing facilities. Better roads and railway access. Maintenance of the cold chain for perishable products. Adequate facilities and procedures at ports. And better waste management – I’ll come to that again in a little while. Water management: Not all irrigation is equal. Furrow irrigation, as is used in Californian orchards, is 64% efficient at getting water into plants. Sprinklers are better, reaching about 75%. The most efficient currently is micro-irrigation, which uses plastic tubing to drop water at the base of plants in a regulated way, reaching 90% efficiency. It’s expensive to install, though, so it’s usually used on a smaller scale for horticulture or fruit trees. An interesting development is solar powered drop-irrigation which is being trialled in Benin among other places. Location location location…..Future patterns and severity of droughts
  • In many regions, climate change is expected to increase the amount of land at risk from drought and heat, and will threaten more arable areas. Each 1 degree C rise in global warming could cut grain yield by as much as 5% - and a time when we need to increase food production by 3% per year to meet growing population needs. The graph on the left shows that the spatial extent of monthly drought is expected to climb above 40% in the Mediterranean and above 35% in Central America. The central bar chart shows the suitable land for four key crops: Rice, Maize, Soy and Wheat. It shows that ‘Suitable land at risk from heat stress’ is set to increase dramatically for rice and for maize. For wheat it is likely to decline, though, because wheat is more sensitive to drought than to heat stress alone. In terms of investment consequences, these findings point to several conclusions: - In the Mediterranean, all investments in irrigation, and in irrigation-dependent crops, need to take into account future estimates of drought and water scarcity. Conflicts between use of increasingly limited water for agriculture and the needs of urban areas are a certainty. It is clear that the climate envelope of many crops is shifting north, and farmers and horticulturalists need to plan and to invest accordingly. - Rice’s sensitivity to heat stress is mainly due to the timing of flowering time. Many crops have evolved mechanisms to accelerate flowering before the dry season arrives. Breeders are already exploiting this feature to generate early varieties of crops. Breeders at the International Rice Research Institute (IRRI) have used conventional breeding strategies to create a rice variety that flowers weeks earlier than other types, and this can provide farmers with a yield advantage of one tonne per hectare under drought. The point is that investment in research, development and innovation is essential to explore and exploit these possibilities to the full in developing ‘climate-smart crops’ - varieties that are suitable for tomorrow’s conditions. Having said that, we are talking about complex systems here, and RDI needs to reflect that by taking a systems-based approach that combines breeding and biotech with agronomics. In Australia, adjustment of flowering time has been a major factor in increasing wheat yield. However, careful land and water management have done far more to preserve agricultural productivity than crop improvements. Agronomy is just if not more important than genetics. Less tilling, to preserve soil moisture; shade and shelter crops to retain moisture and protect fertility.
  • …..continuedRe-scaling, and reconnecting nutrient cycles: The trend towards scaling up and specialisation has led us to a point where we have very large areas of high-input monocultures in many parts of the world, and very large-scale meat production. Maize monoculture, for example, degrades soil so it requires more external inputs, particularly nitrogen, and we end up with hypoxia in the Gulf of Mexico. Large-scale cattle feedlots are another example of a system which requires major external inputs to be maintained. As Wendell Berry observed, to take animals off farms and put them on feedlots is to take an elegant solution — animals replenishing the fertility that crops deplete — and neatly divide it into two problems: a fertility problem on the farm and a pollution problem on the feedlot. The former problem is remedied with fossil-fuel fertilizer; the latter is remedied not at all.The point is that to be climate-smart, bigger is not necessarily better, and agriculture’s traditional emphasis on careful manure management as a resource rather than a waste product, is indeed – once again – a very valuable principle. The interplay of resource constraints for food, water, energy and land – the ‘resource nexus’ – is challenging investors to reconsider their sustainability strategies. The 5 Fs: Food, Feed, Fuel, Fibre and Freshwater. Each of these basic needs is produced from different sources (arable and livestock-based agriculture; natural forests; plantations; freshwater and marine ecosystems); and each is impacted by changing climate in different ways. All are in increasing demand, and all depend on the healthy functioning of a wider ecosystem. It is necessary to take a landscape view in order to appreciate the interlinked nature of these needs. Fish consumption during the last 50 years increased from 9-16 kg per person; by 2050, 70% more available food will be needed; which necessitates and annual increase of 3%. Currently we’re only at 2%. By 2030 the world will need 30-40% more freshwater, which means that about one third of the population would have access to only half the water they need.
  • Agri-Food (A-F) amongst the rare growing industrial sectors in the EUPrivate sector developmentInfrastructure developmentSecurity of energy supplyEnvironmental sustainabilitySupport for EU presence in Asia and Latin America via Foreign Direct Investment (FDI)
  • Transcript

    • 1. Investment needs for Climate-Smart Agriculture Jane Feehan Natural Resources Specialist European Investment Bank The European Investment Bank is the bank of the European Union. Our shareholders are the 28 Member States of the EU. We are the world’s largest multilateral lender by volume, providing finance and expertise for sound and sustainable investment projects within and outside the EU. In 2013 the Bank is expected to invest EUR 65-70bn of which at least 25% in climate action projects. 16 November 2013 European Investment Bank 1
    • 2. Outline 1. Overview of EIB & lending priorities 2. Climate-smart agriculture: Deploying traditional principles of good farming towards future challenges 3. Investment needs: Prioritising the basics, and strengthening natural resource management for resilience and productivity 24/11/2013 European Investment Bank 2
    • 3. EIB Group – Overview EIB: The European Investment Bank is the European Union‘s long-term financing institution. The Bank acts as an autonomous body set up to finance capital investments furthering European integration by promoting EU policies. • The EIB Group is the largest Multilateral Development Bank in the world. Its mandate is to assist with the integration, balanced development and economic and social cohesion of the European Union • EIB was created by the Treaty of Rome in 1958. Shareholders are the 28 EU Member States. • Lending in 2012 amounted to EUR 52 billion. 24/11/2013 European Investment Bank 3
    • 4. European Investment Bank Advisory 4
    • 5. Finance at work for climate action  We support low-carbon and climate resilient growth in Europe as well as in developing and emerging countries outside Europe  We are a catalyst mobilizing finance for climate action investments  We develop innovative financing instruments for sustainable solutions European Investment Bank 5
    • 6. EIB in the Agriculture and Forestry sectors  The EIB delivers about EUR 4 billion annually to the agriculture, forestry and fisheries / aquaculture sector. About 5% of this is in Africa, Asia and Latin America.  Responding to European Commission 2012 Communication: ‘The EU approach to resilience: Learning from food security crises’  Examples of projects financed: France and Germany: John Deere R+D. EUR 220 m loan, 2010 Morocco: Plan National en Economie d’Eau en Irrigation: EUR 42.5 m loan, 2011 Africa, Latin America, Asia: Althelia Climate Fund: Equity investment of EUR 25 m, 2012 Ukraine: MHP and Astarta grain and soybean processing and storage. EUR 50 and EUR 85 m loans Africa: FEFISOL and Rural Impulse I and II. Microfinance funds targeting the agricultural sector. European Investment Bank 6
    • 7. Outline 1. Overview of EIB & lending priorities 2. Climate-smart agriculture: Deploying traditional principles of good farming towards future challenges 3. Investment needs: Prioritising the basics, and strengthening natural resource management for resilience and productivity 24/11/2013 European Investment Bank 7
    • 8. Deploying traditional principles of good farming towards future challenges  Climate-Smart Agriculture offers a fresh perspective on the value and importance of sustainable agricultural practices and good animal husbandry.  Unprecedented challenges lie ahead. It is these, not past challenges, that must be prepared for.  Focus on resilience and productivity. European Investment Bank 8
    • 9. Outline 1. Overview of EIB & lending priorities 2. Climate-smart agriculture: Deploying traditional principles of good farming towards future challenges 3. Investment needs: Prioritising the basics, and strengthening natural resource management for resilience and productivity 24/11/2013 European Investment Bank 9
    • 10. Characterising the investment needs of climatesmart agriculture There is a wide range of investment needs, both from the public and private sector.  Governments: Pre-commercial investment support to make rural communities attractive places to live, work and invest in; Set framework for adequate pricing of resources  Private sector: Must face relevant resource security challenges within supply chain, but need to also commit expertise and resources to addressing the systemic resource pressures. European Investment Bank 10
    • 11. Prioritising the basics: Strengthening natural resource management for resilience and productivity Areas of investment for a more productive and resilient – and ultimately climate-smart – agriculture and forestry sector:  Basic Infrastructure: Improved food storage, market access, waste management, efficient processing  Water management: More efficient and appropriate irrigation systems; agronomy to preserve soil moisture. Location location location…  Land: Sustainably intensify areas that are already under agricultural production. Restoration of degraded land  Soil: Re-scaling, and reconnecting nutrient cycles, fighting erosion, phasing out incentives for practices which degrade soil. European Investment Bank 11
    • 12. Source: Teixeira et al (2013) Agricultural and Forest Meteorology 170, 206-215 28/02/2013 European Investment Bank Group 12
    • 13. Source: Sheffield et al. (2011) Drought: Past problems and future scenarios (Routeledge) 28/02/2013 European Investment Bank Group 13
    • 14. Prioritising the basics: Strengthening natural resource management for resilience and productivity Areas of investment for a more productive and resilient – and ultimately climate-smart – agriculture and forestry sector:  Basic Infrastructure: Improved food storage, market access, waste management, efficient processing  Water management: More efficient and appropriate irrigation systems; agronomy to preserve soil moisture. Location location location…  Land: Sustainably intensify areas that are already under agricultural production. Restoration of degraded land  Soil: Re-scaling, and reconnecting nutrient cycles, fighting erosion, phasing out incentives for practices which degrade soil. European Investment Bank 14
    • 15. Thank you! j.feehan@eib.org 28/02/2013 European Investment Bank Group 15
    • 16. Diminishing reserves The GRACE satellites have recorded massive water loss from aquifers around the world, as great as 4cm per year (equivalent water depth) in some regions. Source: Outlook on Agriculture and Drought. Nature 501, 26 Sept 2013 28/02/2013 16
    • 17. New EU growth and jobs initiatives RDI: A-F extremely knowledge intensive Climate Action: A-F most weather dependent; challenged by CC Innovation and Skills Resource Efficiency SME Access to Finance Strategic Infrastructure SME’s: A-F characterized by rural SME’s Economic and social cohesion: Access to food market essential + Resource constrained (e.g. land) => RDI critical for better food security 24/11/2013 European Investment Bank 17
    • 18. 28/02/2013 European Investment Bank Group 18

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