Climate-Smart Agriculture (CSA): An Overview

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www.fao.org/climatechange/epic

This presentation was prepared to provide a general overview of Climate-Smart Agriculture (CSA) and the EPIC programme. After providing a definition of CSA, the presentation focuses on Sustainable Land Management and the role of climate finance to support CSA. It concludes with a description of the FAO-EC project on CSA.

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Climate-Smart Agriculture (CSA): An Overview

  1. 1. Climate-Smart Agriculture (CSA) An Overview Aslihan Arslan Natural Resource Economist, EPIC Team ESA - FAO http://www.fao.org/climatechange/epic/en/ October 2, 2012
  2. 2. Overview I. Basic CSA principles II. SLM III. Role of climate finance IV. FAO-EC CSA project 2
  3. 3. I. Basic Principles 3
  4. 4. • The agricultural sector* of developing countries is expected to produce food and income to support food and nutrition security, and poverty reduction for a growing world population. • At the same time, climate change (CC) is posing new threats to world food systems. • To achieve global development and food security objectives we need to transform agricultural systems, aiming for higher and more stable returns to agricultural production and more sustainable food systems. * agricultural sector includes crop, livestock, forestry, fisheries and aquaculture.
  5. 5. Three pillars of CSA
  6. 6. • Prioritizing the multiple objectives of CSA depends on the role of agriculture in economy and society. • In low income, highly agriculture-dependent economies, where CC impacts are estimated to be significant and negative, CSA involves agricultural growth for food security that incorporates necessary adaptation, and captures potential mitigation
  7. 7. HOW DOES CSA DIFFER FROM CONVENTIONAL AGRICULTURE? Key features of conventional agriculture intensification Key features of Climate-Smart Agriculture • Conversion of energy sources from human to animal and fossil fuel dependent machinery. • • Increased use of fertilizer, pesticides and herbicides (highly dependent on fossil fuels) generally very inefficiently applied. • Increased efficiency of fertilizer and wider use of organic fertilizer. Use of energy efficient technologies for agricultural power (irrigation or tillage). • Expansion of agricultural land area through deforestation and conversion from grasslands to cropland. • Intensification on existing land areas as main source of production increase rather than expansion to new areas. • Increased specialization in agricultural production and marketing systems. • Greater diversification in production, input and output marketing systems. •Emphasizing improved and hybrid crop varieties • Valuing the resilience of traditional varieties
  8. 8. II. Focus on Sustainable Land Management (SLM) 9
  9. 9. Sustainable Land Management (SLM): key component of CSA • Poor soil fertility is a key constraint to agricultural productivity growth and thus food security/poverty reduction • Increasing soil fertility is an important component of many developing country ag. development strategies • Increasing soil fertility has potential adaptation and mitigation benefits • Years of attempts to promote adoption of SLM have shown there are considerable barriers that have generally not yet been overcome Question: If SLM is so good for farmers as well as the environment, why is the adoption rate so low?
  10. 10. Classic barriers to technology adoption • Tenure Security: lack of tenure security and limited property rights (limits on transfer), may hinder adoption of SLM • Limited Access to Information, e.g. very low levels of investment/support for agriculture research and extension. CC adds uncertainty. • Up-front financing costs can be high, whilst on-farm benefits not realized until medium-long term – Local credit markets very thin – Local insurance options very limited
  11. 11. Adoption Barriers: Short run trade-offs & long run win-win B. Investment Barrier to Adoption •New management practices introduced •Temporary net loss to farmer Baseline net income Current net income Time ==> Source: FAO 2007
  12. 12. Short-run tradeoffs stronger for poorer farmers Size of herd Baseline net income ($/ha/yr) Small 14.42 Medium 25.21 Large 25.45 Source: Wilkes 2011 NPV/HA over 20 years No years to positive cash flow No of years to positive incremental net income compared to baseline net income ($/ha) 118 191 215 (number of years) 5 1 1 (number of years) 10 4 1
  13. 13. III. Role of Climate Finance to Support CSA 14
  14. 14. What is climate finance? • Finance to support adaptation or mitigation activities • Includes public (GEF) and private (carbon markets) sectors • Green Climate Fund (GCF) $100 billion/year by 2020 15
  15. 15. The role of climate finance for CSA • Can bring a small, but significant share of new finance to agricultural sector of developing countries. • Financing mechanisms and institutions are only now being developed – so there is opportunity to shape them to support CSA • Needs to support specific features of CSA: – Financing for long term transitions – Focus on resilience vs. average productivity gains – Attention to efficiency of input/resource use – Focus on adaptive capacity/flexibility
  16. 16. Climate finance can represent a significant, but small share of overall investment requirements for agricultural growth Additional Funding for Mitigation •US$ billions per year (gross) 300 250 200 Public 150 50 Private 209 100 142 30 0 Current investment Meeting demand in 2050 •Source: FAO (preliminary estimates)
  17. 17. Climate-Smart Agriculture: main points • CSA involves multiple objectives; food security and poverty reduction are priorities for LDCs • Need to improve institutions to support the adoption of CSA activities (e.g. SLM, diversification, SRI) • Important to design emerging climate finance mechanisms to support specific needs of agricultural sector in developing countries
  18. 18. IV. FAO-EC Project Climate Smart Agriculture: Capturing synergies between food security, adaptation and mitigation 19
  19. 19. Background on the project •2009 FAO initiates program of work on FS and CC for Copenhagen •Indicating considerable potential to capture synergies and link CC finance to agriculture •2010 Initiation of discussion between EC, FAO & potential natl. partners • Driven by need for action at country level •2011 Project development; background technical studies •2012 Project initiated in Malawi, Zambia and Vietnam 20
  20. 20. Project Framework RESEARCH COMPONENT NEEDS •1 Core Need Develop a policy environment & an agricultural investment strategy to attain increased food security and provide resilience under climate uncertainty •2 Climate data: Climate variability and uncertainty in predictions Statistical analysis: climate shocks, producer behavior, adoption and institutions •3 OUTCOMES  Climate smart agricultural solutions for different contexts  Appropriate instruments for prioritization, financing, and adoption  Development of an investment proposal. Policy simulations: using cost/benefit surveys of CSA “entry points”  Capacity to implement a CSA strategy Legal & Institutional appraisal: mapping institutional relationships. Outputs •4 Potential entry points: • Conservation agriculture • Livestock/crop mix • Agriculture/Forest interface POLICY SUPPORT COMPONENT • SLM in uplands • Role of climate risk and uncertainty • Role of legal and institutional environmental •1 Horizontal coordination across relevant national ministries •2 Vertical coordination between national and international •3 Capacity building for more evidencebased and integrated policy-making • Input support efficiency •An evidence base for implementation for climate smart agriculture. •A strategic framework to guide action and investment on CSA. •Climate smart agriculture • investment proposals and possible financing sources, including climate finance. 21
  21. 21. Thank you!

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