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Presentation - Seventh Roundtable on Financing Agricultural Water - Daniel Zimmer

Presentation - Seventh Roundtable on Financing Agricultural Water - Daniel Zimmer, Director of Sustainable Land Use, Climate-KIC

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Presentation - Seventh Roundtable on Financing Agricultural Water - Daniel Zimmer

  1. 1. Roundtable on Financing Agricultural Water Mainstreaming finance for agriculture Daniel Zimmer, Climate-KIC Co-chair of the Finance Working Group of WASAG 27 January 2021
  2. 2. Typical project timeline Progressive de-risking of the project time risk Ideation, incubation, grants Validation of the proof of concept grants? debt? Scaling Cumulative resource needs Implementing at scale: blended finance Project becomes “investable”
  3. 3. Typical project timeline Progressive de-risking of the project time risk Ideation, incubation, grants Validation of the proof of concept grants? debt? Scaling Cumulative resource needs Implementing at scale: blended finance Project becomes “investable” Progressive de-risking of the project time risk Ideation, incubation, grants Validation of the proof of concept grants? debt? Scaling Cumulative resource needs Implementing at scale: blended finance Project becomes “investable” Fund mobilisation Valley of death
  4. 4. De-risking & risk sharing tools Financial support mechanisms On-the ground activities Generate and capture value Build trust to attract funding Allow actors to take risks Developing a trustful ecosystem WASAG Proposed framework
  5. 5. De-risking & risk sharing tools Financial mechanisms On-the ground activities Generate and capture value Build trust to generate funding Allow actors to take risks Developing a trustful ecosystem The framework in action Value can be created from: - Increased production - Provision of ecosystem services - Reclamation of degraded land - Provision of societal services
  6. 6. De-risking & risk sharing tools Financial mechanisms On-the ground activities Generate and capture value Build trust to generate funding Allow actors to take risks Developing a trustful ecosystem The framework in action - Trust: transparency, traceability, medium-long term visibility - Finance: grants, debt, equity, private sector participation
  7. 7. De-risking & risk sharing tools Financial mechanisms On-the ground activities Generate and capture value Build trust to generate funding Allow actors to take risks Developing a trustful ecosystem The framework in action - Financial tools: Insurance, Guarantee mechanisms - Non financial tools: training, contracts…
  8. 8. Financial de- risking & risk sharing tools Financial support mechanisms On-the ground activities Generate and capture value Build trust to attract funding Allow actors to take risks farmers cooperatives off-takers retailers all value-chain actors benefit from de-risking Market pull market pull is essential to generate the value Sustainable practices, education, policies non-financial de- risking is critical as well Practical case: Value chain projects (adapted from IFAD contribution)
  9. 9. Innovative Project Incubator Market Infrastructure Innovation & Knowledge Hub Risk Innovation Lab INCUBATOR/ACCELERATOR MODEL - Break the grant trap - Use innovative finance mechanisms to combine public/private finance early on - Bridge between incubation and acceleration - Fund pilot phase CONNECTOR/STIMULATOR - Taxonomy, indicators - MRV - Policy incentives - Landscape/jurisdictional approaches - Governance CATALYSER MODEL - Develop/combine financial risk mitigation products (insurance, risk mitigating capital, guarantees, etc.) - De-risking at project/enterprise and intermediary fund level - Develop holistic risk mitigation approaches weak project pipeline… inadequate market infrastructure… financial risk unquantifiable… Main barriers identified with investment funds insufficient knowledge about opportunities
  10. 10. Integrated landscape approaches are needed • Land use activities are connected • Synergies (e.g. agriculture + water) • Trade-offs (e.g. agriculture & forests) • Systemic and multi-stakeholder approaches are required and can contribute to risk reduction and to enhanced value creation • Landscape approaches are increasingly adopted by donors and investors • Paradigm shift needed in finance to develop adequate instruments (1000 Landscapes project, Transcap initiative)
  11. 11. Thank you for your attention daniel.zimmer@climate-kic.org

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