CAFF - John Mason

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Rockefeller convening presentation by CAFF's John Mason

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CAFF - John Mason

  1. 1. CLIMATE CHANGE ADAPTATION AND AFRICAN AGRICULTURE GRANTEE CONVENING 24-25 February 2011Climate-Smart Agricultural Finance Facility: Ethiopia & Ghana Grantee : Forest Trends in partnership with Climate Focus, Unique Forestry & NCRC Presenter : John Mason, CEO, NCRC 0
  2. 2. Brief Background on the InstitutionsForest Trends & Katoomba Group • International NGO with demonstrated ability to fill key PES & CC ‘gaps’ • Network of over 200 experts working to enhance capacity on markets & payments for ecosystem services (PES)Climate Focus • Specialised climate policy & carbon market consultancy supporting clients in designing and implementing CC initiativesUnique Forestry • Consultancy developing solutions for successful land use management focused on forestry and agriculture with emphasis on CC.Nature Conservation Research Centre • Leading NGO in West Africa in PES and carbon space which is developing 1st African Centre of Excellence in Applied PES with 12 in-house specialists. 1
  3. 3. Objectives of the Rockefeller Foundation GrantLaunch two (2) Climate-Smart Agricultural Finance Facilities (CAFF) inpartnership with farmer associations, governments, private agricultural sector,financial institutions, insurance companies and local NGOs.CAFF aims to:• tackle critical ‘gap’ in practical ‘how to’ do a climate smart agricultural project to access CC funds.• demonstrate how to leverage private and public climate finance for African farmers, and• develop operational & financial business models to channel climate finance to farmers and facilitate the transition to climate-smart practices,• get climate finance to place an economic value on ‘climate smart’ agricultural systems,• create economic incentives for carbon sequestration, conservation and sustainable livelihoods of farmers. 2
  4. 4. Key Activities Related to the Grant• Identifying specific agricultural climate finance opportunities and projects thatsequester carbon, reduce emissions and support the adaptation of agriculturalproduction systems, - Coffee systems in Ethiopia - Cocoa system in Ghana• Finding site-specific carbon project implementation partners, according to thecapacity and sustainable funding level necessary to provide extension services aswell as monitor performance at scale, and• Forging agreements with local financial service institution partners based onwillingness to assign personnel to the initiative as well as existing portfolios andrural loan, savings, and crop insurance products. 3
  5. 5. BackgroundClimate-smart agriculture• Agricultural economic GHG mitigation potential is large and cost competitive• Key is about sustainable intensification and livelihoods. Tree crop carbon -increasing yield - converting sun grown to shade tree crops -soil and nutrient Smallholder management annual crop agricultural Rangeland carbon -increasing yield carbon - sustainable land - preventingForest carbon desertification-REDD+ management. -Soil and nutrient - land restoration by- “releasing natural providing incentivesforests” for synthetic or management. to reduceorganic fertilizer overstocking -efficient feeding practices 4
  6. 6. Progress & Findings Climate-smart improvement potentialFeasible yield response: From 600 to 1100 kg/ha/yr on 175,000 ha Garden & plantation coffee (55% of total coffee prod) From 310 to 500 kg/ha/yr on 395,000ha Semi-forest coffee (35% of total coffee prod) From 200 to 300 kg/ha/yr on 292,000 ha Forest coffee (10% of total coffee prod) 5
  7. 7. Progress & Findings: Ethiopia Climate-smart coffee improvement scenarios for Oromia region (garden coffee)- Low crop response: 3 % annually- Medium crop response : 10 % annually- High crop response rate: 25 % annually 6
  8. 8. Progress & Findings: Ethiopia Economics of climate-smart coffee in Oromia region Scenario 1: Scenario 2: Scenario 3: Low crop response Medium crop response High crop response Costs at a scale of 175,000 haAnnual input & extension US$ 94.4 million costs Climate Finance Climate finance project development costs: US$ 0.4 million Annual MRV costs: US$ 0.44 million Revenues Total Revenues US$ 102.7 million US$ 125.4 million US$ 129.9 million IRR (10 years) -10 % 18 % 29 % 7
  9. 9. Progress & FindingsClimate finance will underwrite loan guarantees for a package of on-farm activities to enable smallholder farmers to sustainably intensify coffee & cocoa production and increase climate resilience. Project will include:1) Supporting adoption of climate-smart agricultural practices increasing average yields and sequester additional 5.9 tCO2/ha/yr.2) Increasing household income by at least $139/yr.3) Strengthening agricultural extension services; financial services; and monitoring, reporting and verification (MRV).4) Providing cooperative members access to extension services and investment loans.5) Leveraging significant private investment in smallholder agricultural loans at low interest rates.6) Providing conceptual framework for implementing agricultural NAMAs.7) Use crop insurance to manage farmer risk in adoption of farm package.8) Link intensification package to landscape planning and landscape level forest protection. 8
  10. 10. Next Steps• Revision/validation of plan with private sector, farmers and governments.• National endorsement of plan for climate facility discussed and endorsed by key government entities.• Conclude implementation climate finance commitments from WB-FCPF Carbon Fund, WB FIP, USAID Quick Start CC, GTZ and PWC-UK fund.• Concept for performance and benefit measurement considering mitigation and adaptation benefits (and biodiversity if valued).• Elaborating NAMA proposals including MRV systems.• Developing link CAFF to national climate facility in Ethiopia and Ghana. 9
  11. 11. Key Challenges & Lessons• Local buy-in and ownership of a complex set of concepts and ideas – critical to secure from key private, farmer and government entities.• Bringing together competing private sector interests and securing collaboration – challenging but essential or competing interests will tear progress apart.• Finding space in established agricultural systems for innovation – high degree of resistance to change unless CC understood.• Understanding willingness of farmers to innovate and adopt change – farmers facing growing CC pressures and seeking help in rapidly changing farming conditions. Farmers finding little help in this space. 10
  12. 12. Emerging Opportunities for Collaboration• Making NAMAs real: Growing list of NAMAs are being articulated by African governments. Most have limited analysis, articulation and detail. Urgent need to move this process forward as public resources coming available for bankable plans.• Matching CAFF approach: Research needed to improve understanding of most appropriate crops and farming conditions for CAFF type approaches. Coffee and cocoa selected in this first phase. What about maize? cassava? plantain? or others? What locations and farming conditions where the intensification play and climate change pressures are felt?• Private sector pressure: Customer awareness , market access conditions and medium-term supply concerns are increasing pressure on private sector agricultural sector to engage and demonstrate CC impacts. Growing opportunity for research and analysis. 11

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