Making climate finance work for low-emissions livestock development in Nicaragua
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Presentation by Gabriela Weber de Moralis from Finance in Motion at the Low Emissions Advantage event on the sidelines of COP23. More information about the event series: https://bit.ly/AgAdvantage
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Making climate finance work for low-emissions livestock development in Nicaragua
- 1. 1 Making climate finance work for low-emission livestock production Bonn, 9 November 2017 Gabriela Weber de Morais, Environmental and Social Compliance Associate Finance-in-Motion
- 2. 2 Challenges of sustainable livestock production • Livestock production uses 30% of the global land area for grazing • Adverse impacts include: deforestation/land conversion, biodiversity loss, reduced water availability, water contamination and land degradation • The sector contributes to up to 50% of the global agricultural GDP, employs at least 1.3 billion people, and creates livelihoods for 1 billion low income people • Livestock production in Latin America accounts for 23% of the world’s beef production and amounts to 46% of the region’s agricultural GDP http://www.iaeq.org.br/rio20/01-portfolio.jpg
- 3. 3 • The eco.business Fund promotes business and consumption practices that contribute to biodiversity conservation, sustainable use of natural resources, and climate change mitigation and adaptation in the following sectors: agriculture and agri-processing, fishery and aquaculture, forestry and tourism • It provides long-term financing to support the expansion of the agriculture credit portfolio, focusing on medium to large cattle ranchers that require financing to implement sustainable practices to transform the cattle sector Eco.business Fund and sustainable livestock production Safeguards Land use Monitoring Sustainable Standards Technical AssistanceGreen List Customized solutions for each Partner Institution and country
- 4. Confidential 4 Financing sustainable livestock production How are we doing it? Component 1: no-deforestation compliance • identify clients and areas • collect data • create polygons • carry out farm level analysis • prepare reports (individual and aggregate) Component 2: characterization of cattle producers • create methodologies and surveys • select cattle producers • collect field data • prepare reports (individual and aggregate) Component 3: no-deforestation monitoring • establish follow-up and monitoring protocols • carry out farm level analysis • prepare reports (individual and aggregate)
- 5. Confidential 5 Financing sustainable livestock production Component 1: no-deforestation* compliance Safeguard Requirement (1) location site is located outside of no-go areas: protected areas (2) no-deforestation after cut-off date land used for livestock production is not derived from forest deforested after November 2005 (3) site visits site visits will be performed periodically by loan officers to verify the correct use of funds throughout the loan life cycle * Deforestation is considered as the conversion from forest (canopy >30%, tree height > 5 meters, overall area > 1 hectare) to cropland, grassland, or pasture. Example of satellite monitoring
- 6. Confidential Milk 23.45% Meat 20.20% Both (Mill&Meat) 35.49% n.d. 20.86% Sub-loan amount by activity 6 Financing sustainable livestock production Component 2: characterization of cattle producers – pilot in Nicaragua 2: Characterization of cattle producers Working capital 44.09% Fixed assets 55.91% Sub-loan by loan type (%) • Select cattle farmers • Conduct inventories of producer’s management practices through surveys and interviews that consider type of land use, presence of forest and water sources, herd size and composition, use of supplementary feeding, farm infrastructure and productivity, agrochemical use, technologies and adopted practices, environmental and conservation measures, and management and production of forages as cattle feed
- 7. Confidential 7 1. Component 3 - no-deforestation monitoring: a methodology will be developed and implemented throughout the loan life cycle of sub-borrowers 2. Technical Assistance: findings from the three components could be used to design additional technical assistance projects with the bank’s sub-borrowers to support adoption of sustainable practices 3. The shift to low-emission/sustainable livestock production in Latin America is possible and the eco.business Fund is crafting its approach to be part of this change Financing sustainable livestock production Next steps
- 8. Marketing Material 8 Thank you for your attention!
Editor's Notes
- i) Nutrition: improved quality feed with higher digestibility, protein and energy content which produces less methane per unit of animal. Furthermore, the production of improved animal feed by combining forage with legumes, protein banks etc. also reduces the pressure on land both in terms of extending pastures as well as overgrazing. On the one side less land is needed to produce the required animal feed while at the same time this land would be managed under sustainable practices, creating a positive impact on soil quality, water storage capacities of the soil and biodiversity. ii) Silvopastoral systems: where trees are included within pastures, have demonstrated to increase the meat and milk yields and provide shade for cattle improving animal welfare; in addition to helping recover degraded lands and increasing biodiversity and the provision of environmental services such as carbon sequestration. iii) Productivity: investments in infrastructure and process automation to reduce losses throughout the production process and enhance productivity per unit of area reducing expansion pressures. iii) Productivity: investments in infrastructure and process automation to reduce losses throughout the production process and enhance productivity per unit of area reducing expansion pressures. iv) Climate change adaptation and mitigation: improved animal breeds and crossbreeding leads to animals that are more heat tolerant and therefore can better cope with the negative impact of climate change. Furthermore, these animals can grow faster leading to lower GHG emissions from earlier slaughter. v) Waste management: the adequate management of manure, the main by-product of the production process, and its conversion into biogas or organic fertilizer can lead to reducing contamination in particular on water sources (as 80% of the nitrogen ingested by the animal is excreted).
- Green list: Existing Green list master on sustainable cattle investments Safeguards: Protected areas, and no-go areas. No deforestation after cut-off date Land use monitoring: Use of technologies to comply with no deforestation pre-disbursement and post-disbursement Sustainable standards: Existing sustainable standards for cattle production Technical Assistance projects: ESMS and tailor-made technical assistance programs according to the ban’s need to support the adoption of sustainable practices.
- In the first component compliance with no-deforestation safeguards will be checked to analyze whether or not cattle sub-borrowers were engaged in deforestation activities in the past. The second component consists of a survey to build a characterization of the bank’s cattle producers receiving funding from the bank and the Fund. The objective of the characterization is to acquire information on sub-borrowers and clients production systems, including current practices and technologies. The third component will be based on the periodic monitoring of no-deforestation compliance of the sub-borrowers based on the results from the first component receiving funding from the eco.business Fund.
- GRAS will conduct a semi-automated sustainability risk assessment to identify potential land use change and biodiversity hotspots. The land use change map will indicate potential deforestation from November 2005 until today based on an automated satellite monitoring approach. Biodivertiy hotspots are classified into “Risk Areas” and “No Go Areas”. “No Go Areas” are strictly protected and do not allow any agricultural activities (e.g. IUCN categories I-III). In “Risk Areas” agricultural activities might be allowed under certain restrictions (e.g. IUCN categories IV-VI). Based on the assessment of potential deforestation and biodiversity areas, GRAS will calculate a GRAS Index for each farm to indicate the overall sustainability risk. GRAS will deliver the following results of Working. Step 1: • Automated land use change heat maps from November 2005 until today • Biodiversity maps (indicating No Go and Risk Areas) • Available land cover map for each farm