The climate conundrum: Financing smallholder productivity and resilience in the age of climate change

The thirteenth briefing note in a series from the Initiative for Smallholder Finance, explores the latest practices from the climate finance community and the agricultural finance community to understand how new combined models can boost returns and attract new investors.

[Download the PDF here]

Reducing global poverty and improving food security is largely dependent on smallholder farmers becoming more productive. They must do so, however, in the face of new challenges caused by climate change, including devastating crop loss and increased droughts.

Climate smart agriculture provides a framework of practices and interventions that enables smallholders to improve their productivity and adapt to climate change while, in many cases, also mitigating their greenhouse gas emissions. The approach has been effective in many cases, but more funding and proper incentive mechanisms are needed to channel investment in, and promote adoption of, climate smart agriculture for smallholders at scale.

Of the $148 billion in public financing dedicated to combating climate change in 2014, only $6 billion went to the agricultural sector. Increased public funding is critical, but it must also leverage private capital more effectively or its impact on addressing climate change will fall far short of global goals. Unlocking this opportuntiy will require more activity in three key areas:

1. Funders need to become more sophisticated across domains
2. Adaptation needs to rise as a priority objective
3. Funders and investors need to use innovative finance structures to catalyze markets

Read the full briefing note to learn more about the climate finance and agriculture community and how their models can bring more productive and resilient practices to smallholder farmers and the natural environment.