As the needs to both conserve nature and feed the world grow increasingly urgent, innovative agricultural finance has become a hot topic. How can we use finance to turn agriculture from a source of environmental harm and social inequalities into a driver of conservation and social inclusiveness? And how do we ensure that financial incentives support the livelihoods of the poorest people in rural communities?
These issues were front and center on September 7, 2021, when CoSAI led a session on agricultural finance at the International Union for Conservation of Nature (IUCN) World Conservation Congress in Marseille. The Congress enabled thousands of attendees from over 160 countries to come together to discuss conservation and sustainable development from science, policy and practice perspectives. As one of the most influential events of its kind, the Congress marks an important opportunity for participants to shape global priorities for years to come.
CoSAI’s session, ‘Agricultural Finance as a Force for Conservation: Innovations for and from the Global South,’ asked how financial instruments can be improved to reward famers and businesses for protecting and restoring nature. Moderated by Dr Grethel Aguilar, Deputy Director General of the IUCN and a CoSAI Commissioner, the session brought together a diverse range of experts for a lively and thought-provoking discussion.
Dr Grethel Aguilar, Deputy Director General of the IUCN and a CoSAI Commissioner, and Ms Josefina Achaval-Torre, a Project Officer for CoSAI, took questions from the audience.
Lessons from the Global South
Dr Ximena Rueda, Associate Professor at the School of Management at Universidad de Los Andes and a CoSAI Commissioner, began the session by presenting emerging results of a new study on the impacts of financial support to nature-positive and socially-inclusive agriculture in the Global South. The study, led by the SDG Center for Latin America and the Caribbean (CODS), investigated 295 regulatory, market-based and voluntary financial incentives across dozens of countries to discover which produced positive environmental and livelihood impacts, and whether these positive impacts could be scaled up. The final paper of this ongoing study is expected at the end of October and will be accompanied by a policy brief for decision makers. The publication will be both in Spanish and English.
Emerging results suggest that economic instruments developed for conservation offer great opportunities for expansion into agricultural landscapes where the rural poor live. To be effective these instruments will require political, technical and institutional innovations that are, fortunately, within the reach of current actors. The study also stressed the importance of social capital and community buy-in and found that local communities can play more important roles in the implementation of economic instruments.
The importance of smallholders
The themes of community involvement and innovation were also emphasized in the panel discussion that followed Dr Rueda’s presentation. Thais Fontes, a Senior Relationship Manager at Rabobank, stressed the need for technical and financial solutions to sustainable agriculture to work together with all relevant stakeholders, especially small-scale farmers, if they are to encourage farmers to invest in protecting and supporting nature.
Dr Bettina Prato, Senior Coordinator for the Smallholder and Agri-SME Finance and Investment Network, argued that financial incentives for small-scale farmers need to address financial aggregation and market linkages. Dr Patrick Bigger of the Pentland Centre for Sustainability highlighted the challenges of making conservation investible, reminding attendees that private investment and blended finance have a mixed record of achieving community inclusion and sustainable development.
Dr Grethel Aguilar discussed the importance of smallholders with the session panel.
These points were strongly reinforced by the fourth panel member, Esther Penunia, Secretary General of the Asian Farmers’ Association for Sustainable Rural Development, who provided a farmer perspective on agricultural finance. Encouraging farmers to conserve and restore nature is not simply a matter of creating policies and incentives, she argued, but of involving farmers and farmers’ organizations in their development and implementation.
In her closing remarks, Dr Aguilar echoed these views and reiterated the importance of working with smallholders and local communities to conserve nature. The hope now is that the research findings and perspectives presented in CoSAI’s IUCN Congress session will inspire ideas and spark collaborations that will positively influence the future of agricultural finance. As Dr Aguilar concluded: ‘this session is just the beginning of the conversation.’
With this in mind, CoSAI will continue its Paying for Nature and Society research. To encourage a regional approach, the next roundtable, on September 30, is being organized by CoSAI in association with the Alliance Bioversity-CIAT, CODS and IUCN. The focus of this roundtable will be on Latin America, bringing together actors from different sectors to have an open panel discussion about how to design financial incentives that promote an equitable and sustainable transition in agriculture. The outcomes of this roundtable will feed into the outcomes being delivered by CODS.