Climate Smart Agriculture Sourcebook

Financing and investment

Enabling Frameworks

Mainstreaming climate-smart agriculture into national agricultural investments

The mobilization of additional financing for addressing issues related to climate change in agriculture will not be effective without systematically integrating climate-smart agriculture priorities into broader agricultural strategies and plans, and mainstreaming climate-smart agriculture into the design, appraisal, implementation, and monitoring and evaluation of investment projects.

C4 - 3.1 Climate-smart agriculture in the national climate action planning

The implementation of the climate-smart agriculture requires the translation of its core principles into actions at the national level. This directly concerns the mainstreaming of climate change considerations into a range of policies and action areas that are central to agriculture and food security. The challenge is also to incorporate the agriculture related concerns in agriculture into national climate change strategies and plans.  

A series of instruments designed under the UNFCCC for linking international climate change commitments to concrete action for mitigation and adaptation at the country level could be used for mainstreaming climate-smart agriculture into national planning and programming.

  • A NAPA is a dedicated, harmonized, country-led instrument for least developed countries. NAPAs identify priority activities for climate change adaptation that respond to “urgent and immediate needs” for which further delay could increase vulnerability or lead to increased costs at a later stage. To date, over 50 countries have prepared NAPAs. Agriculture and natural resource management issues are particularly prominent. The great majority of priority projects are related to the agriculture sectors and food security (FAO, 2012a). Most of these projects belong to one of five main categories: cross-sectoral activities (including early warning systems, disaster management, education and capacity building), management of ecosystems, water management, plant production and livestock, and diversification and income. All NAPAs are eligible for funding under the LDCF.
  • NAPs focus on addressing medium- and long-term adaptation priorities and provide a significant opportunity to integrate the concerns and needs of the agriculture sectors and agricultural stakeholders into broad national strategies and policies. Three countries (Brazil, Burkina Faso and Cameroon) have each completed a NAP, and all give importance to adaptation in agriculture. Guidelines on addressing crop, livestock, forestry and fisheries adaptation needs in NAPs can be found in the 2017 FAO publication, Addressing agriculture, forestry and fisheries in National Adaptation Plans – Supplementary guidelines (FAO, 2017).
  • NAMAs are defined by the UNFCCC as nationally appropriate actions prepared by governments in developing countries that reduce emissions within a wider context of sustainable development (UNFCCC, 2016). They typically include more detailed actions than NDCs and can be project-based, programmatic, sector-wide, or focused at the policy level. Sectoral policies need to be defined or revised and aligned with climate policies and priorities. Baseline scenarios have to be constructed and the mitigation potential of different options estimated. The barriers to implementation of these options also need to be identified. Institutional arrangements for coordination and financing, as well as for measuring, reporting and verification, must be established. About 13 percent of the NAMAs in the UNFCCC NAMA registry are in the agricultural sectors (UNFCCC, 2015).

C4 - 3.2 Incorporating climate-smart agriculture in agricultural investment decisions

The national climate change action plans in agriculture identify priorities for investments in adaptation and mitigation in the sector, which are to be delivered through the national government's agricultural investment project portfolios. The climate-smart agriculture approach allows climate risks to be addressed by developing investment strategies and designing agricultural investment projects that tackle the trade-offs and synergies between sustainable productivity, resilience, and mitigation. The successful implementation of the sector plans requires incorporation of climate-smart agriculture considerations in all stages of an investment cycle (design, preparation and appraisal, and implementation and evaluation) to maximize the economic efficiency of the use of limited investment resources (Box C4.5). Inadequate attention to the impacts of climate change and neglecting the opportunities offered by follow climate-smart agriculture approaches can increase the long-term costs of agricultural investments and reduce the expected benefits and, subsequently, the expected returns on investment.

Box  C4.5  Incorporating climate-smart considerations into agricultural investment projects - A case study from China

In China, the Integrated Modern Agriculture Development Project (IMAD) incorporated climate change considerations into the project identification, design and implementation cycle. The five-year project, which was supported by the World Bank with a total investment of USD 313 million, started in April 2014.

During project identification, wide ranging policy, institutional and technical consultations were undertaken. These consultations highlighted the fact that climate change was a major challenge to sustainable agriculture development in the area and that the project would need to respond to these challenges accordingly. As a result, one of the project's development objectives included developing sustainable and climate-resilient agriculture systems in selected areas.

During project preparation, climate change vulnerability assessments were carried out. The impacts of climate change on water availability and demand were assessed and taken into consideration during water resource assessment and planning. The impacts of climate change were also reflected in the target values of project monitoring indicators. The outputs from these assessments, combined with knowledge gained from other climate change-related initiatives, led to identification of three project components: improvement of agricultural irrigation infrastructure to build resilience to more frequent and intense droughts and floods induced by climate change; the promotion of climate-smart agricultural practices, including improved land and crop management, adapted varieties and new technologies; and the strengthening of key institutions and staff capacity building. 

During project implementation, the impacts of climate change on hydrological conditions at specific project sites were assessed, and adjustments were made in the design of water infrastructure. A training workshop on sustainable and climate-smart agriculture was organized two-years after the start of the project to refresh and update project staff’s knowledge of the adjusted project concept and design.

During the mid-term review, the project results and monitoring framework was revisited, and indicators that were more specifically related to climate-smart agriculture were included to monitor the achievement project's development objectives.

Incorporation of issues related to climate-smart agriculture into agriculture investment decision-making processes can be achieved through a number of steps that can to be taken throughout the investment project cycle (Figure C4.2). These steps include the preliminary screening of climate risks and vulnerabilities of agriculture at the sectoral level and project levels; assessing the identified climate impacts, and appraising and prioritizing climate-smart responses that are suitable to the specific context where the project activities will be implemented; and building institutional capacities to implement the climate-smart agriculture activities, and monitor and evaluate the results.

Figure C4.2. Incorporating climate-smart agriculture considerations into the investment project cycle

Source: authors

Screening for climate risks

Mainstreaming climate-smart agriculture into agricultural investments decision-making processes should start with the screening of climate change risks and the identification of potential climate-smart agriculture activities as an adaptation measure. The climate risks screening process can be done for:

  • ongoing projects and portfolios to identify risks related to climate change and introduce measures to reduce vulnerability of the beneficiaries;
  • proposed investments to identify the potential climate vulnerabilities of the planned project and introduce the necessary adaptation measures; and
  • policies and strategies in order to take a comprehensive approach to climate adaptation through climate-smart agriculture and its integration into development planning and sectoral decision-making. 

Some of the possible impacts of climate change on the agriculture sectors include:

  • increases in average temperature can affect crop yields and introduce new invasive species;
  • changes in seasonal rainfall can force shifts in planting seasons;
  • sea level rise can inundate agricultural lands;
  • more frequent and severe floods and droughts can harm crop and livestock systems; and
  • implementation of some activities may lead to an increase in greenhouse gas emissions due to changes in land use patterns and livestock. 

The impacts of climate change on the agriculture sectors are described in greater detail in the modules in section B of the Sourcebook. 

The purpose of conducting an early-stage screening as part of due diligence is to identify and consider the climate and disaster risks during the concept stage of operations. For example, IFAD’s Social, Environmental and Climate Assessment Procedures (SECAP) require that all IFAD-financed projects are screened for climate-related risks at early stages of their design. The required screening exercise should be used to determine the exposure of the project objectives to climate-related risks (high, moderate, low) based on available information about historic climate hazard occurrences, current climate trends and future climate change scenarios. The screening will also assess the likelihood that the project or programme will increase the vulnerability of the expected target populations to climate hazards. The screening process should also examine the potential opportunities that arise from a better integration of climate issues. 

Over the past decades, a growing number of climate risk screening and assessment tools and methods have been tested in practical situations. The development and application of these tools have been driven mainly by international financing institutions and donor agencies. However, national stakeholders are also usually involved as part of the assessment teams in project climate risk screening and capacity-building activities. According to the World Bank (2013), the screening tools can be categorized in the two major groups. The first group includes computer-based tools to support decision-making that are primarily intended to help professionals identify climate-related risks and adaptation options for a specific project under preparation. They may also assist users in establishing priorities among different adaptation options as part of the decision-making process. These tools, which are designed to incorporate various types of data and inputs from various stakeholders, may include social vulnerability information and rely less on 'expert advice'. 

The second group of climate risk screening tools refers to less formalized frameworks and procedures developed for screening projects and programmes or identifying policy priorities. These frameworks, which are typically developed by donor or public agencies and tailored to a specific decision-making process of the organization, tend to rely more on qualitative inputs and require expert advice. They may also incorporate climate science information. These screening processes can require more time to carry out compared with the computer-based tools. However, they may provide a more thorough analysis that is better tailored to the context-specific recommendations for climate risk reduction and adaptation. These climate risk frameworks for climate risks screening are illustrated by the World Bank methodology (Box C5.6). Specific checklists and procedures have been developed and can be applied to climate risk screening and identification of possible adaptation options for the agricultural investment projects.

Box  C4.6 The World Bank climate and disaster risk screening tool for agriculture projects 

The Climate and Disaster Risk Screening Tool for Agriculture Projects is designed to help World Bank staff and other development practitioners screen agricultural projects for risks from climate variability and change, as well as from geophysical disasters. It provides a systematic and transparent way of considering climate and disaster risks at the early concept stage of national policy and investment project development. The simple, self-placed tools provide step-by-step guidance to help users connect climate and disaster information to their planning or project components. 

As illustrated in the diagram below, the screening process requires users apply their expertise and knowledge through a four-stage framework.  When completed, these steps connect information on climate and geophysical hazard risks with the project team’s understanding of both the project’s sensitivity and the broader development context of the project location. The risks are highly dependent on the project's context and location. Rather than relying on automated processes, the tool enables users to apply their expertise and background to assess climate and disaster risks at the local level.The screening results will inform further consultations and dialogue, and help determine the appropriate level of effort for additional studies during project design and for policy and strategy work.



Other examples of climate change risk screening tools that have been developed by different organizations to rapidly assess the risks posed to a planned project due to natural hazards and climate change include:

For detailed guides and comparisons between different screening tools consult UNDP (2010) and Trerup et al. (2011).

Assessing the impacts of climate change on agriculture

The climate risks assessments and screening can take advantage of the wealth of the available climate information available for different locations at the national, regional and local levels. The tools described in this section can be used to provide basic data or methodologies for analysing the impacts of climate change on the agriculture sectors in a given project area. The World Bank's Climate-Smart Agriculture Country Profiles have been developed to provide a comparable baseline of the state of climate-smart agriculture at both the national and subnational levels. The Profiles are intended to inform and stimulate discussion about how climate-smart agriculture approaches can be incorporated into project designs and effectively scaled up through investments. The Climate-Smart Agriculture Country Profiles bridge a knowledge gap by providing clarity on climate-smart agriculture terminology, components, relevant issues, and how to contextualize it under country-specific conditions. 

A Climate-Smart Agriculture Profile covers the information needed to get a quick overview of the national context, the climate-smart agriculture interventions with the greatest potential, and opportunities and constraints for implementing climate-smart agriculture. The baseline includes an analysis of the agricultural, economic, institutional, policy, financial context, the climatic factors related to climate-smart agriculture, and opportunities and barriers to adoption of existing and promising practices and technologies. The target group is mostly decision-makers and donors, but also extends to practitioners and researchers. 

The climate-smart agriculture profiles were initiated in 2014 by International Center for Tropical Agriculture (CIAT), CATIE and CCAFS, with support by the World Bank. The initial project focused on seven countries in Latin America and the Caribbean. CIAT has since conducted additional profiles with support from the World Bank and USAID. Profiles have been completed for 18 countries (e.g. Ethiopia, Kenya, Mexico, Nicaragua, Rwanda, Sri Lanka, Uganda, and Uruguay) and for two states in Mexico. 

The Climate Wizard, which was developed by CIAT, CCAFS and the World Bank, allows users to access climate change information and visualize the climate impacts for different geographic areas.  The Climate Wizard provides a map presentation of historic as well as state-of-the- art projections of temperature and rainfall data. It can also provide climate analysis tailored to the needs of a specific decision-making process and metrics for interpreting climate risks for the specific sectors, including agriculture. These metrics include the agro-economic impacts of climate change, such as total precipitation, dry conditions, extreme hot and cold temperatures, and growing degree days. 

The MarkSim™ DSSAT weather file generator is a platform that helps users generate simulated daily weather data across the globe. It can deliver information about rainfall, maximum and minimum temperatures and solar radiation, and has been specifically designed for tropical countries. The tool can be used to generate daily data for multiple years that are characteristic of future climate for any point in the world. The tool generates climate information that can be used in agricultural climate impact models.

MOSAICC (Modelling System for Agricultural Impacts of Climate Change) is an initiative by FAO that integrates multidisciplinary models to capture different aspects of the impacts of climate change on agriculture.  A detailed description of the model system can be found in module C.10.

Identification and appraisal of climate-smart agriculture investment opportunities

The identification of appropriate climate-smart agriculture interventions as part of agricultural investment programmes and projects requires an examination of a wide range of available options and trade-offs at the implementation stage, from the farm level to national decision-making levels. There are a number of tools and methodologies that can be used to support the decision-making process for the appraisal and prioritization of climate-smart agriculture interventions in agricultural investment plans and projects. 

Comprehensive Africa Agriculture Development programme (CAADP), which is owned and led by African governments, was developed to help counties reach and sustain higher economic growth through agriculture-led development. To achieve these goals, National Agriculture and Food Security Investment Plans (NAFSIPs) have been prepared by a number of countries. These plans provide the opportunity to scale up of climate-smart agriculture practices that benefit national development, food security and climate change adaptation and mitigation. A summary of the methodological framework that has been developed for examining the potential of the NAFSIPs to generate climate change benefits is presented in Box C4.7.

Box C4.7  Identifying the potential for climate-smart agriculture investments in NAFSIPs 

FAO has developed a methodology for CAADP to identify the potential for climate-smart agriculture investments in CAADP countries. The methodology involves performing several tests on NAFSIPs:

  • The degree to which the planned investments are climate smart:  This test consists of screening each subprogramme of the NAFSIP on the potential contribution of the planned activities to climate adaptation and mitigation. The screening results are synthesized through an index describing the total potential climate benefits that may be obtained from the implementation of the investment plan.
  • Climate-smart agriculture investment priority areas:  The NAFSIPs are examined from the point of view of the resources allocated to investment areas that are considered strategic priorities for climate-smart agriculture including production, value chain chains, research and capacity building, infrastructure, institutional support and disaster risk management. The test also analyses if the NAFSIP contributes to NAPAs, which are in turn a prioritization mechanism to identify urgent and immediate national adaptation needs.
  • National policy environment for climate-smart agriculture investments: This test examines the consistency of the NAFSIP's climate-smart activities with policies and development strategies and plans in the agriculture sectors; the existing evidence of the successful scaling up of climate-smart agriculture practices; the strengths and weaknesses of the institutional capacity of the agricultural sectors with regard to implementation. The test is in fact a rapid qualitative assessment based on the expert analysis and judgment. The policy environment then is ranked from 'low' to 'high' based on the perceived notion if the existing policy environment is conducive to scaling up CSA interventions. 

The next step of the methodology is an in-depth investments analysis focusing on a preliminary estimation of the costs and benefits of promising climate-smart options; identification of financing  options, including climate finance; and preliminary planning of programme components and activities for early action. 

Source: FAO, 2012b

The Climate-Smart Agriculture Prioritization Framework, which was developed by CIAT and CCAFS, is designed to help decision-makers identify climate-smart agriculture investment portfolios that can achieve gains in food security, build farmers’ resilience to climate change, and lead to low-emission development of the agriculture sectors. The framework, which is a stakeholder-driven process, has four phases: the initial assessment of climate-smart agriculture options; the identification of the most suitable options through workshops; the calculation of cost and benefits of the most suitable options; and the development of a portfolio of options with an evaluation of the barriers to their adoption (see Figure C4.3). 

So far only a few initiatives that have used the Prioritization Framework have reached the implementation stage. The most complete experience with the application of the Prioritization Framework has been in Mali where it was used to provide evidence-based decision-support to identify climate-smart agriculture investment priorities. The 12 month-process, which involved around 30 decision-makers from the national government, district authorities, academia, international and national research institutions, non-governmental organizations and donors, led to the implementation of prioritized practices in research and development programmes and the request for support to mainstream climate-smart agriculture by the Ministry of Agriculture and the Parliament (Andrieu, 2017). The experience with Climate-smart Agriculture Prioritization Framework in Mali, as well as in Colombia and Guatemala, has demonstrated that it is critical for decision-makers, planners and implementers to gain a better understanding of approaches for achieving agricultural development in ways that takes into account productivity, resilience, and mitigation; and how progress in this area can be realized by scaling up successful climate-smart agriculture practices and integrating climate-smart agriculture priorities into ongoing agricultural programmes.

Figure C4.3.  Overview of different phases of the Climate-smart Agriculture Prioritization Framework

Source: Andrieu et al., 2017

Participatory prioritization of CSA investment interventions: SHARP

For developing effective CSA solutions to be mainstreamed into investment design and implementation, it is important to consider stakeholder priorities and get an idea of the options, costs and expected benefits of CSA adaptation measures at farm and community levels. This approach requires methodologies that are based on participatory appraisal methods and the Self-evaluation and Holistic Assessment of climate Resilience of farmers and Pastoralists (SHARP) tool developed jointly by FAO and external partners, may be recommended as one of them (FAO, 2015). Please see module C6

Economic appraisal of climate-smart agriculture solutions: impact on carbon balance

The EX-Ante Carbon-balance Tool (EX-ACT), developed by FAO, can be used for the economic analysis of agriculture investment projects to value the mitigation potential of investment options. For more detailed description please refer to module C8

The CCAFS Mitigation Options Tool (CCAFS-MOT) estimates greenhouse gas emissions from multiple crop and livestock management practices in different geographic regions. It gives policy-makers access to reliable information needed to make science-informed decisions about emissions reductions from agriculture. CCAFS-MOT combines several empirical models to estimate greenhouse gas emissions from different land uses and considers mitigation practices that are compatible with food production. In addition to the traditional greenhouse gas calculators available for calculating emissions from either single crops or whole farms, CCAFS-MOT also allows for a ranking of the most effective mitigation options for 34 different crops according to their mitigation potential and in relation to current management practices and spatially-linked climate and soil characteristics.

Monitoring and evaluation of investment implementation results

Monitoring and evaluation is an important part of managing the implementation of climate-smart agriculture investment projects. The monitoring and evaluation system needs to be designed and implemented to measure progress towards the achievement of the climate-smart agriculture’s three interlinked objectives. Activities include developing results frameworks, setting baselines, defining indicators, measuring progress on an ongoing basis and evaluating successes and setbacks. These activities provide crucial information for learning from the implementation of climate-smart agriculture interventions. There are a number of methodologies and tools that can be used for the monitoring and evaluation of climate-smart agriculture interventions, and they are discussed in detail in module C9 - programme and project monitoring and evaluation.