Climate Smart Agriculture Sourcebook

Financing and investment

Enabling Frameworks


This module considers several aspects of investing in climate-smart agriculture. The first section, which provides the economic rationale for investing in climate smart solutions, notes that, while the cost of climate change adaptation and mitigation is high, the cost-benefit balances of investments in climate smart agriculture are overwhelmingly positive. The second section focuses on the financing needs for making the transition to climate-smart agriculture and provides an overview of the available financing sources. Specific focus is placed on the need to mainstream climate-smart agriculture considerations into national budgets, and the importance of leveraging additional resources, particularly, domestic and foreign private capital to scale up climate-smart agriculture. The third section delves deeper into mainstreaming climate-smart agriculture into broader agricultural investment strategies, covering topics such as climate-smart agriculture in national climate action planning and programming, and approaches and tools for incorporating climate-smart agriculture into agriculture investment decisions.

Key messages

  • Climate-smart interventions in agriculture require substantial investments and innovative types of financing to support the transformational changes that are needed to maintain or increase agricultural productivity while using less resources, and build the resilience of vulnerable farming communities to the impacts of climate change while also reducing or removing greenhouse gas emissions.
  • Although the cost of climate change adaptation is high, evidence indicates that the cost-benefit balances of investments in climate-smart agriculture are overwhelmingly positive, with the major benefits achieved through sustainable increases in yields, improved livelihoods and greater food security among the rural poor.
  • The current levels of financing for climate change adaptation and mitigation in the agricultural sectors are not sufficient.
  • Global climate finance in agriculture can play a crucial catalytic role by encouraging the mainstreaming of climate change considerations into national sustainable development and sector plans and programmes; removing the barriers for adoption of new technologies and private sector investment; and developing an enabling environment conducive for scaling up for climate-smart agriculture.