Agro-livestock Sector Adaptation to Climate Change and Variability. Colombia Corporación Andina de Fomento (CAF)

Transcription

1 Agro-livestock Sector Adaptation to Climate Change and Variability Colombia Corporación Andina de Fomento (CAF) 14 April 2016

2 GCF ACCELERATING DIRECT ACCESS APRIL, 2016 PROJECT / PROGRAMME IDEA NOTE GREEN CLIMATE FUND PAGE 1 OF 1 Please submit the completed form to fundingproposal@gcfund.org 1 Project / Programme Information Project / programme title Country (ies) / region Mitigation / adaptation focus Results areas Project Preparation Support CAF- Agro-livestock Sector Adaptation to Climate Change and Variability COLOMBIA Mitigation Adaptation Cross-cutting Forestry and land use Most vulnerable people and communities Health and well-being, and food and water security Ecosystems and ecosystem services Do you intend to seek project preparation funding for this project/programme? Yes No If you clicked Yes, please indicate when you plan to submit the funding request: 2016 Project / programme description (including objectives) The programme will aim at inducing the adoption of Climate Smart Agriculture (CSA) 2 in Latin America, through the strengthening of agriculture and livestock institutions for mitigating and adapting to climate change. The programme will help avoid economic losses resulting from climate change effects on agriculture and livestock production, increasing resilience to extreme weather and climate impacts. This will not only help to mitigate risks resulting in income generation and associated economic welfare, but also to reduce risks related to production and availability of staples in the markets, contributing to enhanced food and nutritional security. The programme arises as a solution to reduce the impacts of Climate Change and weather events on agricultural sector of Latin America. Latin American countries are most vulnerable to climate events due to their dependence on the agrolivestock sector. On average, losses in this sector can represent between USD 480 million and USD 2200 million, resulting from changes in the frequency and intensity of droughts, floods, rains and storms, raise or decrease of temperatures generated by events like El Niño and La Niña. Currently, extreme climate events have increased by a rate of about 2.4 times. The most relevant impacts generated by climate change in Latin America, include: - Losses in livestock sector through number and productivity - Losses in crops yields (corn, soy, rice, yucca, beans, potato, fruits, oil palm, etc.) - Displacement of crops such as coffee, cereals and grains - Reduced Poor crop Resilience - Decrease on water availability - Increase in land erosion - Decreases in top soil moisture - Increase in incidence of pests and diseases - Increased occurrence Unexpected fires - Reduction in crop cycles - Decrease of food and nutritional security - CO2 fertilization The CSA program will invest in 5 key areas to strengthen the agro-livestock sector s capacity to adapt to climate change and to increase efficiency in resource use for production systems in prioritised regions. The areas of investment are: 1 Please use the following naming convention for the file name: PI-[Your entity s name]-[date]-[serial number] (e.g. PI-GCF ). 2 According to FAO, CSA has 3 objectives: (i) sustainable increase agriculture productivity and incomes; (ii) adapt and build resilience to climate change; and (iii) reduce and/or remove GHG

3 1. Generation of agro-climatic forecasts and promoting their use as an adaptive alternative for the Colombian agricultural sector to climate variability. It will help in crop planning and livestock maintenance. This information is used to predict crop yields under different scenarios, planting dates, varieties, planting distances and handling. This information is delivered and analyzed by agricultural technicians in order to generate the most appropriate environmental recommendations for coming semesters. 2. New technological options (including genetic resources) for sustainable production. It represents mitigation measures by using cleaner technologies while reducing emissions. It aims to develop tolerant or resistant genetic material to climatic events. The goal is to provide appropriate technology for new climatic conditions.. 3. Productive gap filling through Site Specific Agriculture. It will increase resilience to climate change. It aims to identify the most limiting factors of agricultural production, for producers to focus on climate and operating variables that are actually limiting their production significantly. It intends to increase the competitiveness of each producer through gaps filling. This component requires input from soils research that is essential for adaptation and mitigation of climate change. With this information it is possible to scale in a technological level productive options. Information on soil conditions can define a better way of technological adaptations for each producer. Decision support using strategic foresight and ex-ante assessments to assist stakeholders in identifying and prioritizing CSA in economic and policy contexts. 4. Greenhouse gases quantification and reduction. It is important for the implementation of mitigation measures, as new technologies, in accordance of production goals. 5. Carbon and water footprint assessment. It will give information about the crop and technology efficiency and the use of natural resources. 6. Capacity building for associations and research centres to generate autonomy, including end-to-end engagement with all agricultural value chain participants in order to socialize CSA practices and the role of CSA for adaptation and mitigation. Expected results from the programme implementation include: - Reduce economic losses to farmers as a result of phenomena like El Niño and La Niña and other extreme weather events. Reduce losses at least by 30% in livestock sector. - Government savings generated due to the reduction in the losses of farmers (the need for government intervention is reduced through crop loss mitigation actions). It is a prevention commitment. - Increased competitiveness of the agricultural sector, applying simple and easily implementable measures to promote productive gaps filling. - Improved planning of the agricultural sector preventing that impacts from weather events affect the final price structure, creating climate resilient value chains. - Increased productivity due to the use of cleaner technologies, while reducing greenhouse gas emissions and contribute to reduction targets, promoting sustainable and green development. Initially the program will start in Colombia as a pilot, and later will be replicated in the following countries: - Peru - Argentina - Paraguay - Mexico - Chile - Bolivia The programme will be replicated in a contextually specific manner for each of the abovementioned countries. This will require an organizational and policy landscape review. Similarities and differences in the national context will be compared and the model will be individually adapted for each country. Importantly, whenever possible, processes and procedures will be developed against asset of standard principles in order to maximize interoperability among countries and to maximize collective action at a regional scale.

4 Alignment with GCF Criteria 3 Please provide a short summary of alignment of this project/programme with GCF s investment criteria 2 This project is fully in line with the GCF s focus of developing mechanisms whereby activities consistent with a low emission and an increased resilience pathway to have access to financial. Environmental and social assessments must be undertaken, and risk factors shall be identified for formulating mitigation actions. The Project shall follow GCF and CAF s procurement procedures. Moreover, they must comply with GCF s paradigm shift objectives and with GCF s outcomes, outputs, activities and inputs at the project level and have arrangements for monitoring, reporting and evaluation. Brief Rationale for GCF Involvement and Exit Strategy Please provide a short summary explaining why the GCF contribution is critical for the project/programme and how the project/programme sustainability will be ensured in the long run (after the project/programme is implemented with support from the GCF and other sources) Agricultural investments are large and risky, as there is high uncertainty and vulnerability to unexpected climate events. GCF fund will help to increase the adaptive capacity of farmers and ranchers and will ensure that new agricultural infrastructure, practices and knowledge is resilient to climate change, and helps mitigate GHG emissions. For instance, Colombia has suffered the consequences of climatic events, which have affected important agricultural fields in many parts of the country causing million losses. As Colombia plans to upgrade a large part of agro-livestock infrastructure, productivity and competitiveness, the Government has decided to incorporate the climate change dimension in the design and technical features. Not only should the new or rehabilitated fields/crops last longer they should also avoid and prevent climate related events so that not only the infrastructure itself gets more resilient, but also the communities that depend on such infrastructure for their food supplies, work, trade and health services. On the other hand, the GCF s participation will lead to a replicability and scalability of the project in other regions across the country, and in other countries of Latin America. In general, more resilient agricultural practices, as well as knowledge and building capacity will allow that the initiative will be replicated and to have a generational replacement. This program integrated capacity building in CSA practices with capacity building in governance associated with CSA. By emphasizing both the CSA outcomes themselves as well as how CSA is implemented, this effort serves to socialize a CSA mind-set as integral to all agriculture decisions. Data collected will include metrics and/or reports on governance, business climate, economic instruments, financial information, value chains, areas under CSA and management, project stakeholders, environmental and social outputs, knowledge generation and exchange, and state of execution and impact. The goal is to engage private sector to adopt CSA technologies on their own. Also, the intention of the program is to generate a pilot experience that can be replicated in the other Latin American countries considering their unique specificities and potential across agricultural, social, environmental, economical, and political dimensions. The replication effect at the private sector level is also expected in those other countries. Besides, in each country it is necessary to: - Have a constant review and reform (when necessary) of regulatory and fiscal policy to support a stable and conducive environment for private sector investment in CSA efforts in all participating countries; - Promote the participation of rural populations in CSA investments to share and simultaneously reduce the risk of all involved parties by providing land, organization, knowledge, labor capitals and safeguards (WRI, 2015). Increase awareness by policy makers of the public and fiscal policies that interfere with sustainable land use approaches and reform initiated. Financing/Cost Information Details on financing sources: FUNDING SOURCE AMOUNT FINANCIAL Tenor Pricing Seniority (USD) INSTRUMENT (Equity, loan, guarantee, grant) GCF financing 39,816,000 Loan ( ) years % Options 3 Annex Table 2 may provide useful guidance on investment criteria.

5 Co-financing from 60,830,000 Loan ( ) years % CAF Other 9,954,000 Grant ( ) years % TOTAL PROJECT FINANCING = Total project cost 110,600,000 Options Options GCF will provide a mix of concessional lending (0.25% as it is considered a public investment), and a technical assistance grant to CAF. CAF will Investments for the programme will be done in accordance of the following characteristics and conditions: Sovereign credits: 55% Concessional credits: 36% Technical cooperation: 9% About 76% of investment will be headed towards agro-climatic forecast and its implementation trough Big Data and genetic and technological improvement. About 18% will be invested in mitigation activities (GHG, Carbon and Water footprint assessment) and building capacities. The remaining percentage corresponds to monitoring and coordination activities. Annex Table 1. Results Areas Which of the following targeted results areas does the proposed project/programme address? Reduced emissions from: Energy access and power generation (E.g. on-grid, micro-grid or off-grid solar, wind, geothermal, etc.) Low emission transport (E.g. high-speed rail, rapid bus system, etc.) Buildings, cities, industries and appliances (E.g. new and retrofitted energy-efficient buildings, energy-efficient equipment for companies and supply chain management, etc.) Forestry and land use (E.g. forest conservation and management, agroforestry, agricultural irrigation, water treatment and management, etc.) Increased resilience of: Most vulnerable people and communities (E.g. mitigation of operational risk associated with climate change diversification of supply sources and supply chain management, relocation of manufacturing facilities and warehouses, etc.) Health and well-being, and food and water security (E.g. climate-resilient crops, efficient irrigation systems, etc.) Infrastructure and built environment (E.g. sea walls, resilient road networks, etc.) Ecosystems and ecosystem services (E.g. ecosystem conservation and management, ecotourism, etc.)

6 Table 2. Investment Criteria Guidance Notes The following guidance note may help to present the potential of the Project/Programme to achieve the Fund s six investment criteria. Specify the climate mitigation and/or adaptation impact. Provide specific values for the below indicators and any other relevant indicators and values, including those from the Fund s Performance Measurement Frameworks. The project will have a climate change mitigation and adaptation impact, both at a local and national level through the development of resilient agricultural infrastructure and through knowledge development and transfer in 7 Latin American countries. It will enhance livelihoods of the most vulnerable people, communities and regions across the countries. All of the above mentioned under the Fund s framework and objectives. In terms of GHG, Agriculture represents 19-29% of total GHG emissions. So, it is expected that reductions represent about 10% of GHG caused by agriculture in Latin America in the project lifetime. Moreover it is expected that agro-livestock losses due to extreme climate events are reduced by 10-30%. For instance, for Colombia this will contribute to the country to achieve the 20% commitment of national GHG reduction for D.1. Climate impact potential [Potential to achieve the GCF's objectives and results] Main benefits consistent with the GCF objectives are related to the avoided losses due to climate change in agriculture and livestock raising activities. The impact is on prices, affecting larger groups of population, as a response to scarcity. The impact at the micro level is directly to producers, which losses can seriously affect their ability to generate income and food supply for their families. As per mitigation, AFOLU is the largest source of emissions in Colombia, and land use change is perhaps one of the main drivers. Increasing productivity per hectare, and avoiding the need to expand the agriculture frontier in response to flooded or eroded areas can be important for helping mitigating climate change. This will be done by addressing indicators such as: - Total USD saved or enhanced - Total tonnes of CO2 eq to be avoided or reduced per annum from land use management - Increased resilience and enhanced livelihoods of most vulnerable people, communities and regions in terms of food security - Cost-effectiveness as USD saved in harvests per USD invested - Institutional feasibility: level of acceptance. - Carbon intensity of agriculture sector is reduced D.2. Paradigm shift potential [Potential to catalyze impact beyond a one-off project or programme investment] Strategic foresight approaches will be used to help policymakers understand both shortterm and long-term tradeoffs in investment decisions as well as potential food security impacts in different regions. Provide the estimates and details of the below and specify other relevant factors. Potential for scaling-up and replication (e.g. multiples of initial impact size) Potential for knowledge and learning Contribution to the creation of an enabling environment Contribution to the regulatory framework and policies Potential for scaling-up and replication This project will invest in the implementation of adaptation measures of the agrolivestock sector in prioritized areas in Colombia, Peru, Paraguay, Chile, Bolivia, Argentina and Mexico, starting in Colombia.

7 As the programme was already implemented in some regions of Colombia including Villavicencio, Yopal, Aguazul, Ibagué, Saldaña, Neiva, Aipe, Montería, Espinal, Ciénaga de oro, Buga, Espinal, Riohacha, Zona bananera y Dibulla, it is expected that the initiative could be scaled up in other regions and in the other countries based on the experience, lessons learned and similarities. Therefore, in order to scale-up and replicate initiatives (WRI, 2015) the project will adress: 1. Identify existing successes (projects that under the financial and technical structure have been carried out in a satisfactory way). Provide a solid foundation and evidence for scaling up, based on improved understanding of the scale and impacts. 2. Support peer-to-peer learning and the development of community based institutions. 3. Address policy and legal issues to enable conditions for the development of similar projects (analyze barriers and adapt more conducive policies, legislations and other development interventions) 4. Develop and implement a communication strategy (inform stakeholders and disseminate information about experiences, impacts and value chains) 5. Develop and strengthen agricultural value chains (by focusing on value chains farmers will be capable of capitalizing their role in the market, promoting the scale-up of CSA projects). 6. Expand research activities (increase support for action research, may help filling gaps in knowledge needed to refine and improve the effectiveness of scaling strategies and benefits) and strengthening national and local capacities. 7. Promote structured decision-making and implementations using clear rationale and impact-orientation. Reducing both financial and technical barriers comes as a second instance, where risk perception is lower as pilot programs are promoted by national or local governments, experience is gained through the development of projects and due to technical, technological and scientific advances that led to a massive adoption of CSA, learning from experiences and adapting them to actual necessities and conditions. Potential for knowledge and learning: The project has the capacity and potential to create the necessary knowledge to build new agricultural and livestock raising technological capacities, empowering producers to launching similar projects on their own. It is important to point out the ability of measuring climate change related indicators, resulting from reduced losses in production and farmers trained in best practices, having greater production capacity and improved social and economic capacity of beneficiaries. It is important to generate learning material and knowledge management channels. Nonetheless, the Programme will rely on the ability of the local executing agencies to promote with relevant stakeholders the potential offered by the program to foster sustainable development while attaining climate change objectives. Specifically, the Technical Assistance and Learning Facility to be financed by the Program will be used to disseminate successful experiences, and to show how to participate and make better use of this financial opportunity. Contribution to the regulatory framework and policies: The establishment of a CSA program that involves an adaptation and mitigation strategy to climate change towards alleviation of food insecurity represents an innovative government policy, which includes new guidelines and standards. By replicating this project in related projects, there will be a shift in the government policy towards climate change adaptation and mitigation. Foresight approaches will provide

8 policymakers key information for understanding potential positive impacts and will help lead to improved policy integration and long-term success. Provide the estimates of economic, social and environmental co-benefits. Examples include the following: Economic co-benefits Social co-benefits Environmental co-benefits Gender-sensitive development impact Economic co-benefits Through the establishment of improved agricultural and livestock technology, it is expected that income increases, especially at local level, with impacts on economic development and poverty alleviation. Food security will be enhanced while reducing government investment. Also, avoided losses will mean lower costs for Government and lower insurance premium tolls. As productivity increases farmers will have higher incomes, improving livelihoods. The programme may help to increase the value of farmer activities and products through value chains linking them to possible markets. With building capacities, better trained farmers will generate greater job opportunities for them. Increasing returns to labor, returns to capital inputs, and returns to environmental inputs will increase sustainability. D.3. Sustainable development potential [Potential to provide wider development co-benefits] The implementation of CSA will provide economic development to both the population living in the project areas and the country s population. Local economies will then have the opportunity to thrive, thus creating better conditions to its inhabitants. Social co-benefits Cultural practices will be combined with new technologies. The project will influence the food security situation by increasing food availability, improving access and quality. In the case of natural disasters, the affected regions are to be less vulnerable and may ensure food provision. As population is less vulnerable to climate change and to extreme climate events health and safety are to increase. Environmental co-benefits Environmental co-benefits include: - Improvement of soil quality: sustainable practices can increase organic matter in soil, improve rainfall infiltration and retention, and increase nutrient retention while reducing soil erosion. - GHG emissions and capture: A shift to sustainable land management practices would promote lasting reduction in land-use-related emissions. - Improved water quality due to runoffs with less or without chemical fertilizers. Besides, CSA has the potential to improve a segment of the hydrological cycle, as vegetation cover regulates the flow and purification of water. - Biodiversity conservation: the potential improvement and/or conservation of habitats (as the agriculture frontier can be put to a hold through the program), multiple species will be able to thrive in the area of focus. The resulting greater biodiversity is valuable for climate and pest resilience and may be of use as a source of raw materials for the pharmaceutical industry. Reducing the carbon and water footprint will help save valuable resources related to water supply, and water treatment, energy, and land use change

9 Describe the scale and intensity of vulnerability of the country and beneficiary groups and elaborate how the project/programme addresses the issues. Examples of the issues include the following: Level of exposure to climate risks for beneficiary country and groups Does the country have a fiscal or balance of payment gap that prevents from addressing the needs? Does the local capital market lack depth or history? Needs for strengthening institutions and implementation capacity D.4. Needs of recipient [Vulnerability to climate change and financing needs of the recipients] Colombia is a tropical country characterized by a geography with unique regions. This geography provides the country with multiple benefits and characteristics in different aspects. At the same time, Colombia has high vulnerability to extreme climate events. Latest climate change scenarios predict a rise in temperature averaging 2 to 4 Celsius degrees by 2070, along with modified hydrological conditions with rainfall reductions up to 30% in certain areas. Most people live in the Andean mountainous areas, subject to density pressure, drought and erosion, and on the flooding coastal plains. Climate related events have become common, passing from droughts to floods with no respite. In general, Latin American countries are all exposed to similar weather conditions and are relatively equally exposed to climate change and extreme climate events. For example, countries like Argentina and Bolivia are highly exposed to floods; Peru and Bolivia are exposed to winter frosts, Colombia and Peru to droughts. The region is highly exposed to La Niña and El Niño. The risk of occurrence of these events has also an impact on economic development for the country because of the importance of trade in the economy. In Colombia losses sum up to million USD from which the 7% corresponds to the agricultural sector (BID & CEPAL, 2012) On the other hand, the investment necessary to develop a resilient and sustainable infrastructure system is very high, and the government cannot solely assume it. It is then necessary to co-finance the project with different investors. The new and resilient infrastructure project will mitigate the exposure to climate risks to the country, as well as people surrounding its areas of influence. Provide details of the below and specify other relevant factors. Coherence and alignment with the country s national climate strategy and priorities in mitigation or adaptation Brief description of executing entities (e.g. local developers, partners and service providers) along with the roles they will play Stakeholder engagement process and feedback received from civil society organizations and other relevant stakeholders D.5. Country ownership [Beneficiary country ownership of project or programme and capacity to implement the proposed activities] Coherence and alignment with the country s national climate strategy and priorities in mitigation or adaptation: In Colombia, the Government is aware on the challenges posed by climate change and the need for adaptation and mitigation, and sustainability. The country is becoming more aware of the importance of actions related to mitigation and adaptation. The National Development Plan expressed the government s development vision for the years to come, which includes adaptation and mitigation actions to face climate change. These components were integrated into the National Development Plan , which intends to reduce vulnerability on the rural area, increase adaptation to climate change and other environmental phenomena based on ecosystem services and to provide a natural upstanding environment. Additionally, it establishes the necessity to develop mitigation and adaptation plans for productive systems on prioritized regions. Moreover, sectorial action plans are being developed. The Ministry of Agriculture and Rural Development implements monitoring actions over climate change impacts in the sector as it promotes different initiatives to increase sustainability and resilience of the sector.

10 Mitigation actions include Driving flows (pipes), Erosion control on slopes and unstable slopes, Control and sediment trapping, Channel stabilization, hazardous and waste management, non structural measures, protection of biodiversity, actions focused on soil degradation and pollution, allocations to productive soils, among others (BID&CEPAL, 2012) Brief description of executing entities along with the roles they will play: The following are the institutions involved in the development of the programme. Similar institutions will take roles in other countries. The Development Bank of Latin America (CAF) promotes a sustainable development model through credit operations, non-reimbursable resources, and support in the technical and financial structuring of projects in the public and private sectors of Latin America. It is owned by 19 countries (including Spain and Portugal) and by 14 private banks in the region. CAF offers loans, financial consultancy, partial guarantees, structured financing, guarantees and collaterals, credit lines and technical cooperation, among others. In this project, CAF will provide all the information and management necessary to fulfill the objectives. Additionally, CAF will finance and channel additional resources, will be in charge of the financing of the contributions of the nation, using GCF contributions both by concessional and technical cooperation, monitoring and reporting loan to the nation and reporting and monitoring of resources catalyzed from GCF. Ministry of Agriculture and Rural Development is the Colombian institution leader in the design, management and coordination of agricultural, fisheries, forestry and rural social development, which foster harmonization with macroeconomic policy and a decentralized, participatory implementation and concerted political entity. MADR will be in charge of ratifying the interest and need for the program in the country, the definition of crops to work and thematic areas, managing the support of national entities for international funding in the project at the country level (DNP and Ministry of Finance) and contribution of resources. CIAT, the International Center for Tropical Agriculture, work on decision and policy analysis harnesses the power of information to influence decisions about issues such as climate change, linking farmers to markets, research impact assessment, and gender equity. CIAT will provide technical and scientific support, it will be the technical and administrative Leader of the agreement and it will be in charge of the technical and operational coordination, research, analysis and training. Responsible for delivering results and products. Guilds / partners / research centers, are the regional presence that join with producers, are in charge of technology transfer and dissemination of results to enhance project benefits in the individual producer level. In coordination with CIAT, they will carry out the execution of field activities, develop joint analysis with CIAT. They will contribute with resources and empowerment methodologies, analysis and results through a process of capacity building. Each guild has different technical, financial and administrative capacities; therefore, the strategy must be differentiated and negotiated with each union according to their circumstances. The unions are responsible for the process of transferring technology to producers. Ministry of Environment and Sustainable Development is governing body of the environmental sector and represent the interests and goals of Colombia in relation to climate change. They will be in charge of articulating the program to the country's goals in terms of adaptation and mitigation of climate change (INDC - Colombia)

11 National Planning Department is the Colombian focal point of the Green Climate Fund (GCF) is responsible of giving approval or no objection to the program so it can be introduced to the GCF. Provide details of the below and specify other relevant factors (i.e. debt service coverage ratio), if available. D.6. Effectiveness and efficiency [Economic and financial soundness and effectiveness of the proposed activities] Estimated cost per t CO2 eq (total investment cost/expected lifetime emission reductions) Co-financing ratio (total amount of the Fund s investment as percentage of project) Economic and financial rate of return - With the Fund s support - Without the Fund s support Cost Effectiveness TBD Associated with loss savings, CO2 emission reductions, major productivity and less vulnerability. Economic and financial return to be determined from actual expected revenues. Co-financing is USD