Action

Unlocking finance for land-use mitigation and adaptation

The EU REDD Facility, Climate Policy Initiative and Climate Focus studied ways to shift investment in agriculture, forestry and other land uses towards practices to mitigate and adapt to climate change.

The study identified financing opportunities and developed tools to support public sector financing for mitigation and adaptation strategies to lower emissions.

Key facts

The objective

The objective of the study was to develop an understanding of financing flows in agriculture, forestry and other land uses. Such an understanding helps identify ways to redirect public and private investment from business-as-usual towards practices to mitigate and adapt to climate change. The study examined land-use mitigation and adaptation interventions, and opportunities for governments to scale-up investment in mitigation and adaptation strategies. The study presents opportunities for governments, international donors, private investors and businesses to finance mitigation and adaptation in agriculture, forestry and other land uses and to coordinate their efforts. 

The challenge

Agriculture, forestry and other land uses account for around a quarter of global greenhouse gas emissions. In many countries, the proportion of emissions from land use is far higher. At the same time, these sectors are very vulnerable to the impacts of climate change. There are opportunities to redirect the hundreds of billions spent annually on land-use activities around the world towards low emissions without sacrificing either productivity or economic development. Low and middle-income countries and their development partners, businesses and investors urgently need to identify the changes in public support that can help to scale-up private sector investment in land-use mitigation and adaptation.

The amount invested each year in land-use mitigation and adaptation is a fraction of total investment in agriculture, forestry and other land uses. Estimates of investment in land-use mitigation and adaptation range widely, from USD1.3 billion to USD51.8 billion. Total investment in agriculture and forestry in developing countries alone amounts to hundreds of billions of dollars. Most investments do not mitigate climate change or help adapt to its effects. In some cases, investments may increase emissions or exacerbate climate vulnerability. Much of the investment in land use, spurred by significant public subsidies and incentives, is by domestic private investors.

Limited understanding of the drivers and nature of investment in land-use inhibits efficient, effective public interventions. In many cases, we know little about how much investors channel to the land-use sector, how they deliver funds, what funds pay for and who spends funds. Nor do we understand the share of investment in low emissions compared to business-as-usual land-use activities or the opportunities that may exist to address barriers, or create incentives to shift land-use activities towards low emissions. The study developed three tools to address these issues.

The approach

The study approach was to examine ways to shift investment in agriculture, forestry and other land uses towards practices to mitigate and adapt to climate change, to identify financing opportunities and to develop tools for governments and development partners. The tools:

  • Inform the design of multilateral and bilateral strategies to reduce land-use emissions
  • Identify domestic and international financial instruments to redirect public and private finance towards low-emissions land-use
  • Encourage coordination of public financing instruments across land-use sectors

Much of the investment in land use, spurred by significant public subsidies and incentives, is by domestic private investors.

Results and impact

Results

  • A tool to describe the landscape of land-use finance. This tool enables countries and development partners to capture a snapshot of public and private land-use finance flowing to low-emissions and business-as-usual activities. The snapshot provides an understanding of the amount and types of financial flows, and the key actors and activities. The tool helps identify channels, gaps and blocks in financial flows.
  • A tool to analyse financial viability gaps. This tool explores the financial viability of climate-change mitigation and adaptation activities. With this tool, users can analyse potential barriers to low-emissions activities (risk, information, capacity, financial gaps) and identify entry points for public and private investment. The tool provides information for designing public incentives to unlock investment in mitigation and adaptation.
  • A tool to map public investment. This tool provides a framework for tracking public financial instruments for climate-change mitigation and adaptation in a given country, jurisdiction or sector. The framework identifies instruments that target business-as-usual or low-emissions land-use activities. The tool enables governments to assess the coherence and consistency of financial policies and instruments, including those supported by development partners, and the extent to which they support low-emissions land use.

Impact

  • The tools help governments, donors and private investors to identify entry points for delivering finance in ways that maximise domestic and private sources of investment by improving coordination across sectors, technologies and geographies
  • These tools will be tested in a few countries in the next coming months.

Project resources

We will add reports, tools and policy briefs developed by the project to this list as they become available:

Full report: Three Tools to Unlock Finance for Land-Use Mitigation and Adaptation 

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Executive summary: Three Tools to Unlock Finance for Land-Use 

Download 

Résumé exécutif: Trois outils pour rediriger les financements vers une utilisation durable des sols 

Download

Resumen ejecutivo: Tres herramientas para fomentar el financiamiento de usos sostenibles de la tierra 

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Sumário Executivo: Três Ferramentas Para Destravar o Financiamento para Mitigação e Adaptação do Uso da Terra 

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Ringkasan eksekutif: Tiga Perangkat Analisis untuk Pembiayaan Mitigasi dan Adaptasi di Sektor Tata Guna Lahan 

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Presentation: Climate finance for forests in the context of the broader land-use finance architecture, Angela Falconer, Climate Policy Initiative

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Presentation: Unlocking finance for land-use mitigation and adaptation, Charlie Parker, Climate Focus

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Presentation: Unlocking finance for land-use mitigation and adaptation, Adeline Dontenville, EU REDD Facility

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Graphic library

 

Tool 1: Landscape of land-use finance

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Source: Climate Policy Initiative

 

 

Tool 2: Financial viability gap analysis

Download

Source: Climate Policy Initiative

 

 

Tool 3: Public finance mapping

Download

Source: Climate Policy Initiative

 

Landscape of land-use climate finance 2014

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Source: Climate Policy Initiative

 

About the authors

Adeline Dontenville EU REDD Facility

Contact:  adeline.dontenville@efi.int