• Day 1: Tuesday, 19 December
  • Room: Nairobi 1 - 2

How to scale up climate finance for sustainable land use?

Financing sustainable landscapes, Food and livelihoods
Nairobi 1 - 2

There is a growing interest and talk to scale up private finance and investment for sustainable land use. Given that agriculture is the main driver of deforestation, a growing number of agricultural producers, processors, traders and consumer goods companies have commitments to decouple deforestation from production, particularly in the fields of palm oil and wood industries (beef and soy companies are lagging behind). However, despite these pledges and government efforts to reduce deforestation, the world continues to lose more than 7 million ha of tropical forests every year! This is putting into jeopardy international agreements on climate change (Paris climate agreement), deforestation (New York Declaration on Forests) and restoration (Bonn Challenge).

There are a number of barriers related to lack of inclusion of smallholders, weak land titles and forest governance, transparency and tracing commodities across the agricultural value chain that contributes to the status quo. Finance is another major barrier. Costs associated with transitioning to a different business model (e.g. from monoculture to agroforestry), increasing the repayment period to e.g. 10 years taking into account a ‘wait’ period of 3-5 years for some crops such as cocoa and palm oil, setting aside areas for reforestation or protection of high-conservation value and high carbon stock forests as well as involving smallholders with sometimes unclear land titles and limited ability to take on debt, is currently preventing the transition to sustainable land use management.

As a result, land-use related climate finance only accounts for 1-2% compared to investments in renewable energy. The main difference is that unlike energy efficiency and renewable energy, climate finance to reduce deforestation and forest degradation is almost solely driven by grant- related funding. If we are to also see a systemic shift towards climate smart agricultural production, decoupled from deforestation and restoration of degraded land, there will – at least initially – be a need for public finance in the form of junior subordinate debt, credit guarantees and grants to be blended with senior debt from commercial banks to (partly) or to ‘de-risk’ commercial debt or private equity investments thereby mitigating the costs and/or risks of transitioning towards sustainable land use that includes provisions for forest protection, restoration as well as the involvement of smallholders.

This session focuses on the key question how to unlock and scale up climate finance for sustainable land use, particularly from the private sector. What models work and can be scaled up? How can governments contribute to unlocking private capital? What safeguards need to be put in place to ensure environmental and social “additionality” is created? Hear first hand from leading experts in this field! The audience is invited to actively join the discussion to identify the best opportunities to scale up land use-related climate finance.