The Asset, 28 Nov 2019
Leveraging climate finance to scale climate-smart rice production will unlock financing for sustainable rice value chains.
LEVERAGING climate finance to scale climate-smart rice production is the cornerstone of global food security and urgently needed to avert civil unrest, a new report by Earth Security Group (ESG) has found.
Proposing three innovative finance solutions to support sustainable rice production in line with the Paris Agreement climate targets, Financing Sustainable Rice for a Secure Future ispublished November 27 by ESG, with support of the UN Capital Development Fund (UNCDF), the Sustainable Rice Platform (SRP), the food and agribusiness company Phoenix, the World Business Council for Sustainable Development (WBCSD), and the Swiss Agency for Development and Cooperation (SDC).
These three innovative finance solutions include a ‘rice bond’ to finance sustainable rice value chains taking advantage of 2020 being a key year for the growth of green bonds in the agriculture sector, as highlighted by the Climate Bonds Initiative. A rice bond would enable a global rice processor, trader, or retailer to provide farmers with capital to transition to sustainable production, improve farming practices, increase yields and revenue, and become more resilient to climate risks.
“Sustainable rice has the potential to improve lives and livelihoods in many of the world’s poorest countries and we are pioneering new financing vehicles that will help attract private sector capital to support SDG and climate-positive investments, particularly for those countries most in need,” says Esther Pan Sloane, head of Partnerships, Policy and Communication, UN Capital Development Fund (UNCDF).
Coming ahead of the 2019 United Nations Climate Change Conference (COP 25) in Madrid, ESG recommends leveraging international climate finance to attract private sector investment for climate-smart rice production. Country pledges that include rice in their Nationally Determined Contributions (NDCs) would be the first place to start. At present, forty-eight countries include in their NDCs the commitment to reduce greenhouse gas (GHG) emissions from rice paddies but have not yet outlined how they plan to incentivize the private sector to achieve these targets.
Gaurav Dhawan, executive chairman, Phoenix, adds that "Building sustainable food systems will require leading global companies that help to scale a new way of growing crops: increasing food security and farmer livelihoods while decreasing agriculture's resource footprint. Phoenix is working actively with partners to realize the commercialization of climate-smart, gender-inclusive rice production globally.”
Rice is vital to the food security of over half the world’s population (3.5 billion), with Asia accounting for 90% of global rice consumption. In lower-income countries such as Bangladesh, Cambodia and Vietnam, up to 70% of people’s dietary energy comes from rice. The commodity is the source of 10% of global anthropogenic methane emissions. In Southeast Asia – the world’s rice bowl – rice cultivation accounts for up to 25-33% of the region’s methane emissions, and between 10-20% of its overall GHG emissions.
“Rice is critical to global food security; however, it has been largely overlooked as an investment opportunity. Our tools, metrics and guidance can help governments and supply chain actors drive adoption of proven climate-smart best practices,” explains Wyn Ellis, executive director, Sustainable Rice Platform (SRP). “Through our partnership with ESG, we are developing innovative financial mechanisms that will catalyze wide-scale adoption among the world’s 144 million rice smallholders and achieve sector transformation contributing to the SDGs and climate targets.”
Under a business-as-usual scenario, the Intergovernmental Panel on Climate Change (IPCC) anticipates that rice production will fall across the world. Asia will be particularly hard hit due to a convergence of land degradation, climate change, and water scarcity.
“The failure of global food systems due to climate change is one of the biggest security challenges we face. A radical overhaul of existing rice production systems is needed in Asia – the epicentre of global rice production and consumption – as well as Africa, which is now also increasingly dependent on rice imports to ensure food security,” says Alejandro Litovsky, CEO of Earth Security Group. “Our report is a call to action for global impact investors to put ‘climate-smart’ rice farming practices at the centre of their impact investment strategies and for governments to use climate finance to attract private investment towards more resilient agriculture systems.”
Larger rice-producing countries such as India and China, with extensive territories that cover a range of climatic zones, will have more space to shift rice cultivation to cooler areas that will become suitable for growing rice. However, smaller producers and importers in the tropical belt, such as countries in Southeast Asia and West Africa, lack such flexibility to adapt.
“Mobilizing innovative finance—such as a 'rice bond'—to support the sustainable transformation of rice-based landscapes is vital for productivity, livelihoods, climate and nature. By collaborating with Earth Security Group and driving action through the Sustainable Rice Landscapes Initiative, WBCSD is bringing business and finance to scale action for healthy people and a healthy planet,”adds Tony Siantonas, director, Sustainable Landscapes, World Business Council for Sustainable Development (WBCSD).