IFAD Promotes Climate ‘Smart’ Investments

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Agriculture is stepping up in the fight against climate change with help from the private sector as a new report from the International Fund for Agricultural Development (IFAD) has shown that investing in climate-resilient agriculture can attract sizeable contributions from the private sector.

The Business Advantage – Mobilising Private Sector Led Climate Actions in Agriculture, a study of IFAD investments through its Adaptation for Smallholder Agriculture Programme (ASAP), showed that for every dollar of ASAP investment, between US$0.77–2.85 was leveraged in private-sector investments – helping countries reach climate finance commitments scheduled under the Paris climate agreement.

“IFAD works with the private sector on adaptation investments that are both financially profitable and socially and environmentally sound,” said IFAD President Gilbert F. Houngbo.

“Many of these adaptation investments were deemed high risk by the private sector, but ASAP operates as a de-risking or insurance instrument to encourage business to invest in them.”

Previously, in Bhutan the private sector was wary of investing in small scale dairy farms due to product quality concerns. With IFAD investment leading the way, however, local farmers improved the quality of their milk and then partnered with a local dairy company to create an assured market. In the first year, the investment ($77,429) was close to 2.5 times the amount invested by IFAD. The company’s supply of milk was greatly improved while farmers reported their income from dairy sales increased by 54 to 170 per cent.