Incentives to Mitigate Climate Change

In a new policy brief published in August 2012, the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS)summarizes the outcomes from a FAO–CCAFS expert workshop on Smallholder Mitigation: Mitigation Options and Incentive Mechanisms held in Rome in July 2011. The brief deals not only with ways in which smallholders can reduce greenhouse gas emissions originating from their farms but also the incentives needed if they are to adopt such practices.

74% of agricultural greenhouse gas emissions originate in low and middle income countries where much of the workforce is comprised of smallholder farmers. Yet there are few systems in place in many of these countries in which farmers can receive a direct payment for their mitigation activities. For many smallholder farmers their priorities may be to feed their family and increase their income and security rather than mitigating climate change, which mean mitigation activities, must serve multiple goals without jeopardising the farmers own needs if they are to be adopted.

As One Billion Hungry states it is important to minimise trade-offs, in this case between reducing emissions without reducing productivity. According to the brief there are several financial and non-financial incentives which could be employed to increase adoption of mitigation activities. These include:

(i)            Improved farm production, efficiency or adaptability to climate change;

(ii)           Income and other benefits from selling offsets in the carbon market or payments for ecosystem services (PES) schemes;

(iii)           Increased prices for sustainable, low climate impact products;

(iv)         Improved opportunities to attract investment; and

(v)          Better alignment with values and social norms.

There do exist mitigation activities that have co-benefits. For example, conservation farming, discussed in Chapter 13, has resulted in increases in yields due to improved soil fertility while also reducing carbon losses from the soil. But as with all new technologies there is a cost to implement them, one that can de-motivate a farmer from taking on a new risk. As an example, the cost of establishing agroforestry systems in Sumatra is $1159 per hectare per year.  Access to microfinance and climate finance is an important barrier to overcome if smallholders are to adopt new practices.

The brief also discusses the current and potential role of carbon markets in providing farmers with incentives to mitigate emissions. While only at an early stage in their development the brief highlights four factors that have so far hindered their progress: limited markets, low returns to farmers, hidden costs and the need for advance funding. Another potential tool currently in development are Nationally Appropriate Mitigation Activities, which are commitments made by developing countries, submitted to the UNFCCC and used as a tool for securing international climate financing.

This mix of tools to incentivise mitigation activities is important to cover a diversity of farmers and farming systems. Mitigation is one goal of sustainable agriculture and as such should be integrated into wider agricultural development programmes and policies. As the paper concludes, “mitigation incentives are thus best built into more comprehensive agricultural strategies that support enhanced productivity and food security with practices that also contribute to mitigation and adaptation to climate change.”

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