FINANCING CHALLENGES

Scaling up financing for sustainable land management initiatives is one of the key issues facing policy makes, practioners and land users alike. As the discussion of the last few days demonstrates, the benefits of SLM are increasinlgy well understood. Unlocking this potential however with appropriate financing remains a challenge, despite the good progress of initiatives like TerrAfrica. Over the next few days Mohamed Bakarr and Ephraim Nkonya will pick up this discussion.

The financing of SLM initiatives has always been a challenge.

The debates around the traditional routes for financial flows within countries and across borders are well known – proponents and providers each with their own valid reasons for sourcing or controlling ever-thinner slices of a relatively small pie.

We may have to accept that, although important, the donor dollar will always be a weak process – a little like spray irrigation, not enough of the good stuff soaks into the ground.

The great opportunity for SLM is that this may all change. Climate change brings with it carbon finance and with that the notion that other environmental services could be financial vehicles. The land makes money over and above the products it produces.

We could see carbon, water, biodiversity, even nutrient replenishment as tradable stocks and a big part of the asset value of land.

The question is how will it change and what mechanisms and institutions will need to emerge to access and channel funding to SLM initiatives? This is unknown, although many people, including some of the expert contributors to this debate, are starting to make it happen.

So, do we see climate change as an opportunity or a threat? That surely is one for the financial minds… or is it?

Mark

I believe there is now real consensus to invest in sustainable land management (SLM) as a means of combating land degradation in the context of food security, and in the face of global climate change.

Clearly, any financing discussion must start with the fact that it is not a simple matter of lack of funding.

Land is an asset worth investing in at all levels. SLM is a development priority because it underpins agriculture (food and fiber crops), rangeland management (livestock), and forest landscape management (wood and fuel) and improved the value and longevity of this asset. Viewed in this way, SLM is the foundation for natural resource uses that drive much of the rural economy in developing countries.

So financing SLM should be considered a genuine economic and development agenda by all countries. But how can we make it happen?

First, governments must create the enabling environment and climate for diversity of investment in SLM. Incentives and opportunities for SLM cannot be harnessed if existing policies or investment climates are not conducive. For example, insecure land tenure has been shown to serve as a major impediment to SLM.

Simple solutions such as empowering local land users with secure tenure, will create incentives for SLM because they will focus on interventions with great potential for long-term sustainability. It is therefore essential that developing countries increasingly facilitate such enabling environments if the growing prospect of funding for climate change mitigation and adaptation is to effectively tapped.

Second, financing for SLM should come from a diversified range of sources, including reflows from production practices. This means harnessing opportunities across a range of sectors, especially those that depend on ecosystem service flows.

Payments for ecosystem services such as hydrological flows and carbon sequestration are being tapped in different parts of the world to foster prudent and judicious use of production landscapes. Much more needs to be done to develop and institutionalize such options.

Third, global financing mechanisms such as the Global Environment Facility (GEF) should be strengthened to play a crucial role in fostering SLM by leveraging mainstream development funding. The GEF as a financing mechanism of multi-lateral environmental agreements has the comparative advantage of financing incremental costs to generate global environmental benefits from mainstream development projects. For example, GEF financing for SLM helps to increase resiliency of agriculture and rangeland systems by emphasizing innovations to maintain or improve ecosystem service flows.

The UNCCD and its 10-Year Strategy offers an exciting global policy backdrop to explore these options by both developed country and affected country partners.

And now is the time to take full advantage of the opportunity before it is too late!

My name is Ephraim Nkonya from IFPRI. Regarding financing of SLM and climate change adaptation and mitigation, the discussion in Buenos Aires pointed to the need for partnership between developing and developed countries in financing SLM and climate change adaptation and mitigation. My major concern is on the limited participation of SSA countries in the carbon market, which has largely been due to the miriad of constraints facing the region. Sarah can say more about this.

I think there is a need of raising the SLM profile in the region by informing the policy makers of the large losses that SSA economies suffer through land degradation and therefore the need to invest more in SLM. Current public investment in soil fertility management has been largely on fertilizer subsidy. Investment in organic soil fertility management – such as agroforestry, soil erosion control, etc have largely been funded by donors. This is where there is need to raise the profile of SLM to get policy makers attention. This will definitely pay dividends if SSA countries start investing in promoting organic soil fertility management rather than the current focus on fertilizer subsidy. Doing so will be more effective in adaptation to climate change, and raise the profile for participating in the carbon market.