Photo: Glenneis Kriel
A stark divide currently exists between climate finance aimed at mitigation (aimed at reducing greenhouse gas emissions), and adaptation (aimed at adjusting to the changing climate).
Hayden Aldredge, senior manager at ISF Advisors, US, pointed out that only 5% of global climate finance currently went towards adaptation, whereas the rest was spent on mitigation solutions.
What is more, only 5% to 10% of climate adaptation finance for smallholder farmers and small to medium agri enterprises in Africa came from the private sector.
Aldredge said there was a big business case to have more private funding flowing towards these entities in Africa. “The cost to annually address climate risks is estimated at around US$15 billion (about R270 billion), whereas the cost of not addressing it is about US$200 billion (R3,6 trillion).”
He identified “perceived risks”, the “hyper localised nature of adaptation” and a lack of understanding as some of the biggest obstacles to adaptation finance, which could be overcome by providing private investors, capital providers, lenders, and commercial banks with more data from lenders.
Along with this there is also “real risk”, as agriculture after all is a risky business. Aldredge said that risks for especially commercial banks, which are a fundamental channel of finance in the agriculture sector, could be lowered by having remote sensing and analytic companies plug into these banks’ risk evaluation systems to help them with more information and data to make better-informed lending decisions.
Digital and market platforms could also be harnessed to enable farmers in regions that had been adversely affected by climate-related events to build a history of transactions to alleviate perceived risks.
Data-driven tools, such as index insurance, which is triggered when a specific threshold is reached, like lower or higher rainfall, and digital training tools to teach farmers ways to improve their climate resilience will also help to reduce these risks.
Adithi Rooplall, general manager of ESG at Foskor Mines in South Africa, said the divide in climate adaptation and mitigation strategies were also seen on a company level, with most companies focusing on climate mitigation but paying little attention to adaptation.
She said a commitment to climate adaptation and mitigation could be built into a company’s climate change policy or be used as leverage to show their commitment to climate change in their economic, sustainable and governance (ESG) strategies.
Rooplall explained that this could entail assistance to smallholder farmers through, for example, equipment to improve their efficiencies and resilience, assistance with connectivity or skilling; and training on climate-smart practices.
Companies may also conduct climate change modelling to identify hazards, such as high or low rainfall and so forth, to their businesses, with this information shared on their websites weekly. Roopal said that smallholder farmers would then be able to access the reports on the websites and incorporate the information into their agricultural practices.
Stephen Walker, managing director of Ground to Tap Water Solutions in South Africa, said a dramatic shift was needed to derisk water availability in Africa. This could start by securing water supplies, through dams and rivers, using technology to manage boreholes and aquifers more efficiently, and the use of water treatment solutions.
Water use efficiencies can then also be improved using drip irrigation or more efficient irrigation solutions, and the use of weather predictions, remote sensing, and soil monitoring solutions to improve water use efficiencies.
Along with this, farmers also need to embrace new planting technologies, and ensure they plant the right crops and varieties in the right place.
The cleaning of water for recycling is also important, especially in aquaponics and greenhouse production systems, to reduce the water footprint of these systems.
Walker said investments in water solutions might not improve the future earnings of a company, but it would increase the value of a business by reducing water-related risks.
