climate change and developing country agriculture

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Climate Change and Developing

Country Agriculture:

An Overview of Expected Impacts,

Adaptation and Mitigation Challenges,

and Funding Requirements

By Jodie Keane,Overseas Development Institute

Sheila Page,Overseas Development Institute

Alpha Kergna,Institut d’Economie Rurale (IER)

Jane Kennan,Overseas Development Institute

December 2009.

ICTSD

International Centre for Trade

and Sustainable Development

Issue Brie No. 2

ICSD-IPC Platorm on Climate Change, Agriculture and rade



Climate Change and Developing Country Agriculture: An Overview o Expected Impacts, Adaptation and Mitigation Challenges, and Funding Requirements

ICTSDInternational Centre for Trade

and Sustainable Development

By Jodie Keane, Overseas Development Institute Sheila Page, Overseas Development Institute Alpha Kergna, Institut d’Economie Rurale (IER) Jane Kennan, Overseas Development Institute

Climate Change andDeveloping Country Agriculture: An Overview o Expected Impacts, Adaptation and Mitigation Challenges,and Funding Requirements

Issue Brie No. 2




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Published by

International Centre or rade and Sustainable Development (ICSD)

International Envrionment House 2

7 Chemin de Balexert, 1219 Geneva, Switzerland

el: +41 22 917 8492 Fax: +41 22 917 8093E-mail: [email protected]

Visit ICSD’s website at: www.ictsd.org

And

International Food & Agricultural rade Policy Council (IPC)

1616 P St., NW, Suite 100, Washington, DC 20036, USA

el +1 202 328 5056 Fax +1 202 328 5133

Email: [email protected]

Visit IPC’s website at www.agritrade.org

Charlotte Hebebrand, President/CEO o IPC, and Marie Chamay Peyramayou, Manager o the ICSD Global

Platorm on Climate Change, rade Policies and Sustainable Energy, are the persons responsible or this initiative.

Acknowledgments:

We are grateul to Vinaye Dey Ancharaz (University o Mauritius) or his review and comments on the paper.

his paper was presented at the Dialogue on “Climate Change and International Agricultural rade Rules” organised by the

ICSD–IPC Platorm on Climate Change, Agriculture and rade on 1 October 2009 in Geneva, Switzerland. Jodie Keane

reviewed the paper based on the comments she received at this meeting. We are grateul to the participants or their valuable inputs.

his paper was produced under the ICSD Global Platorm on Climate Change, rade and Sustainable Energy - an

initiative supported by DANIDA (Denmark); the Ministry o Foreign Aairs o Finland; the Department or International

Development (U.K.); the Ministry or Foreign Aairs o Sweden; the Ministry o Foreign Aairs o Norway; OxamNovib and ICSD’s institutional partners and project supporters such as the Commonwealth Secretariat, the Netherlands

Directorate-General o Development Cooperation (DGIS), the Swedish International Development Cooperation Agency

(SIDA); the Inter American Development Bank (IADB) and the Bill & Melinda Gates Foundation.

IPC wishes to thank the William and Flora Hewlett Foundation and all o its structural unders or their generous support.

ICSD and IPC welcome eedback and comments on this document. hese can be orwarded to Marie Chamay Peyramayou,

[email protected] and/or Christine St Pierre, [email protected].

Citation: Keane, J., Page, S., Kergna, A., and Kennan, J. (2009). Climate Change and Developing Country Agriculture: An

Overview o Expected Impacts, Adaptation and Mitigation Challenges, and Funding Requirements , ICSD–IPC Platorm on

Climate Change, Agriculture and rade, Issue Brie No.2, International Centre or rade and Sustainable Development,

Geneva, Switzerland and International Food & Agricultural rade Policy Council, Washington DC, USA.

Copyright © ICSD, 2009. Readers are encouraged to quote and reproduce this material or educational, non-proit

purposes, provided the source is acknowledged.

his work is licensed under the Creative Commons Attribution-Noncommercial-No-Derivative Works 3.0 License. o view

a copy o this license, visit http://creativecommons.org/licenses/by-nc-nd/3.0/us/ or send a letter to Creative Commons, 171

Second Street, Suite 300, San Francisco, Caliornia, 94105, USA.

Disclaimer: he views presented in this paper are those o the authors and do not necessarily represent the views o ICSD and

IPC. he authors thank Vera Schulho or her excellent research assistance and acknowledge comments received rom Susan Prowse,Programme Leader, rade, ODI, and contributions made by rom Jessica Brown, ODI, in relation to climate change inance.

ISSN 2075-5856




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CONENS

ABBREVIAIONS

FOREWORD vii

EXECUIVE SUMMARY ix

INRODUCION 1

1. SCOPING AND DIAGNOSICS 1

1.1 Predicted Changes or Agricultural Production Systems Across Regions 2

1.2 What Are Te Likely Economic Impacts o Climate Change on the Agricultural Sector? 3

1.2.1 Impact on agricultural output 4

2. WHA ARE HE ADAPAION AND MIIGAION OPIONS? 9

2.1 Climate Change Proofng Existing Products and Methods o Production and Logistics 9

2.2 Diversiying into New Products, Methods o Production 11

2.2.1 rade in carbon 11

2.2.2 Low-carbon products 14

2.3 Diversiying into New radable Services 16

3. WHA ARE HE AVAILABLE RESOURCES O ASSIS ADAPAION AND

MIIGAION RELAED O HE AGRICULURAL SECOR? 17

3.1 Finance or Mitigation 17

3.2 Finance or Adaptation 18

3.3 International Funds or Mitigation and Adaptation argeted at the Agricultural Sector 19

3.4 National Adaptation Plans o Action (NAPAs) 19

4. LINKING AID FOR RADE O CLIMAE CHANGE AND AGRICULURE 20

4.1 Te History o Aid or rade in the World rade Organization 20

4.2 Linking the Aid or rade Categories to Climate Change Needs 22

4.2.1 rade policy and regulations 22

4.2.2 rade development 22

4.2.3 rade-related inrastructure 23

4.2.4 Building productive capacity 23

4.2.5 rade-related adjustment 23

4.2.6 Other trade-related needs 23




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4.3 Coordination and Competition or Funding 24

4.3.1 rade and climate change 24

4.3.2 Linking unding or specifc purposes to o cial development assistance 24

5. CONCLUDING REMARKS 26

REFERENCE LIS 28

NOES 33

ANNEX

LIS OF ABLES

able 1.1: Estimated Impact o Climate Change on Agricultural Production in the South 2able 1.2: Estimated Impact o Climate Change on Agricultural Production in the North 3able 1.3: Predicted Changes in Agricultural Production across Countries within Regions 4able 1.4: Contribution o Agricultural Exports to GDP 5able 1.5: op en Agricultural Product Groups Exported by Sample Countries

(Average 2003–08) 7able 1.6: Estimated Export Revenue Losses by 2080 8able 2.1: UNFCCC Estimates o Global Investment Costs or Adaptation 9

able 2.2: errestrial Carbon Abatement Opportunities in the Agricultural Sector 12able 2.3: GHG Emissions Comparison—Cut Flowers rom Kenya and the Netherlands 15able 3.1: Pledged and Proposed Funds or Mitigation in Developing Countries 17

Annex

able 1: Non-Annex 1 Parties to the UNFCCC 36able 2: Countries or which GHG emissions data are missing 37able 3: Additional Annual Investment Expenditure Needed to Counteract the Eects

o Climate Change on Nutrition (Million 2000 US$) 38

able 4: Potential Sources o Mitigation and Adaptation Finance 39able 5: International Public Funds or Mitigation and Adaptation inthe Agricultural Sector 40

able 6: Plans or the Agricultural Sector in NAPAs 43

LIS OF BOXES

Box 1.1: Impact o Climate Change on the Agricultural Sector 3Box 2.1: Adaptation Measures in the Agricultural Sector 10Box 2.2: Adapting to Climate Change in Mali 11

Box 2.3: GHG Mitigation through Carbon Sequestration in Soils 13Box 2.4: Carbon rading Regimes 14Box 2.5: Approaches to Carbon Labelling 15




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LIS OF FIGURES

Figure 2.1: otal CO2e Emissions by Income Group and Region (2000) 13

Figure 2.2: Including and Excluding Land Use Change and Forestry (LUCF) 13

Figure 3.1: Mitigation Finance Required by Developing Countries per Annum Compared

to Tat Available 18

ANNEX

Figure 1: Players and Institutions in the Carbon Market 47




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ABBREVIAIONS

AAU Assigned Amount Unit

AF Adaptation Fund

AR4 Fourth Assessment Report

CDM Clean Development Mechanism

CER Certifed Emissions Reduction credit

CIF Climate Investment Fund

CRS Creditor Reporting System

EC European Commission

EF-IW Environmental ransormation Fund-International Window

FAO Food and Agricultural Organisation o the United Nations

GCM General Circulation Model

GEF Global Environmental FundGHG Greenhouse Gas

GWP Global Warming Potential

IAAL International Air ravel Adaptation Levy

ICAO International Civil Aviation Organization

IDA International Development Association

IMERS International Maritime Emission Reduction Scheme

IPCC Intergovernmental Panel on Climate Change

IU International elecommunications Union

LDC Least Developed Country LDCF Least Developed Countries Fund

LUCF Land Use Changes and Forestry

MEA Multilateral Environmental Agreement

MDG Millennium Development Goal

NAPA National Adaptation Plans o Action

ODA O cial Development Assistance

OECD-DAC Organisation or Economic Cooperation and Development-Development

Assistance Committee

REDD Reduced Emissions From Deorestation

SCCF Special Climate Change Fund

SPA Special Priority on Adaptation

UNCAD United Nations Conerence on rade and Development

UNDP United Nations Development Program

UNECLAC United Nations Economic Commission or Latin America and the Caribbean

UNEP United Nations Environment Programme

UNIDO United Nations Industrial Development Organization

UNFCCC United Nations Framework Convention on Climate Change

US United States

WO World rade Organization




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Climate change will have a major impact on agricultural production, comparative advantages, andtrade ows. A greater divergence between regions in terms o agricultural output is likely. For the

most part, countries in the tropics and subtropical zones, mostly developing economies, are ex-pected to lose in terms o agricultural production whereas countries in temperate zones, mostly de-veloped economies, are expected to gain. Many o these developing countries are highly dependenton the production and exports o agricultural goods, climate change will thereore cause consider-able losses o growth and export opportunities. In addition, most o the worst aected countries arecharacterized by current crippling inrastructure, eeble rural and agricultural markets and, weak integration to the global economy.

It is generally agreed that the countries in Arica will experience declining yields in the long run. Forexample, agricultural production in Guinea-Bissau, which agricultural sector adds value o 62% o

GDP, is estimated to decrease with 32.7 % (without carbon ertilization) by 2080. Te impacts ondevelopment and ood security, as well as on nutrition, will be enormous.

Te international community has agreed to give priority to mitigation and adaptation eorts gearedtowards addressing such distress. Moreover, securing adequate resources and identiying ways andmeans to redress a trend towards an eventual catastrophe is urgent and imperative. Te currentpaper investigates ways in which the aected developing countries can secure alternative sourceso export earnings. In doing this, the paper goes beyond the option o ‘climate change proofng’o existing products, methods o production and logistics; it also investigates the possibilities o diversiying into new products, methods o production and new tradable services. As a part o thetransition towards a low carbon global economy, new products, such as carbon, and services, such

as standard setting and verifcation o carbon emissions, are demanded.

However, the question remains with respect to how projects supporting these eorts can be fnanced.Current available and proposed mitigation fnance remains considerably lower than the projected costso mitigation in developing countries. Te paper discussed the possibility o linking Aid or rade andaid directed at mitigating and adapting to the eects o climate change on agricultural production indeveloping countries. It is shown that these two orms o aid have many similarities and that linkingthem is viable, and could create more coherence. Further, it is stressed that these two orms o targetedaid should be additional rom normal ODA, but that, at the same time, they should not be separate.

Creating coherence with respect to aid is especially important considering the current lack o coor-dination between the overall international regimes dealing with trade and climate change. Such alack will unnecessarily punish the receivers o fnancial aid.

Te ICSD–IPC Platorm on Climate Change, Agriculture and rade is pleased to release thispaper, trusting that it will contribute to a better understanding o these complex linkages and theirtreatment in the current negotiations in the international climate and trade ora.

Ricardo Meléndez-OrtizChie Executive, ICSD

Charlotte Hebebrand,President /CEO, IPC

FOREWORD




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EXECUIVE SUMMARY

Agricultural trade ows depend on the interaction between trade policy and inherent comparativeadvantage. Not only is the agricultural sector highly vulnerable to climate change, it is also one o

the sectors most distorted and heavily inuenced by a wide range o local, regional, national andinternational trade policies. Te increased stress to the system brought about by climate changemakes reorm in global agricultural policies arguably even more important.1

Even i the most ambitious climate change mitigation measures are adopted, global temperaturesare likely to increase by at least 2O C, compared with pre-industrial levels, by the end o this century,i not sooner.2 Te intensity and requency o extreme climatic conditions are expected to increaseand the predictability o normal rainy seasons decrease.3 Poor countries with large rural economiesdepend on agricultural exports or their fscal and socio-political stability (Christoplos 2009);agricultural export earnings may be jeopardised unless alternatives are sought or ‘climate proo’

investments are made.

But what are the alternative sources o export earnings? Given the potential impact o climate changeon agricultural production, this document sets out to assess how producers might adapt, this includesin relation to the new market opportunities or goods and services that are likely to arise rom eortsto mitigate climate change, as well as to climate change itsel.. It identifes the scope or climate changefnance and existing trade acilitation mechanisms, such as Aid or rade, to work together to addressthe challenges posed by climate change to the agriculture sector in poor countries.

echnical assistance or trade aims to help developing countries design and implement tradepolicy eectively and to help producers within these countries be competitive, given the policies,

markets, products, and conditions which ace them, now and in the uture. Climate change and theinternational conventions and agreements that respond to it will aect what is produced, what istraded, trading rules, the standards traded goods must meet, and the regulations they must ollow.

Country-specifc studies on the climate change impacts expected or the agricultural sector inmost low income countries are scarce, in part due to a lack o data availability. Where country-specifc studies do exist, they typically analyse a limited number o crops and cereals eaturemost prominently. Although such crops are important in terms o global agricultural trade ows,reductions in agricultural output and productivity because o climate change will aect more than

just cereals. Some o the economies most dependent on agriculture ace an estimated loss o morethan 50 percent o their total agricultural output by 2080, even when including carbon ertilisationeects (where an increased concentration o carbon dioxide in the atmosphere acts as a stimulusto crop productivity). Countries such as Malawi may need to adapt to a 20 percent reduction inagricultural export earnings because o reduced agricultural output as a result o climate change.

Beyond ‘climate proofng’ existing modes o production and investment, or which global ‘topdown’ estimates exist, but or which ‘bottom up’ estimates are largely limited, other adaptationoptions may include those that relate to the transition to a low-carbon global economy. Worldwide,new products and services are being demanded as part o the transition towards a low-carbonglobal economy. Out o the total greenhouse gas (GHG) abatement opportunities and mitigationmeasures identifed by McKinsey (2009) that need to be undertaken and adopted in order to avoid

dangerous climate change,

70 percent are located in the developing world. Fully 90 percent o all‘terrestrial carbon’4 opportunities are located in the developing world and these opportunities andmeasures account or 30 percent o total GHG abatement opportunities.




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It is highly likely that avoided deorestation (Reduced Emissions rom Deorestation and ForestDegradation or REDD) will be included in the next commitment period o the Clean DevelopmentMechanism (CDM). But recognition o all types o terrestrial carbon could oer primarily agriculturally based societies, such as low income countries, potential new market opportunities in

carbon trade and sources o income.

Tough the international architecture or fnancing climate change mitigation and adaptation isnew and growing, there is a considerable gap between identifed needs and current pledges. Tere isalso considerable variation in terms o the ocus o unds. Nevertheless, mitigation fnance availablethrough the Clean Development Mechanism (CDM) has been the largest source o mitigationfnance to developing countries to date. Eorts should be made to increase access to the mechanismby low income countries; these eorts should increase both the scope and scale o this access.

Te transition to a low-carbon economy will likely require that low-carbon products be certifed

as such. I certifcation is undertaken using liecycle analysis, which is the more objective, butinevitably more costly, methodology, some developing country agricultural exporters may beneftrom the relocation o agricultural production rom high- to low-emitting locations. However,

without a well-designed and internationally recognised carbon labelling methodology, there is arisk that some low-carbon products will not be recognised, and as a result some developing country producers will lose out.

All aid programmes should ensure that any given development programme uses trade e ciently and is consistent with limiting climate change and achieving a sustainable pattern o production.In practice it is already di cult to separate unding or adaptation or mitigation or climate changerom unding or normal adaptation to new trading problems or opportunities, and this will become

increasingly di cult as standard project analysis increasingly takes account o climate change. Tattargeted assistance should be additional to normal O cial Development Assistance (ODA) doesnot mean that it should be separate rom it at the level o programmes or projects. But any new purpose or Aid or rade will require additional unding to avoid diversion rom existing needs.

Tere is much scope or climate change fnance and existing trade acilitation mechanisms, suchas Aid or rade, to work together to address the challenges o climate change: many o thedonors that have provided mitigation and adaptation fnance are also involved in trade-relatedassistance. However, the current absence o standardised checks to ensure compatibility suggeststhat coordination between institutions and programmes needs to be improved; such coordinationmay, at the same time, serve to reduce potential conicts between competing demands and agendas.

Te Aid or rade initiative, like climate change mitigation and adaptation fnance, is about thedelivery o global public goods. In all these cases, unding must be additional and must not bediverted rom other sources. Te need to establish and delineate fnancing mechanisms that canstand alone i necessary becomes even more important in the current environment o donor resourceconstraint.




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Agricultural trade ows depend on the interactionbetween trade policy and inherent comparative

advantage..5 Not only is the agricultural sectorhighly vulnerable to climate change, it is also one o the sectors most distorted and heavily inuencedby a wide range o local, regional, national andinternational trade policies. Te increased stressto the system brought about by climate changemakes reorm in global agricultural policiesarguably even more important.

Even i the most ambitious climate change

mitigation measures are adopted, globaltemperatures are likely to increase by at least2O C since pre-industrial levels by the end o this century, i not sooner; the intensity andrequency o extreme climatic conditions areexpected to increase and the predictability o normal rainy seasons, decrease.6 Poorcountries with a large rural economy dependon agricultural exports or their fscal and socio-political stability (Christoplos 2009); climatechange could potentially jeopardise agricultural

export earnings unless alternatives can be soughtor climate proo investments are made.

But what are the alternative sources o exportearnings? Given the potential impact o climate change on agricultural production, thisdocument sets out to assess how producers mightadapt, particularly in relation to new marketsor agricultural products and services relatedto climate change mitigation eorts. Te frstsection, ‘Scoping and Diagnostics’, reviews someo the most notable climate change scenariosat the aggregate, as well as the country- andproduct-specifc level (where this is possible).

It then sets out to quantiy the potential staticrevenue losses that might result rom the eects

o climate change on agricultural trade ows,and the resultant impact on employment andGDP, or some o the most vulnerable andpoorest countries in the world.

Te second section reviews adaptation andmitigation options related to the agriculturalsector, in three parts: frst, climate changeproofng current modes o production; second,diversiying into new products; and third,

diversiying into new services. It relates thesecond and third options to global climate changemitigation eorts. Te third section reviewsexisting mitigation and adaptation fnancemechanisms and their subsequent components; itassesses the extent to which available instrumentsand mechanisms are being leveraged to meet thechallenges o climate change or the agriculturalsector in vulnerable economies.

Te ourth section reviews other sources o

fnance designed to acilitate trade and accessto markets, such as Aid or rade. It assessesthe extent to which existing fnancial resourcesmight adapt to accentuated developmentchallenges given the impact o climate changeon the agricultural sector in poor countriesand the e increased demands which may result.Te fnal section concludes with a summary o overall fndings and an assessment o how ‘new’sources o climate change fnance and existingmechanisms and tools could, and should, work together to address the challenges o climatechange in the agricultural sector or vulnerableproducers and exporters.

INRODUCION

1. SCOPING AND DIAGNOSICS

Although there are uncertainties in relation tothe impact o climate change on agriculturalproduction, there are a number o areas wheregeneral agreement exists:7

• the only certainties about the impact o climate change on agriculture are increasing

uncertainty, variability, and requency and severity o extreme events (storms,hurricanes, droughts, etc.);

• there are opportunities or some countries (e.g.

North America, Russia, China), under all butthe most extreme scenarios, which lead to anexpansion o potential agricultural crop land;




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• all scenarios show declining yields in Aricain the long run, but the level and rate o this decline diers amongst scenarios; and

• most scenarios show relatively similar

impacts on agriculture in the next oneto two decades and predict impacts to bemoderate during this period at global andregional scales. Impacts at smaller scales(intra-regional and within countries)may be much more severe but are muchharder to predict.

Te studies reviewed, which lead us to theaorementioned generalised statements, are

complex and a result o assumptions, dataavailability, and modelling technique. Althougha range o General Circulation Models (GCMs)are requently used, ew studies are based on the

same model.8 Most o the scenarios reviewedhave either ormed part o the Fourth

Assessment Report (AR4) o the IPCC (2007)or have drawn on the IPCC Special Report on

Emission Scenarios (2000).9 According to theresults o these studies, all regions will experiencean increase in temperatures towards the end o the current century; this is accompanied by predicted changes in precipitation (though toa much larger degree in terms o variability). Interms o the aggregate impact on agriculturalproduction, it is clear that a greater divergencebetween regions in terms o output is likely. Tatis, or the most part, the more southern and

equatorial developing countries are expected tolose in terms o agricultural production, whilstdeveloped countries based in the north arelikely to gain.

1.1 Predicted Changes or Agricultural Production Systems Across Regions

Most agricultural producers located in low incomeand less developed countries are typically operating

well below their potential productive capacity. Asnoted by the FAO (2007) the developing world

already contends with chronic ood problems.Estimates suggest that this situation could worsen:around 11 percent o arable land in developing

countries could be aected by climate change,including a reduction o cereal production inup to 65 countries, and loss o up to 16 percento GDP in some cases.10 ables 1.1 and 1.2

summarise some o the generalisable impacts o a range o climate change scenarios (and models)on agricultural production across regions.11

able 1.1: Estimated Impact o Climate Change on Agricultural Production across Southern Regions

Sub-Saharan Arica Latin America South Asia South-East Asia

emperature

emperatures toincrease by 3–7° C by 2080–2099.

emperatures toincrease by 1–7.5° C by 2070–2099.

emperatures toincrease by 2.3–4.5° Cby 2070–2099.

emperatures toincrease by 2–3.8° C by 2070–2099.

Precipitation

Precipitation to decreaseby up to 30–40% inmost parts o southern Arica, but to increaseby 7% in tropical andeastern regions by 2080–2099.

Precipitation to changeby up to -40% to+12% by 2080.

Precipitation toincrease by 10–17% by 2070–2099.

Precipitation toincrease by 3–8% by 2070–2099.

Agriculture

Rain-ed cereal (wheat,maize, rice) productionto decrease by 12%(net loss) by 2080, withgreat regional variations.

Overall grain yields tochange by between -30%to +5% by 2080. Forexample, rain-ed wheatproduction is to decrease

by 12–27% by 2080.

Net cereal productionto decrease by at least4–10%. For example,rain-ed wheatproduction is to decrease

by 20–75% by 2080.

Overall cereal productionto increase by up to30%, but rain-ed wheatproduction is to decreaseby 10–95% by 2080.

Note: Te wide range o temperature and precipitation reect the scenarios on which the estimates are based across regions.Sources: Christensen et al. (2007); IPCC (2007); Ruosteenoja et al. (2003).




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able 1.2: Estimated Impact o Climate Change on Agricultural Production in Northern Regions

Europe North America

emperature

emperatures to increase by 1–5.5° C by

2070–2099.

emperatures to increase by 2–5° C by 2080.

PrecipitationPrecipitation to change by -30% to +30%by 2071–2100.

Precipitation to change by -20% to +20% by 2080–2099.

Agriculture

Cereal yields to increase in northern Europe,e.g. rain-ed wheat production by 10–30%,and to decrease in southern Europe by 2080. However, there will be a net gainoverall.

Yields to increase by 5–20% across the wholecontinent, though with some regional dierencesacross products such as: corn, rice, sorghum,soybean, wheat, common orages, cotton, and someruits.

Note: Te wide range o temperature and precipitation reect the scenarios on which the estimates are based across regions.Sources: Christensen et al. (2007); Giorgi et al. (2004); IPCC (2007).

1.2 What Are Te Likely Economic Impacts o Climate Change on the AgriculturalSector?

Country-speciic studies on the climatechange impacts expected or the agriculturalsector in most low income countries arescarce, in part due to a lack o data availability.

Where country-speciic studies do exist,they typically analyse a limited number o

crops and cereals eature most prominently.

Although such crops are important in termso global agricultural trade, reductions inagricultural output and productivity becauseo climate change will aect more than justcereals. A summary o the ways in whichclimate change may impact agricultural

production is presented in Box 1.1 below.

Box 1.1: Impact o Climate Change on the Agricultural Sector

Climate change can inuence agricultural production in a number o ways. One can roughly group the drivers into six categories:

• emperature as it aects plants, animals, pests, and water supplies. For example, temperaturealterations directly aect crop growth rates, livestock perormance and appetite, pestincidence, and water supplies in soil and reservoirs.

• Precipitation as it alters, or example, the water directly available to crops, the drought-stressthat crops are placed under, the supply o orage or animals, animal production conditions,irrigation water supplies, aquaculture production conditions, and river ows supportingbarge transport.

• Changes in atmospheric CO2 as it inuences the growth o crop plants and weeds by altering

one o the basic inputs or photosynthesis.• Extreme events as they inuence production conditions, destroy trees or crops, drown

livestock, alter water supplies, and inuence waterborne transport and ports.• Sea level rise as it inuences the suitability o ports and waterborne transport, inundates

producing lands, and may alter aquaculture production conditions.• Climate-change-motivated greenhouse gas net-emissions reduction eforts as they would

inuence the desirability o production processes and the costs o inputs, plus add new opportunities.

Source: Adapted rom McCarl (2007).




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As noted by Wheeler and i n (2009:35), within the economic literature on climate change,there are two approaches that can be interpretedas reecting the net costs o adaptation. Tese

are reerred to as the ‘Ricardian’ and ‘cropgrowth model’ methods. Te Ricardian modelincludes the value o land and is modelled underassumptions that reect the uture proftability o land; in the crop growth model, the impactso climate change are simulated and the value o the resultant change in output taken as a measureo the economic impact o climate change. Cline(2007) provides the results o both approachesacross regions and a total o seventy countries.12

Te recent study by Cline (2007) provides themost comprehensive estimates o aggregatechanges in output; it has been used andsupplemented by the contribution o theagricultural sector to GDP and employmentor the low income and less developed countriesincluded, the results o which are summarisedin able 1.3. Cline’s (2007) estimates are basedon a consensus set o geographically detailedestimates or changes in temperature and

precipitation by the 2080s, which are applied toagricultural impact models.

Te results have been urther supplemented by agricultural trade data or the most recent fve years,as presented in able 1.4. Tis has been done witha view to estimating the impact o climate change

on agricultural trade ows, in a simple static sense,and to estimating, thereore, the brevity o potentialexport losses across countries in today’s terms. Teollowing sub-sections discuss the results.

1.2.1 Impact on agricultural output

Some o the most dependent agriculturaleconomies ace an estimated loss o more than 50percent o their total agricultural output by 2080,

even when including carbon ertilisation eects(where an increased concentration o carbondioxide in the atmosphere acts as a stimulus tocrop productivity).13 Losses o agricultural output,

without carbon ertilisation, range rom -5.4percent to -0.1 percent, as shown by able 1.3below. However, even with carbon ertilisationeects, only Kenya seems to gain: an increase o 8.8 percent in agricultural output is estimated by 2080, based on the crops produced and agriculturaloutput as o 2003. For all other countries listed,

losses o between -1.9 percent and -54.1 percent inagricultural output are expected by 2080.

able 1.3: Predicted Changes in Agricultural Production across Countries within Regions

Country

Dependence on AgriculturalSector

Vulnerability to Climate Change

Agriculture value added(% o GDP)or nearest year

Employment in agriculture(% o totalemployment

or nearest year)

Agricultural output or 2003Estimated change by the 2080s

in % o agricultural output

per ha in

2003 USD

Millions o

2003 USD

Without carbon

ertilization

With carbon

ertilization

Liberia 66 - 419 (c) 1 833 (c) -32.7 (c) -22.6 (c)

Somalia 66 - - -16.6 (b) - 4.1 (b)

Guinea-Bissau

62 - 419 (c) 1 833 (c) -32.7 (c) -22.6 (c)

Central AricanRepublic

56 - 478 (a) 1 429 (a) -60.1 (a) -54.1 (a)

Ethiopia 47 44.1 253 2 794 -31.3 -20.9

Congo,

DemocraticRepublic o

46 - 422 3 289 -14.7 -1.9

Sierra Leone 46 - 419 (c) 1 833 (c) -32.7 (c) -22.6 (c)




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anzania 45 82.1 430 4 634 -24.2 -12.8

Niger 40 - 243 1 092 -34.1 -24.2

Mali 37 41.5 350 1 644 -35.6 -25.9

Aghanistan 36 - 313 2 448 -24.7 -13.4

Malawi 34 - 267 651 -31.3 -21.0

Nepal 34 81.9 728 2 399 -17.3 -4.8

Burkina Faso 33 - 190 1 296 -24.3 -13.0

Uganda 32 69.1 280 2 015 -16.8 -4.3

Cambodia 30 70.2 378 1 438 -27.1 -16.1

Madagascar 28 78 447 1 587 -26.2 -15.1

Mozambique 28 - 253 1 123 -21.7 -10.0

Kenya 27 19 446 2 300 -5.4 8.8

Zambia 22 - 189 997 -39.6 -31Bangladesh 20 51.7 1 355 11 421 -21.7 -9.9

Viet Nam 20 58.8 969 8 616 -15.1 -2

Zimbabwe 19 - 901 3 018 -37.9 -29

India 18 68.1 777 132 140 -38.1 -28.8

Senegal 16 - 441 1 104 -51.9 -44.7

Guinea 13 - 419 (c) 1833 (c) -32.7 (c) -22.6 (c)

Notes: (a) Values reer to Other Equatorial Arica (group o ollowing countries: Republic o the Congo, Gabon, Equatorial Guinea,Central Arican Republic); (b) Values reer to Other Horn o Arica (group o ollowing countries: Djibouti, Somalia); (c) Valuesreer to Other Equatorial Arica (group o ollowing countries: Guinea, Guinea Bissau, Liberia, Sierra Leone).Sources: Cline (2007); World Development Indicators or nearest year.

able 1.4: Contribution o Agricultural Exports to GDP

Country

Agricultural Exports US$ MillionGDP US$

million(nearest year)

Value o agricultural

exports as a % o GDP

2003 2004 2005 2006 2007 2008

Malawi 439 380 410 566 769 778 3 164 24.6

Zimbabwe 855 452 1 778 813 3 418 23.8

Kenya 1 284 1316

1 555 1 841 2 155 2 623 22 779 11.5

Ethiopia(excludesEritrea)

451 476 812 899 1 029 1 365 13 315 10.3

Viet Nam 2537 3195

3 990 4 562 6 050 60 999 9.9

Uganda 280 337 386 454 649 798 9 419 8.5

Guinea-Bissau

59 54 23 304 7.5

Mali 403 423 328 345 300 340 5 866 5.8

Mozambique 120 172 215 314 231 367 6 833 5.4

anzania,UnitedRepublic o

360 422 558 497 634 12 784 5.0

Burkina Faso 286 368 303 6 173 4.9

able 1.3: Continued




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Madagascar 330 224 129 168 220 199 5 499 3.6

Zambia 149 384 318 327 403 326 10 734 3.0

Senegal 185 182 199 133 298 252 9 186 2.7Niger 82 84 71 80 83 81 3 663 2.2

India 6 617 7208

9 270 11 524 14652

19 701 911 813 2.2

Nepal 140 8 938 1.6

Guinea 14 23 79 32 23 3 317 0.7

Bangladesh 51 111 207 204 370 61 897 0.6

Aghanistan 27 8 399 0.3

Cambodia 9 20 7 258 0.3

Central AricanRepublic

2 2 1 1 494 0.1

Note: GDP and exports or nearest year have been used. Agricultural exports are defned as those included under the WO Agreement on Agriculture. Ethiopia excludes Eritrea.Source: UNComtrade and World Development Indicators.

As shown by able 1.4 some countries have experienced rapid growth in their agricultural exportsin recent years. Clearly some o the countries that are expected to experience substantial declinesin agricultural output because o climate change are also highly dependent on agricultural exportearnings as a proportion o GDP. able 1.5 breaks down the top ten agricultural products andthe top three exporters or each, in terms o value and average annual growth rates or the period2003–08. Tis shows that, or the countries included, traditional commodities such as ‘coee,tea, maté, and spices’ are more important than ‘cereals’ in terms o their proportion o totalagricultural export earnings. raditional commodity exports such as cotton, tobacco, and sugarand more non-traditional exports, such as cut owers and ornamental oliage, have also grown ata aster rate (in terms o value) than cereals or the countries included.

able 1.4: Continued




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able 1.5: op en Agricultural Product Groups Exported by Sample Countries (Average 2003–08)

Product otal or sample

and top 3

exporters

Average annualexport value

(US$’000)

Share o averageannual exports

or top 3

exporters

Share o average annualexports o all

agric. items, allcountries

Annualaverage

changea

Coee, tea,maté, andspices

All samplecountries b

4 192 100% 18.5% 8.7%

Viet Nam 1 298 31% 36.5% c

India 1 105 26% 20.9%

Kenya 763 18% 13.4%

Cereals All samplecountries b

3 552 100% 15.7% 12.8%

India 2 236 63% 22.9%

Viet Nam 1 173 33% 19.9% c

Zambia 32 1% 50.4%

Edible ruitand nuts


1 647 100% 7.3% 4.2%

India 824 50% 16.5%Viet Nam 564 34% 22.0% c

anzania 50 3% -10.6% c

Cotton All samplecountries b

1 642 100% 7.2% 22.4%

India 795 48% 113.1% Mali 270 16% -10.3%

Burkina Faso 256 16% 4.5%

obacco All samplecountries b

1 590 100% 7.0% 14.9%

India 379 24% 24.6% Malawi 356 22% 19.1% Zimbabwe 298 19% -18.9% d

Residues and waste rom theood industries;preparedanimal odder


1 379 100% 6.1% 41.5%

India 1 306 95% 44.1%Viet Nam 21 2% 8.7% c

Nepal e 11 1% n/aEdiblevegetables


1 319 100% 5.8% 14.0%

India 521 39% 18.2%Kenya 208 16% 12.3%Viet Nam 154 12% 26.9% c

Sugarsand sugarconectionery


992 100% 4.4% 21.8%

India 646 65% 30.3% Malawi 65 7% -13.2% Zambia 61 6% 14.1%

Oil seeds and

oleaginousruits

All sample

countriesb

935 100% 4.1% 19.9%

India 571 61% 24.8%Ethiopia 157 17% 33.2%Viet Nam 63 7% 3.7% c




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Live treesand otherplants; cut

owers andornamentaloliage


834 100% 3.7% 21.6%

Kenya 361 43% 21.4%

Zimbabwe 256 31% 110.6% d

India 79 9% 13.0%

otal 18 081 79.7%

Notes:

(a) 2003–08 unless otherwise noted. It should be noted that the aggregate growth rate or all sample countries shown is distorted by the act that ewer o the sample countries have reported their trade or 2008 than have or 2003 (13 compared with 19).

(b) All values are as reported by the sample countries themselves to the UN’s Comtrade database. Te number o years in the period2003–08 in which countries have reported varies greatly: rom one (Aghanistan and Nepal 2008 and 2003 respectively) to allsix (Ethiopia, India, Kenya, Madagascar, Malawi, Mali, Mozambique, Niger, Senegal, Uganda, Zambia). Te totals rom whichthe shares in the ourth and fth columns are derived are simple averages o the values reported by all sample countries: or thespecifc item concerned (Col. 4) and or all items covered by the WO Agreement on Agriculture (Col. 5).

(c) 2003–07.

(d) 2004–07.

(e) Nepal’s exports are based on one year only (2003).

Based on the estimates o Cline (2007) o theimpact o climate change on total agriculturaloutput, able 1.6 estimates some o the staticexport revenue losses which may result orthe countries included in able 1.4. Tose

countries that have a high dependence onagricultural output as a proportion o GDP,and or which agricultural exports account or ahigh proportion o total agricultural output, areclearly the most vulnerable to climate change.

able 1.6: Estimated Export Revenue Losses by 2080

Country

Agriculturaloutput in2003, US$

million

Agriculturalexports in2003, or

nearest year,US$ million

Agriculturalexports as a % o total

agriculturaloutput (a)

Vulnerability to climate change: Estimates by the 2080s in % o agricultural exports (b)

Without carbonertilization

With carbonertilization

Malawi 651 439 67.5 -20.9 -14.2

Zimbabwe 3 018 855 28.3 -10.7 -8.1

Senegal 1 104 185 16.8 -8.7 -7.5

Mali 1 644 403 24.5 -8.7 -6.3

Burkina Faso 1 296 286 22.0 -5.4 -5.4

Zambia 997 149 15.0 -5.9 -4.6

Ethiopia 2 794 451 16.1 -5.0 -3.4

Guinea-Bissau 1 833 59 14.0 -4.6 -3.2

Madagascar 1 587 330 20.8 -5.4 -3.1

Niger 1 092 82 7.5 -2.6 -1.8

India 132 140 6 617 5.0 -1.9 -1.4

Mozambique 1 123 120 10.7 -2.3 -1.1

anzania 4 634 360 7.8 -1.9 -1.0

Viet Nam 8 616 2 537 29.4 -4.4 -0.7

Nepal 2 399 140 5.9 -1.0 -0.3Guinea 1 833 14 0.8 -0.2 -0.2

Cambodia 1 438 9 0.6 -0.2 -0.2

Aghanistan 2 448 27 1.1 -0.3 -0.1

able 1.5: Continued




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Te costs o adaptation in the agriculturalsector reerred to by the UNFCCC (2007) andMcCarl (2007) relate to climate change proofnginvestments, including:

• 10 percent increase in research and extensionunding; and

• 2 percent increase in capital investmentcosts.

Te estimates reer to three distinct cost items:better extension services at the arm level; thecost o additional global research (e.g. on new cultivars); and extra capital investment at the arm

level (Wheeler and i n 2009). All o the costitems identifed relate to increasing agriculturalproductivity and enhancing resilience to climate

change. Te estimates are, however, ‘top down’and based on the increments that should bemade to current expenditure.16

An increase in capital investment costs couldrelate to an increase in irrigation demands.

An increase in research and extensionexpenditure could relate to the developmento new crop varieties and plant breeding and/or the provision o inputs such as ertiliseras well as technical assistance related to cropmanagement techniques. Some o the majorclasses o adaptation in the agricultural sectorare summarised in Box 2.1 below. Box 2.2

discusses some o the challenges o adaptingto increasing vulnerability because o climatechange, in Mali.

Box 2.1: Adaptation Measures in the Agricultural sector

Long-term adaptation measures may include: changes in land use to maximise yield under new conditions; application o new technologies; new land management techniques; and water-usee ciency techniques. Reilly and Schummelpenning (1999) defne the ollowing ‘major classes’o adaptation, which include adapting to: seasonal changes and changing sowing dates anddierent varieties or species. Actions required may include those related to:

• water supply and irrigation systems;• other inputs (ertiliser, tillage methods, grain drying, and other feld operations);• new crop varieties;• orest fre management and/or other natural disasters.

Given the diversity o possible managementresponses to the challenges posed by climatechange, some authors question whether it ispossible to summarise costs in headline fgures.However, the UNFCCC estimates do providea starting point to ocus debate, despite thecriticisms levied at the estimates as having alimited and mostly speculative basis. Wheeler andi n’s (2009) critical review o the UNFCCCestimates concluded that the estimates providea su cient overall frst approximation. Teestimates are considered ‘su cient’, in part,because o the limited availability o ‘bottom-

up’ case studies that could better indicate the

magnitude o costs. As more specifc studiesand adaptation options become available, costestimates are likely to increase.

In sum, around 10 percent o the total costs o adaptation to climate change identifed by theUNFCCC (2007)—assuming the top end o adaptation costs—should be destined or theagricultural sector in developing countries. Atpresent, however, both the total proportion o climate change unds or adaptation and theirdestination (in terms o country, sector, andproject) remain largely unclear (as will be urther

discussed in Section 3).

Source: UNFCCC (2007)




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Box 2.2: Adapting to Climate Change in Mali

Mali is a country in Sahelian Arica where 80 percent o the population lives on agriculture and pastoralactivities. Te major crops produced or domestic consumption include: millet, sorghum, rice, maize,

and legumes. Cotton, vegetables, and tubers are produced as cash crops. Exported agricultural goodsinclude cotton, livestock, mangoes, and fsh. Livestock and fsheries are traded, but also serve as asource o wealth. Agricultural activities are likely to be severely aected by climate change, namely through increased temperatures and likelihood o drought, as a result o reduced rainall, and becauseo a shrinking rainall season. Tese changes in turn aect agricultural and livestock productivity, oodsecurity, and ood prices, and render agricultural production a daily struggle.

Climate change will limit the quantities and qualities o tradable agricultural goods by reducingcultivated and grazing areas and their productivity, enhancing pest attacks, and limiting accessto water. Te combination o climate eects is likely to increase the costs o imported goods andlimit the market or exported crops, because o a reduction o agricultural surplus.

Te climate-induced shrinking o arming and grazing lands may enhance the potential orconicts between armers and pastoralists and result in additional pressure on natural resources.

Although the Sahelian population has a long history o adapting to climate variability throughchanges in livelihood strategies (cropping patterns, consumption habits, as well as migration), theadaptation options that armers can aord (such as new seed varieties and changes in productionmethods) still depend, to some extent, on rainall distribution. Farmers are not equipped to adaptto the potential impacts o global climate change; options are limited because all productionsystems are climate dependant and interdependent.

o cope with climatic changes, some armers have adopted early maturing and drought resistantvarieties, as well as soil water conservation techniques and the application o ertilizer andchemical sprays. But some o these strategies may urther limit access to oreign markets becausearmers cannot aord ‘best agricultural practices’ and thereore escape trade barriers. raceability o exported products requires knowing saety and grading procedures, knowledge that is lackingor most Arican armers.

Te main objective o agricultural production is sel-su ciency, which is, in practice, rarely achieved by producers in the country. Most public investment in agriculture (around 14.2percent o the National Budget) targets irrigation development, cereal stocks, and the acilitationo access to credit. A ew parts are devoted to research and extension o improved strategies to

cope with climate change. Te country has a National Action Plan o Adaptation, which has beendrated and submitted to UNFCCC.

2.2 Diversiying into New Products, Methods o Production

Beyond ‘climate proofng’ existing modes o production and investment, other adaptationoptions may include those related to thetransition to a low-carbon global economy,

which demands new products and services.Developing countries need to adapt to the new market opportunities that arise rom eorts to

mitigate climate change, as well as to climatechange itsel. Indeed, the two eorts arerelated: tapping into new market opportunitieseectively could release additional resources

or productive investments required to increaseresilience to climate change and adapt to itseects. Tis sub-section reviews some o the

Source: Alpha Kergna, Agricultural Economist, Institut D’Economie Rural (IER), Mali




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products that are being increasingly demandedas part o this transition.

2.2.1 Trade in carbon

Out o the total greenhouse gas (GHG)abatement opportunities and mitigationmeasures identifed by McKinsey (2009), thatneed to be undertaken and adopted in order toavoid dangerous climate change,17 70 percentare located in the developing world (non-

Annex 1 countries).18 Te carbon abatementopportunities identifed by McKinsey (2009)all within (and across) the ollowing categories:

energy e ciency, terrestrial carbon, and low-carbon energy supply. Around 30 percent o thetotal GHG abatement opportunities identifedall within the terrestrial carbon category. Tis

relates to both orestry and the agricultural sectorand includes: halting deorestation, reorestingmarginal areas o land, and sequestering more‘carbon’ (or ‘carbon equivalent’, CO

2e) in soils

by changing agricultural practices. O thetotal amount o terrestrial carbon abatementopportunities identifed by McKinsey, 90percent are located in the developing world.able 2.2 provides a summary o the terrestrialcarbon abatement opportunities identifed.

able 2.2: errestrial Carbon Abatement Opportunities in the Agricultural Sector

Sub-categories Identied as errestrial Carbon

Crop nutrient management

Rice management

Reduced slash and burn agriculture

Reduced pastureland conversion

Reduced intensive agriculture conversion

Pastureland aorestation

Grassland management

Organic soil restoration

Source: Adapted rom McKinsey (2009)

Since most low income countries are already ‘low carbon’, any international agreement is likely toexclude them rom binding emissions reductionstargets, but include the opportunity or themto sell their certifed emissions reductions. TeClean Development Mechanism (CDM) is oneo the key tools established as part o the Kyotoprotocol designed to encourage trade in certifedemissions reductions between the developed andthe developing worlds—that is between thosecountries that have legally binding emissionsreductions targets and those that do not.

Tere is a one percent cap on the share o carboncredits that can be generated through Land UseChanges and Forestry (LUCF) within the currentcommitment period o Kyoto (2008–2012);

some researchers have argued that i the CDM

included all terrestrial carbon opportunities itcould lead to a collapse in the price o carbon(UNDP 2008). However, it is highly likely that avoided deorestation (Reduced Emissionsrom Deorestation and Forest Degradation,abbreviated to REDD) will be included in thenext commitment period, despite these ears.19

Tere is much more uncertainty about othertypes o terrestrial carbon. But recognition o all types o terrestrial carbon could oer primarily agriculturally based societies, such as low incomecountries, potential new market opportunities incarbon trade and, thereore, sources o income.Figures 2.1 and 2.2 present the share o emissionsgenerated by Land Use Change and Forestry (LUCF) across countries and regions; almost hal

o sub-Saharan Arica’s emissions are rom LUCF.




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Figure 2.1 and 2.2: otal CO2e Emissions by Income Group and Region (2000); Including and

Excluding Land Use Change and Forestry (LUCF)

Source: Derived rom data obtained rom World Bank (2009b) and WRI (2009). World Bank income groups as o July 2009. aiwan(not included in the World Bank listing) has been assumed to be high income. 2000 is the latest year or which LUCF data are available.

(a) 2000 is the latest year or which LUCF data are available. Includes data rom international bunkers (where available).

Note: Annex able 2 presents those countries that have been excluded rom analysis because o a lack o data.

Te IPCC (2007a) notes that the mitigationpotential o the agricultural sector could besignifcant. Expanding the scope o carbonmarkets to include agricultural soil carbon would

mean allowing carbon fnance to play more o a role in promoting sound land managementpractices. Tis view is echoed by the UNDP(2008) as summarised in Box 2.3 below.

Box 2.3: GHG Mitigation through Carbon Sequestration in Soils

Te limited participation o sub-Saharan Aricain the frst commitment period o the CDM isto some extent to be expected: large developingcountry emitters, such as China, have beneftedthe most rom the CDM to date because they emit more and thereore have emissions ready to be oset.20 However, recognition o avoidedemissions in both the orestry and agricultural

sector within the CDM may, in the uture,increase the level o participation o low incomeand primarily agricultural societies.21

Many issues surrounding monitoring andveriying the increased storage capacity andpermanence o carbon sequestration remainto be resolved. Should they be resolved, it may become increasingly attractive to invest in theagricultural sector in non-Annex 1 countriesand to oset emissions produced elsewhere. Asnoted by the World Bank (2009, chapter 3:42):

“a soil compliance carbon market holds greatpotential or achieving the necessary balancebetween intensiying productivity, protecting

Abatement opportunities in agriculture arise rom improved crop land nutrient management,reduced slash and burn agriculture, less intensive agricultural production (i.e. less use o chemicals,ertilisers, and pesticides produced rom energy intensive processes), pastureland aorestation,and degraded-land restoration, in addition to improved livestock management (as methanereleased rom livestock is also a GHG). Te environmental degradation o soils is both a causeand eect o poverty. apping into carbon markets to proft rom these abatement opportunitiescould unlock multiple benefts. Tese include an increased ow o fnance into environmentalsustainability, support or more resilient livelihood systems in the ace o climate change, andbenefts or climate change mitigation.

Source: Adapted rom UNDP (2008).




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natural resources, and simultaneously helpingrural development in some o the world’spoorest communities.”

However, such a market is not yet ready:technical issues regarding verifcation, scale,and time rame remain to be resolved. Te

second commitment period o the Kyotoprotocol and the CDM (2012–2016) isunlikely to include all terrestrial carbonopportunities. However, other regional,

national, or voluntary carbon markets may bemore accommodating in the uture (see Box2.4 and Annex Figure 1).

Box 2.4: Carbon rading Regimes

Te importance o terrestrial carbon has recently been recognised by the US. Te Waxman-Markley Act was passed by the House Energy andCommerce Committee on 21 May 2009 and theHouse o Representatives on 28 June 2009.22 Tebill includes binding emissions reductions targetsrom major US sources o 17 percent by 2020 and80 percent by 2050, compared to 2005 levels. Itmandates energy saving standards or buildings,appliances, and industry. And it requires that 20percent o electricity demand be met throughrenewable energy sources and energy e ciency by 2020. It also includes agricultural creditsbased on the sequestration o carbon in soils.23

And, perhaps more controversially, it providesor the application o Border ax Adjustments(BAs) on those countries that don’t adhere toemissions reductions targets.

Te EC has also recognised the role the agriculturalsector has to play in the mitigation o climate

change and has proposed to review key sectoralpolicies by 2012 to determine the potentialimpacts and costs o climate change or dierent

economic sectors.24 In sum, despite the ears o a collapse in the price o carbon in internationalcarbon markets should the agricultural sectorbe included in carbon trading schemes, thishas not prevented other national schemes romrecognising the importance o the sector and therole it must play in mitigating climate change.

2.2.2 Low-carbon products

Tere is no approved CDM methodology orveriying GHG emissions oset by biouels,since land may have been cleared to producethe biouel crop (ODI 2008a). However, theEC has proposed legislation that includesmandatory requirements or measuringthe carbon ootprint o biouels. Tis is toensure that only certifed biouels which meetenvironmental sustainability criteria are usedto ulfl national renewable energy targets. Tesustainability criteria require that the GHG

emission saving rom the use o biouels andother bioliquids must be at least 35 percent,applicable rom 1 April 2013 (EC 2008).25

Until developing countries are ready (authors such as Stern [2008] put this date at around2020) a ‘one sided’ trading regime is proposed, which rewards developing countries or redu-cing emissions, but does not punish them or ailing to do so. During this period, developingcountries should commit to strong sectoral reductions supported by international fnancial

institutions and carbon markets; this means moving CDM rom being project-based to ope-rating at a more sectoral level (See ODI, 2008c). Te EC (2009) proposes that or advanceddeveloping countries and highly competitive economic sectors, the CDM should be phasedout, with a move to a ‘cap and trade’ system, possibly via a sectoral carbon market mechanism.Te prolieration o cap and trade schemes across countries and possibly regions may result inincreased opportunities or some types o terrestrial carbon mitigation. Although the institu-tional and legal ramework o the global carbon market—in which the CDM plays a crucialrole—is set out by the UNFCCC, individual companies may preer to use voluntary carbonmarkets and standards, some o which include the agricultural sector.




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Tis is part o a predicted trend in the transitionto a low-carbon global economy: the requiredcertifcation o low-carbon products as such.26

I certifcation is undertaken using liecycle analysis, which is the more objective, but inevitably morecostly, methodology, some developing country agricultural exporters may beneft rom therelocation o agricultural production rom high- to

low-emitting locations. Tis may also be the caseor other types o sectors and industry, such asmanuacturing. What’s known as ‘carbon leakage’occurs when stringent emissions-reductions targets

cause production to relocate to countries withoutsuch regulation. BAs are designed to reduce thelikelihood o ‘carbon leakage’. Te implementationo such measures requires an understanding o thecarbon content o products.

Box 2.5: Approaches to Carbon Labelling

• Liecycle approach: Tis methodology includes adding up all carbon emissions throughouta product’s lie rom the production o inputs to fnal consumption and disposal o

waste. As noted by Brenton et al. (2008), the methodological di culties o turning thisintuitively appealing idea into practice are immense and the lack o standardised methodsheavily inuences the useulness and comparability o existing studies. However, this is thescientifcally preerred measure.

• Carbon ootprint estimates (carbon disclosure): Tis methodology includes estimatingGHG emissions related to production and fnal consumption, but excludes the additionalcarbon emissions related to inputs. Te approach thereore traces the value chain, romarming to pack-house, transportation, and sale (including storage and packing).

• ransportation approach, ‘ood miles’: Tis methodology estimates the carbon ootprint o a product based only on the emissions that result rom transportation.

Brenton et al. (2008) note that the eectiveinclusion o low income countries in carbonlabelling schemes may oer importantopportunities or global emissions reductions;this is because doing so may incentivise increasedtrade with such countries because o theiravourable climatic conditions and use o low energy-intensive production techniques. As able

2.3 shows Kenya is a considerably more carbon-e cient production location or cut owers thanthe Netherlands, even i the emissions associated

with air reight are included.27 Kenya is also acountry identifed by Cline (2007) as potentially experiencing an increase in agricultural productionas a result o climate change—assuming carbonertilisation eects (see able 1.3).

able 2.3: GHG Emissions Comparison—Cut Flowers rom Kenya and the Netherlands

Supply chain section Kenya Netherlands

Production 300 36 900

Packaging 110 160

ransport to airport 18 0

ransport to distribution centre 5600 0

ransport to distribution centre romairport 5.9 50

6 034 37 110

Source: Adapted rom Edwards-Jones at al. (2008) with reerence to Williams (2007).Note: Emissions are shown as Global Warming Potential (GWP) expressed in kg o CO

2equivalents using the IPCC (2001)

conversion actors. GWP and CO2

emissions rom Kenya include the IPCC altitude actor.




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3. WHA ARE HE AVAILABLE RESOURCES O ASSIS ADAPAION AND MIIGAION RELAED O HE AGRICULURAL SECOR?

Although the international architecture orfnancing climate change mitigation andadaptation is new and growing, there is aconsiderable gap between identifed needs andcurrent pledges. Tere is also considerablevariation in terms o the ocus o unds. Te

ollowing sections attempt to identiy theproportion o international climate changefnance destined or the agricultural sector indeveloping countries (loosely defned as thosecountries which are not currently required toadhere to binding emissions targets).

3.1 Finance or Mitigation

Tere are a variety o fnancial resources

available to und climate change mitigationeorts. Tese include: 1. carbon markets andthe Clean Development Mechanism (CDM);2. private investment; 3. international publicunds; 4. national public unds; 5. privatephilanthropy; and 6. innovative fnancial

mechanisms. Te resources allocated to each are

based on various emissions reduction scenariosand mitigating actions and are summarised inable 3.1 below. Further details on internationalpublic unds, and their respective componentsin relation to the agricultural sector, can beound in Annex able 5.34

able 3.1: Pledged and Proposed Funds or Mitigation in Developing Countries

Amount perannum (US$ Bn)

Source

Projected costs o mitigation

Projected costs o mitigation(between 2010–2020)

71–103 McKinsey (2009)

Pledged mitigation nance (2008–2012)

International public unds(multilateral)

1.68 www.climateundsupdate.org

International public unds(bilateral)

2.46 www.climateundsupdate.org

Private philanthropy 0.2 Design to Win (2007)

CDM investment 7.4 Capoor & Ambrosi (2008)Voluntary carbon oset market 0.27 Capoor & Ambrosi (2008)

Proposed uture mitigation nance (2012 and beyond)

Proposed innovative fnancingmechanisms

Ranges up to 201 Brown (2008)

Note: As o March 2009

Despite the amounts o mitigation fnancepledged, the pledged money remainsconsiderably lower than the estimated costs, as

illustrated by Figure 3.1. As can also be seen,and as noted by the World Bank (2009a), the

fnancial revenues the CDM generates aremodest relative to the amount o mitigationmoney that will have to be raised. But they

constitute the largest source o mitigationfnance to developing countries to date.




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Figure 3.1: Mitigation Finance Required by Developing Countries per Annum Compared toTat Available

Sources: www.climateundsupdate.org, World Bank, http://greengrants.org/pd/design_to_win.pd

Note: McKinsey (2009) costs o mitigation have been used; estimates as o March 2009.

3.2 Finance or Adaptation

Currently, there are two dedicated adaptationunds under the UNFCCC, which are managedby the Global Environmental Facility (GEF);the Least Developed Countries Fund (LDCF);and the Special Climate Change Fund (SCCF).

A third und or adaptation has also recently been established under the organisation o the GEF: this is called the Special Priority on

Adaptation (SPA) and is essentially a GEF trustund.35 Te LDCF supports the preparation andimplementation o National Adaptation Planso Action (NAPAs).

NAPAs ocus on enhancing adaptive capacity to climate variability. Tey provide a processor LDCs to identiy priority activities thatrespond to their urgent and immediate needs

with regard to adaptation to climate change.Te SCCF ocuses on climate change mitigationmeasures that are integrated into nationalpoverty reduction strategies. Te SPA fnancesadaptation activities that also generate globalenvironmental benefts.

o date, adaptation unds disbursed translateto only around US$250 million a year to poorcountries or climate change projects. Nearly one-third o the US$760 million distributed inthe last three years has gone to China, India, andBrazil and less than US$100 million o the totalhas gone to projects in the world's 49 poorestcountries. Te Least Developed Countries Fund(LCDF) has only fnanced 22 projects, together

worth US$50 million.36




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3.3 International Funds or Mitigation and Adaptation argeted at the Agricultural Sector

3.4 National Adaptation Plans o Action (NAPAs)

Specifc interventions planned or the agricultural

sector, designed to help some o the countriesmost vulnerable to climate change, aresummarised in Annex able 6. Essentially, theseare country-specifc ‘bottom-up’ estimates o thelikely costs o adaptation to climate change; in allcases they reer to the costs required to ‘climatechange proo’ existing modes o agriculturalproduction. Te di culties in distinguishingbetween unds or adaptation to climate changein the agricultural sector compared to ‘normal’development practices are clear.

Annex able 6 also identifes the proportion o adaptation unds in the current NAPA that isdestined or the agricultural sector. I we reectback on the most vulnerable economies identifedin Section 1, in terms o the contribution o agricultural output and exports to GDP, we cansee that in some cases the proportion o totalunds allocated to the agricultural sector appearsto support the identifed degree o vulnerability (i.e. Malawi). However, in some cases, this doesnot appear to be the case, i.e. Senegal.37 And inother cases, NAPAs are simply not yet available,including some o the most vulnerable countriesidentifed (i.e. Mali).

I the costs identifed in all NAPAs were totalled,

they should approximate to the estimates o theUNFCCC (2007) required to ‘climate change proo’the agricultural sector globally. Tis is true regardlesso dierences between countries, both in terms o the proportion o NAPA unding destined or theagricultural sector as well as overall vulnerability toclimate change. Te costs that wouldn’t be reectedare those that relate to adaptation to new marketopportunities and sources o income.

It is highly likely that developing countries

will need to make available country-specifcinormation on their carbon budgets, as well asoptions to reduce their emissions, in order toaccess some types o climate change fnance ormitigation (and to a lesser extent adaptation).

Although there are new market opportunitiesassociated with low-carbon growth and globalmitigation eorts, there are also some majorbarriers. Tese include a dearth o scientifccapabilities to veriy emissions reductions:tapping into carbon markets eectively requiresa new type o institutional trade inrastructure.Te ollowing section reviews other sources o fnance designed to acilitate trade and access tomarkets, such as Aid or rade.

Although there has been much criticism o boththe amount o mitigation and adaptation unds

disbursed to date as well as which countries havereceived these unds, Annex able 5 attemptsto identiy, in broad terms, the proportiondestined or the agricultural sector. Tis has beenachieved by reviewing the projects currently in receipt o both types o unds (adaptation

and mitigation). Funds targeted at adaptationin the agricultural sector appear to be more

prevalent than those or mitigation eorts, suchas diversiying into new low-carbon products.Clearly the GEF Least Developed CountriesFund has been the most active und in theagricultural sector to date in relation to bothadaptation and mitigation eorts.




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4.1 Te History o Aid or rade in the World rade Organization

Te costs o trading became an important issue inthe Doha Round o WO negotiations becausedeveloping countries were still acing costs romimplementing the agreements o the previousUruguay Round, and they eared that the new Doha Round would impose additional costs—both in terms o negotiating capital as well asdirect fscal impacts. Both o these additionalcosts have clear parallels with concerns aboutthe economic impact o climate change throughnew rules and through damage to production.

Te extension o trade rules to new areas likeintellectual property and the tightening o ruleson existing areas have led to complaints that theserules had high costs o compliance or developingcountries, oten out o proportion to any beneft.

While there had been general statements inprevious agreements about potential technical

assistance to help countries meet these costs, therehad been no ormal commitments and countriesdid not consider that the aid had been su cient.

Tereore they would not accept new obligations without guaranteed assistance to meet the costs.Te second main concern o developing countriesin the Doha Round was about preerence erosion.Tose countries that already had exceptionally avourable preerential access eared thatmultilateral liberalisation would reduce theirexport revenue. Starting in 2003, developingcountries began suggesting special unding as anecessary part o any trade agreement.

Te frst result, in 2004, was a way o dealing with regulatory costs. For the proposednew rules on rade Facilitation (how goodsare treated at the border), it was agreed thatcountries that did not receive the ‘requiredsupport and assistance’ would not be boundto implement the new rules. In order to deal

with the much higher potential real costs rom

loss o exports, WO members adopted a clausemandating Aid or rade (Hong Kong MinisterialDeclaration, paragraph 57, WO 2005),

4. LINKING AID FOR RADE O CLIMAE CHANGE AND AGRICULURE

echnical assistance or trade aims to help

developing countries design and implementtrade policy eectively and to help producers

within these countries be competitive, giventhe policies, markets, products, and conditions

which ace them, now and in the uture. While good technical support programmesshould implicitly prepare countries to meetany expected trading environment (as wellas the actual trading environment), somechanges aecting international trade may be

so large or so uncertain that trade assistancemust allow or them explicitly. Climatechange and the international conventions inresponse to this will aect what is produced,

what is traded, trading rules, the standardstraded goods must meet, and the regulationsthat they must ollow.

As discussed in Section 1, this creates new costs and new opportunities, and thereore

new needs or assistance related to trade. An

additional reason or linking trade-related aidto climate change is that in some cases the new international climate change agreements arelinked to fnancing or the costs o adaptationor mitigation. o the extent that these costsare related to trade, this fnancing must becoordinated with general assistance or trade.Changes in the climate, and in agreementsabout it, can thus aect the demand or and thesupply o fnancing or trade capacity building.

Tis section will frst look at how Aid or radehas emerged as an agreed-upon internationalinitiative, because this oers possible lessons oraid or climate change. It will then examine thespecifc categories o Aid or rade to indicatehow they could be related to needs or assistancethat are arising out o climate change. It willfnally look at the problems o coordinatingdierent types o assistance.




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“to build the supply-side capacity and trade-related inrastructure that they [developingcountries] need to assist them to implementand beneft rom WO Agreements and more

broadly to expand their trade”. Tey set up aask Force to report within six months, andthe report was adopted in 2006.

Te ask Force (WO 2006) defned the scopeo Aid or rade as:

• rade policy and regulations, including:training o trade o cials, analysis o proposals and positions and their impact,

support or national stakeholders to articulatecommercial interest and identiy trade-os,dispute issues, institutional and technicalsupport to acilitate implementation o tradeagreements and to adapt to and comply withrules and standards.

• rade development, including: investmentpromotion, analysis and institutionalsupport or trade in services, businesssupport services and institutions, public-

private sector networking, e-commerce,trade fnance, trade promotion, marketanalysis and development.

• rade-related inrastructure, including:physical inrastructure

• Building productive capacity.

• rade-related adjustment, including:supporting developing countries to put inplace accompanying measures that assistthem to beneft rom liberalised trade.

• Other trade-related needs.

Te success (and speed) in securing agreementto special provisions to und Aid or rade

was, in large part, due to the desire to secure amultilateral trade agreement that required theconsent o all countries. It was consistent with

the view that the developed countries that hadcreated the system o preerences should help tomeet the costs o unwinding it. But it also owed

some o its acceptability to dissatisaction withthe treatment o aid in existing aid programmes.Te increased ocus on poverty reductiongoals was oten interpreted as requiring

recipients to change allocations in avour o social programmes rather than support or theproductive sectors. Aid to improve capacity to trade had allen as a proportion o totalaid. ying demands or additional assistanceto negotiating a multilateral agreement, toprinciples o restorative justice,38 and also toa real need to reorm aid programmes couldstrengthen arguments or aid to help agricultureadjust to climate change.

Te WO has established a system o reviewingand monitoring progress, based on an annualGlobal Review. Te WO monitors datacollected by the OECD-DAC’s CreditorReporting System (CRS) or all aid. Te CRScodes most closely related to the ask Forcecategories o Aid or rade were identifed andagreed upon with the WO, and are used by the OECD to report to the WO on donors’aggregate unding o Aid or rade.

In addition to compiling data, the OECDand WO jointly issued questionnaires in2007 and 2008 to bilateral donors, recipientcountries, and some international agenciesasking or inormation on their Aid or radestrategies and what they und or receive. Someinormation going beyond ows o unds datais thus now available at world and country level. Te WO also includes monitoring

Aid or rade in its rade Policy Reviews o both donor and recipient countries. As thesetake place only every two years or the majordonors and, at most, every six years or thepoorest countries, this process will take timeto cover all countries.

Te data rom the CRS, the Global Review by theGeneral Council o the WO, and the detailedmonitoring o donors and recipients through thequestionnaires and potentially in the rade Policy

Reviews, give the WO the inormation needed tomonitor the level and distribution o unding andthe opportunity to criticise and propose reorms.




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Tis links aid providers, reporting to the OECD-DAC, to the organisation responsible or trade,the WO. But the reluctance o the WO asan organisation to challenge the traditional

aid agencies has made the reviews more oraor exchange o inormation than appraisalmechanisms. Te agencies do not subject theirdecisions on projects to common criteria.

Ater 2006, the stagnation o the Doha Roundmeant a lack o ongoing trade negotiationsin which developing countries could demandchanges to aid in return or trade concessions.Tereore, although there have been increased

ows o unds or trade-related purposes, thereis no way to ensure that these purposes will beinuenced by the priorities o the internationaltrading system.

In climate change unding, it has beenaccepted that there will be a variety o unds.hese will also require monitoring to ensurethat they are suicient and appropriate. heexperience o Aid or rade oers to climatechange unding lessons on structure, but also

warnings on the conditions necessary oreectiveness.

4.2 Linking the Aid or rade Categories to Climate Change Needs

Tis section links the categories that areincluded within Aid or rade, and items relatedto enhanced supply-side capacity, to thoseidentifed in the ensuing sections as necessary or building climate change resilience. As willbe shown, there is considerable overlap andthereore scope or both initiatives to be linked.However, Aid or rade categories have beenlinked in this sub-section in a purely suggestive

way: more concrete examples requires more in-depth, country-specifc analysis.

4.2.1 Trade policy and regulations

Te United Nations Environment Programme,UNEP (de Lombaerde and Puri 2009:94–5) hasidentifed needs in environmental policy whichclosely parallel those in trade capacity building: “A key issue…is the ability o developing countriesand developing country experts to meaningully participate in international standard-settingbodies.…Equally important or developingcountries are the issues related to domesticimplementation capacities. Te third elementis related to both o the above and concernsthe creation o policy space or meaningulparticipation by various stakeholders”. Carbonlabelling is an example o a potentially importantadvantage or developing countries i they can beassisted in participating more eectively in setting

the rules and meeting them. For all these, the typeso assistance given to build policy capacity in trade would be relevant to climate-related needs.

rade policy may also be used as a tool inclimate change initiatives. Tere are proposalsto link national initiatives to tax or capcarbon usage to border taxes on countriesnot accepting similar taxes. Challenging suchmeasures when they violate WO rules andfnding least cost ways o conorming to them

when they do not, will mean that countriesmay need additional training and assistance

in analysing trade regulations in order to meetclimate objectives.

4.2.2 Trade development

I carbon border taxes are imposed, some developingcountries may need assistance in adapting theirproduction to minimise their impact. Securingprivate fnance or the investment needed orclimate change adaptation and mitigationmay include increasing oreign investment, soassistance in attracting and managing this will berelevant to climate objectives. Some developingcountries are likely to need assistance in orderto take advantage o the CDM: initial capitalinvestments may be required.

As noted by Halonen (2009), fnance relatedbarriers that developing countries ace includethe high transaction costs associated withCDM project preparation and implementation.

CDM projects must conorm, in the currentcommitment period (2008–2012), to the“additionality” clause. Tat is, CDM projects




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must be verifable and contribute to emissionreductions above and beyond the business-as-usual scenario. Tey must not merely be incompliance with existing legislation.

4.2.3 Trade-related inrastructure

Many o the types o inrastructure in the plansor the agricultural sector included in NAPAs(Annex able 6) could be related to support ortrade as well as enhanced resilience to climatechange. Tese could include, or example, inGuinea, rehabilitating hydro systems; in Guinea-Bissau, protecting production rom high tides;

and in Senegal, increasing irrigation acilities.Tere are thereore synergies with Aid or radei the investments required to increase theresilience o existing and planned inrastructureto climate change are related to the supply-sidecapacity o countries to trade.

4.2.4 Building productive capacity

rade capacity building will need to respondto climate change by assisting countries frst to

diversiy to reduce their vulnerability to theserisks and then to fnd new areas o specialisationand to meet the new regulatory requirementsor traded products. Te data in ables 1.3, 1.4,and 1.5 show clearly that or some countriesclimate change eects will have a major impacton agricultural production and trade. Te sizes o the eects are or some countries at least as largeas those rom preerence erosion that triggeredinterest in Aid or rade. In some cases, notably Malawi, the most seriously aected countries arethe same, strengthening the case or providingcoordinated assistance to adjust. Most o theprojects in the NAPAs (Annex able 6) to adaptsupply could be related to trade, or exampleadapting crops to salinity and risks o ooding inBangladesh, building capacity in the DemocraticRepublic o Congo, adapting technologies in

Guinea, improving crop and livestock productionin Madagascar, and adapting agriculturalproduction to erratic precipitation in Malawi.

Barriers to tapping into new market opportunities such as the CDM, may include not only fnancialbarriers but also limited productive capacities,such as the ability to monitor and certiy emissions reductions; this would apply equally to carbon labelling initiatives. Te buildingo new trade capacities will be required in thetransition to a global low-carbon economy.

4.2.5 Trade-related adjustment

Te potential increase in the size and requency o climate-related shocks will aect tradedproducts: compensation schemes or shocks tosupply or to prices o commodities are amongthe earliest orms o trade-related assistance romthe international fnancial institutions. o theextent that climate change results in increasedvolatility o weather patterns and climatic shockson the agricultural sector (but not exclusively)it may also result in greater macroeconomic

instability. Tis suggests that greater attentionshould be paid to the ability o countries toaccess international mechanisms designed tocope with exogenous adverse shocks, includingthose related to climate change.39

4.2.6 Other trade-related needs

Te ask Force did not want to exclude any measures which a country could show wereintended to improve its trade. Te category o ‘Other trade-related needs’ can thereorebe used or any trade-related climate projectsthat do not all under one o the designatedcategories. Countries will need to takeaccount o climate change in their respectivedevelopment plans. Aid that assists with thistask could all under this category.




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4.3 COORDINAION AND COMPEIION FOR FUNDING

4.3.1 rade and climate change

Some agencies involved in supporting tradehave already recognised the need to includeclimate change issues. Most climate-relatedunds, including the growing number underthe World Bank and those proposed by bilateralaid agencies (including EC, UK, Spain, Japan,Germany, Norway, Australia, and Germany) aretargeted at adaptation to environmental change,including changes in trade, rather than at theregulatory requirements o the international

conventions. Special unds include provisionsor assistance on energy use and shiting to low-carbon production. A more general aim is, “whatthe Bank calls ‘climate-proofng’ developmentprojects, which it estimates will require a ew billion U.S. dollars annually” (Porter et al.2008:14). Some o these programmes are trade-related. For example, some technical assistanceis targeted at increasing analytical capacity,

which could have benefts or trade capacity as well, and the und conditions oten emphasise

adoption o new technologies. Tere are obviouscomplementarities with productivity-increasingtechnical assistance or trade.

Tere appears to be no estimate o how much o the total estimated costs o adaptation to climatechange may be or trade-related projects. “A Bank paper on climate change has predicted thatit would have to increase IDA [InternationalDevelopment Association] unding by 6 percentto 21 percent annually just to maintain thesame net level o benefts to recipient countries,compared to a scenario without climate change”.(Porter et al. 2008:14). Tis percentage might betaken as a rough initial estimate o the additionalcost o ‘climate-proofng’ trade capacity buildingor other donors.

Only a ew donors currently cover regulatory needs. UNEP has pointed to the need to link trade and environmental initiatives. Its support

o assessments o the environmental impact o trade policy changes in specifc sectors led tothe publication o the Reerence Manual or the

Integrated Assessment o rade-related Policies andIntegrated Assessment Guidance or Mainstreaming Sustainability into Policymaking (UNEP 2001;UNEP 2009; UNIDO 2009). It has promoted

work on analysing the relationship betweenMultilateral Environmental Agreements (MEAs)and trade agreements and published a joint report

with the WO (amiotti et al. 2009).

Specialised agencies like the International

Civil Aviation Organization, ICAO, and theInternational elecommunications Union,IU, are working to establish internationaltechnical standards to limit environmentaleects, and could include these in their generalsupport programmes. UNCAD providesand supports analysis o the links o climatechange to trade, investment, and development,including building developing country capacity to adopt consistent trade and environmentalpolicies. It also provides support specifcally to

help countries meet environmental standards.UNECLAC (United Nations EconomicCommission or Latin America and the Caribbean)also provides support or analysis o the impacto climate change and new standards or trade(UNIDO 2009).

All the donors listed in Annex able 5 asproviding unds or mitigation and adaptationin the agricultural sector, except the GEF, arealso involved in unding trade-related assistance,so in principle there should be mechanismsor harmonising objectives and coordinatingfnance. In practice, there are not yet regularchecks to ensure compatibility.

4.3.2 Linking unding or specifc purposes to o cial development assistance

Any targeted assistance, mandated by international agreement, causes problems in normal aid terms.

Implementing WO or climate agreements willbeneft the world as a whole, and may beneft acountry directly. But such changes are not necessarily




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priorities or a cash-constrained government, sounder normal criteria many implementation costs

will not qualiy or assistance.

As the World Bank (World Bank 2009) hassuggested, the most e cient ways to reduceemissions and improve energy e ciency globally may be through investment in developingcountries. Since this is or the beneft o all,this study argues, such investment should beunded by those most able to do so, i.e., throughtransers rom developed countries. Assistanceor adjustment is more directly related to acountry’s needs, but allocating aid according to

the damage rom climate change, like allocatingit according to a country’s costs rom preerenceerosion, is not consistent with the normal criteriaor aid, except perhaps or macroeconomicadjustment to exceptional external shocks.Te public good and negotiation reasons thatled to the acceptance o Aid or rade—thatdeveloping countries must be persuaded toaccept an international agreement which willimpose costs on them—also apply to climatechange related assistance.

Tere has been discussion and concern aboutthe di culties o linking trade capacity building to poverty strategies in countries’ aidprogrammes, as there has been about linkingenvironmental aid to poverty strategies (Prowseet al. 2009, or example). Funds targeted atclimate change also raise the same issues o inconsistency between targeted assistanceand general budget support that are ound intrade capacity building (e.g., Bird and Cabral2009). In both cases there are clear generalinterests in ensuring that individual countriesmeet international standards, but the risk remains that countries may choose to givesuch compliance lower priority than othernational interests i country priorities are givenprecedence over global concerns.

Tereore, since both trade and climate changerelated programmes have, in part, international

objectives and exist or the beneft o countriesother than the direct recipients o assistance,they should not be considered quantitatively

part o o cial development assistance. Tey donot and should not ollow the Paris Declarationprinciples o conorming to national prioritiesor to the principles or allocation among

countries according to poverty or otherdefnition o need that bind some aid agenciesand inuence most o them. Instead, climatechange related unding, in relation to eorts tomitigate climate change should be determinedby where it is more e cient to be spent. Fundingor adaptation, should be determined by whichcountries are going to be most aected. Tis isnot the same as ‘normal’ country priorities o donors or countries.

However, that targeted assistance should beadditional to normal ODA does not meanthat it should be separate rom it at the levelo programmes or projects. Indeed, ensuringthat a development programme should usetrade e ciently and be consistent with limitingclimate change and achieving a sustainablepattern o production should be part o any aid programme. Tis is consistent with the

World Bank approach o considering how

to ‘climate proo’ development projects andestimating the costs o doing so. o do this,it is necessary to estimate the additional costsimposed by climate objectives, and increasetotal ODA by that amount (or, where there issu ciently disaggregated inormation on costs,increase dierent types o ODA by appropriateactors). In practice it is already di cult toseparate unding or adaptation or mitigationor climate change rom normal adaptation tonew trading problems or opportunities andthis will become increasing di cult as takingaccount o climate change becomes a morestandard part o project analysis.

By accepting the explicit objective o ‘helpingcountries to trade’, bilateral donor countriesthat are members o the WO added aninternational obligation to their existingobjectives or their aid programmes. Te same

would be true or aid related to climate change.

For those donors that have mandates explicitly directed at poverty reduction, this additionrequires some modifcation or reinterpretation




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o aid priorities, or clearly separated budgetlines. Te new ocus on trade also brought aneed or dierent types o expertise; in somecases this has been met by allocating more

fnancing through multilateral or specialisedagencies. Te same would be needed or climatechange related assistance.

Tere will be temptations or those concerned with any special need, including trade andclimate change, to try to divert unds romthose or general development or rom those orpotentially related needs. Tis creates conicts.

As is shown by the calculations o the additionalcosts o ‘climate-proofng’ existing projects,any new purpose or Aid or rade wouldrequire additional unding to avoid diversion

rom existing needs. How ar should undingintended to help developing countries to buildtrade capacity be used or needs created by other policy interventions, such as internationalclimate change conventions? How ar shouldenvironmental or trade unding based on theinterests o the global community, displaceassistance determined by the needs and prioritieso each country?

Tere are going to be two types o impact madeby climate change on the agricultural sector. Tefrst is rom climate change itsel: climate change

will necessitate changes in what is produced, what is traded, and how it is traded, becausethe new conditions will make some old typeso production or trade impossible. Among themost important types o change likely to aect

developing countries’ current production patternsare changes in rainall and other changes in thesupply o water, altering the competitiveness o dierent areas in producing cereals (ables 1.1and 1.2). emperature changes will also changethe areas capable o producing tropical and sub-tropical crops, including major export revenuegenerators like coee. Sub-Saharan Arica, Latin

America, and South Asia are likely to have toproduce new commodities, while South-East

Asia, like some developed areas, may be able toincrease current production. Changes in sea level

will reduce the supply o land in some areas.Increased risk o extreme climatic shocks may shit the balance o production towards locationsthat are more resilient to shocks, even at the costo reduced productivity.

Te second type o changes relates to theimposition o new regulations, both multinationaland national, which will impose new product

standards and new costs o meeting regulationsand demonstrating compliance. Te negotiationo new conventions also imposes new costs and the

need or new skills. New regulations could includenew requirements on standards and labelling(e.g., carbon labelling). Tere are risks that somecountries will take unilateral action to restricttrade (e.g. border tax adjustments to complementnational measures), which will require developingcountries to respond or adapt. Climate change

will aect the availability o and the regulations

governing the use o dierent energy sources which will aect energy use. Changes in energy use will, in turn, increase costs by variable amounts, which will aect the competitiveness o dierentproducts and producers, including agriculturalproducts and producers.

On the demand side, climate change willstimulate demand or low-carbon or cleanenergy sources; this may include cropsproduced or biouels. rade and the patternso production which result rom dierenttrade regimes or capacity to trade, in turnaect the climate. Assistance directed at trademust take these eects into account. I allinputs are priced to reect both their scarcity and any external diseconomies, then shitingproduction to the most e cient producersshould reduce the impact on climate as wellas improving development prospects. othe extent that prices are wrong, assistance

to trade should encourage better policy andavoid relying on distorted prices to identiy trading opportunities.

5. CONCLUDING REMARKS




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IPCC (2001).

IPCC (2007a).Contribution o the Working Group III to the ourth assessment report o the Intergovernmental Panel on Climate Change, Chapter 8 . Geneva: Intergovernmental Panel on Climate Change. Obtainedrom: http://www.ipcc.ch/pd/assessment-report/ar4/wg3/ar4-wg3-chapter8.pd

IPCC (2007b). Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution o Working Group II to the Fourth Assessment Report o the Intergovernmental Panel on Climate Change .In: Parry, ML, et al., (eds.). Cambridge: Cambridge University Press.

Josling and BlandordLudi, E, Stevens, C, Peskett, and Cabral, L (2007). Climate Change and Agriculture: Agricultural rade, Markets and Investment (drat). London: Overseas Development Institute (March). Obtainedrom: http://www.odi.org.uk/resources/download/1261.pd

McCarl, B (2007). Adaptation Options or Agriculture, Forestry and Fisheries . A report to the UNFCCC Financial and echnical Support Division. Bonn: United Nations Framework Convention on ClimateChange. Obtained rom: http://unccc.int/fles/cooperation_and_support/fnancial_mechanism/application/pd/mccarl.pd

McKinsey and Company (2009a). Pathways to a Low-Carbon Economy, Version 2 o the Global Greenhouse Gas Abatement Cost Curve.

Nelson, GC (2009). Climate Change and Agriculture . Washington, DC: International Food Policy Research Institute (February).

ODI (2008a). Review o the Indirect Efects o Biouels: Economic benets and ood security, Report tothe Renewable Fuels Agency (RFA). London: Overseas Development Institute. Obtained rom: www.dt.gov.uk/ra/_db/_documents/Report_o_the_Gallagher_review.pd

ODI (2008b). Are Ethical and Fair rade Schemes Working or Poor Producers or Do We Need a Good or Development Label? London: Overseas Development Institute. Obtained rom http://www.odi.org.uk/resources/download/2457.pd




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ODI (2008c). Achieving Green Growth in a Carbon Constrained World, Background Note . London:Overseas Development Institute (October). Obtained rom: http://www.odi.org.uk/resources/download/2449.pd

Page, S (2007). Te Potential Impact o the Aid or rade Initiative . Geneva: United NationsConerence on rade and Development (G24 Discussion Paper Series 45).

Porter, G, Bird, N, Kaur, N and Peskett, L (2008). New Finance or Climate Change and the Environment. Gland/Berlin: World Wildlie Fund/Heinrichöll Stitung. Obtained rom: http://

www.odi.org.uk/resources/download/2980.pd

Prowse, M, Grist, N and Sourang, C (2009). Closing the gap between climate adaptation and poverty reduction rameworks . London: Overseas Development Institute (ODI Project Briefng 21).

Reed, D (ed.), (2009). Te Institutional Architecture or Financing a Global Climate Deal: An Options Paper, echnical Working Group or the Danish Government.

Reilly, J M and Schimmelpennig D (1999). Agricultural Impact Assessment, Vulnerability, and theScope or Adaptation. Climatic Change , 43(4):745–788.

Ruosteenoja K, Carter R, Jylhä K and uomenvirta H (2003). Future climate in world regions: anintercomparison o model-based projections or the new IPCC emissions scenarios . Helsinki: Te FinnishEnvironment Institute (Finnish Environment 644).

South Centre (2009). Te Rise o “Climate Protectionism”, South Bulletin, Issue 40 [Internet].

Obtained rom:http://www.southcentre.org/index.php?option=com_content&task=view&id=1081&Itemid=279

Stern, N (2008). Key Elements o a Global Deal on Climate Change . London: London School o Economics and Political Science. Obtained rom:http://www.occ.gov.uk/activities/stern_papers/Key%20Elements%20o%20a%20Global%20Deal%20-Final01may.pd

amiotti, L, et al. (2009). rade and Climate Change. A report by the United Nations Environment Programme and the World rade Organization. Geneva: World rade Organization. Obtained rom:http://www.wto.org/english/res_e/booksp_e/trade_climate_change_e.pd

UNCAD (2009). Te Clean Development Mechanism – Guide 2009 . Geneva: United NationsConerence on rade and Development. Obtained rom: http://www.unctad.org/templates/

webyer.asp?docid=11809&intItemID=4342&lang=1

UNDP (2008). Human Development Report 2007/2008. Fighting Climate Change: Human solidarity in a divided world . New York, NY: United Nations Development Programme. Obtained rom:http://hdr.undp.org/en/media/HDR_20072008_EN_Complete.pd

UNEP (2001). Reerence Manual or the Integrated Assessment o rade Related Policies. Geneva:

United Nations Environment Programme. Obtained rom:http://www.unep.ch/etu/etp/acts/manpols/remania_fnal.pd




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UNEP (2009). Integrated Policymaking or Sustainable Development: A reerence manual. Geneva:United Nations Environment Programme. Obtained rom: http://www.unep.ch/etb/publications/IPSD%20manual/UNEP%20IPSD%20fnal.pd

UNFCCC (2007). Investment and Financial Flows to Address Climate Change . Bonn: United NationsFramework Convention on Climate Change Secretariat.

UNIDO (2009). rade Capacity Building: Inter-Agency Resource Guide . Geneva: United NationsIndustrial Development Organization.

Wheeler, and i n, R (2009). Costs o adaptation in agriculture, orestry and fsheries. In:Parry M, et al. Assessing the Costs o Adaptation to Climate Chang: A Review o the UNFCCC and Other Recent Estimates . London: International Institute or Environment and Development andGrantham Institute or Climate Change, pp. 29–39. Obtained rom: http://www.iied.org/pubs/

pds/11501IIED.pd

Williams, AG (2007). Comparative study o cut roses or the British market produced in Kenya and the Netherland: A report or World Flowers . Cranfeld, United Kingdom:Cranfeld University.

World Bank (2009a). World Development Report 2010: Development and Climate Change. Washington DC.

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WRI (2009). Climate analysis indicators tool . Washington DC: World Resources Institute. Obtainedrom: http://cait.wri.org/

WO (2005). Doha Work Programme, Ministerial Declaration in Hong Kong, W/MIN(05)/W/3/ Rev.2, December 18. Geneva: World rade Organization.

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WO/UNEP (2009) rade and climate change, WO-UNEP Report. Geneva: World radeOrganization. Obtained rom:http://www.unep.ch/etb/pd/UNEP%20WO%20launch%20event%2026%20june%202009/rade_&_Climate_Publication_2289_09_E%20Final.pd

National Adaptation Plans o Action (NAPAs) Reviewed

BanglasdeshGovernment o the People’s Republic o Bangladesh. Ministry o Environment and Forest (2005).National Adaptation Programme o Action (NAPA): Final Report . Dhaka. Obtained rom: http://

unccc.int/resource/docs/napa/ban01.pd




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Cambodia Royal Government o Cambodia. Ministry o Environment (2006). National adaptation programme o action to climate change (NAPA). Phnom Penh. Obtained rom:http://unccc.int/resource/docs/napa/khm01.pd

United Nations Framework Convention on Climate Change. (2006?). Cambodia project list . Bonn.Obtained rom:http://unccc.int/fles/adaptation/napas/application/pd

Democratic Republic o the CongoRépublique Démocratique du Congo. Ministère de l’Environnement (2006). Programme d’ActionNational d’Adaptation au Changement Climatique de la Républlique Démocratique du Congo [National

Adaptation Programme o Action on Climate Change o the Democratic Republic o Congo].Kinshasa. Obtained rom:

http://unccc.int/resource/docs/napa/cod01.pd

Guinea République de Guinee. Ministère de l’Agriculture, de l’Elevage, de l’Environnement, des Eauxet Forêts, Conseil National de l’Environnement (2007). Plan d’Action National d’Adaptation aux changements climatique (PANA) de la république de Guinee [National Adaptation Programme o Actionon Climate Change (NAPA) o the Republic o Guinea]. Conakry. Obtained rom:http://unccc.int/resource/docs/napa/gin01.pd

United Nations Framework Convention on Climate Change (2007?). National AdaptationProgrammes o Action, Index o NAPA Projects by Country: Guinea. Bonn, pp. 9–11.

http://unccc.int/fles/adaptation/application/pd/napa_index_country.pd

Guinea-BissauUnited Nations Framework Convention on Climate Change (2007?). Guinea Bissau: NAPA Project Prole. Bonn. Obtained rom:http://unccc.int/fles/adaptation/napas/application/pd/15_guineab_pp.pd

MadgascarRépublique de Madagascar, Ministère de l’Environnement, des Eaux et Forêts (2001?). Programme d’Action National d’Adaptation au changement climatique [National Adaptation Programme o Actionon climate change] . Antananarivo. Obtained rom:http://unccc.int/resource/docs/napa/mdg01.pd

MalawiRepublic o Malawi. Ministry o Mines, Natural Resources and EnvironmentEnvironmental Aairs Department (2006). Malawi’s National Adaptation Programmes o Action(NAPA) under the United Nations Framework Convention on Climate Change (UNFCCC), First Edition. Lilongwe. Obtained rom:http://unccc.int/resource/docs/napa/mwi01.pd

Senegal

Répubique du Sénégal. Ministère de l’Environnement et de la Protection de la Nature (2006). Plan




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d’Action National pour l’Adaptation aux changements climatiques [National Adaptation Programme o Action on Climate Change] . Dakar. Obtained rom:http://unccc.int/resource/docs/napa/sen01.pd

United Republic o anzania (the)United Nations Framework Convention on Climate Change (2007?). anzania: NAPA Project Prole. Bonn. Obtained rom: http://unccc.int/fles/adaptation/napas/application/pd/34_tanz_pp.pd

Zambia Republic o Zambia. Ministry o ourism, Environment and Natural Resources (2007).Formulation o the National Adaptation Programme o Action on Climate Change: Final Report .Lusaka. Obtained rom: http://unccc.int/resource/docs/napa/zmb01.pd

United Nations Framework Convention on Climate Change (2007?). National Adaptation

Programmes o Action, Index o NAPA Projects by Country : Zambia. Bonn, p. 31. Obtained rom:http://unccc.int/fles/adaptation/application/pd/napa_index_country.pd




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1 See Nelson (2009), who also notes that uncertainties over where climate changes will take place meanlack o clarity about the eects on agricultural production. Tese uncertainties combine with the

complexity o the agricultural policy environment to make accurate simulations di cult to achieve.

2 Anderson, K. (2009) Te Challenge o Growth: Can growth be compatible with climatechange mitigation targets?

3 See Christoplos (2009): http://www.acp-eu-trade.org/library/fles/Christoplos_EN_040509_GRM-GDR_Aid-or-pro-poor-agricultural-trade-in-a-context-o-climate-change.pd

4 errestrial carbon’ relates to both orestry and the agricultural sector and includes: haltingdeorestation, reoresting marginal areas o land and sequestering more ‘carbon’ (or ‘carbonequivalent’, CO2e) in soils by changing agricultural practices.

5 See Nelson (2009), who also notes that uncertainties over where climate changes will take place meanlack o clarity about the eects on agricultural production. Tese uncertainties combine with thecomplexity o the agricultural policy environment to make accurate simulations di cult to achieve.

6 See Christoplos (2009): http://www.acp-eu-trade.org/library/fles/Christoplos_EN_040509_GRM-GDR_Aid-or-pro-poor-agricultural-trade-in-a-context-o-climate-change.pd

7 See Ludi et al. (2007): http://www.odi.org.uk/resources/download/1261.pd

8 GCMs are mathematical representations o the general circulation o a planetary atmosphere

or ocean and have been developed by various research centres. ypically, they dier in termso projected temperature change and climate sensitivity.

9 Te most recent assessment report o the IPCC draws on climate change impact, adaptation,

and vulnerability (CCIAV) assessments. Most CCIAVs provide scenarios o the uture emissionstrajectories based on assumptions in relation to socio-economic and technological development.

10 With reerence to the FAO Committee on Food Security, Report o 31st Session 2005.

11 Although these estimates are based on a range o scenarios, clearly an increase in temperaturesacross regions is predicted, even in the most optimistic that have been reviewed.

12 Tese estimates are a mean value o the results o a Ricardian statistical model and a process-based agronomic crop model (Cline 2007).

13 As noted by Cline (2007:24), carbon dioxide is an input to photosynthesis, which uses solar energy to combine water and carbon dioxide to produce carbohydrates, with oxygen as a waste product.Higher atmospheric concentrations o carbon dioxide also reduce plants stomatal (pore) openingsand hence the loss o water to respiration. Crops which are posited to beneft rom the eects o carbon ertilisation include: rice, wheat, soybeans, fne grains, legumes, and most trees; benefts orother crops such as maize, millet, sorghum, and sugarcane are much more limited.

14 Tese categories correspond to those identifed by Ludi et al. (2007), who identiy theollowing scenarios: 1. Export agricultural declines; 2. Capital intensive agricultural exportsincrease; and 3.Labour-intensive exports increase.

ENDNOES




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15 Further to the estimates o McCarl (2007) and critical review undertaken by Wheeler and i n(2009), IFPRI similarly suggests increased investment over baseline to adapt to climate change,the results o which are presented in Annex able 3 (Nelson et al. 2009). However, similar toMcCarl (2007), and as highlighted by Wheeler and i n (2009), one o the major shortalls

o applying a ‘climate mark-up’ is that current investment ows to the agricultural sector aretypically much lower than what is required to get countries up to their production possibility rontier, which results in an ‘adaptation defcit’, which is largely a ‘development defcit’ (Ibid:11).

16 For example, Wheeler and i n (2009:11) note that the estimated costs o climate changeproofng capital investments are made on the assumption that two percent o currentinvestment is climate sensitive.

17 o avoid an increase in temperature o not more than 2o C compared to pre-industrial levels. 18 See Annex able 1.

19 Some voluntary carbon markets already include the orestry sector.

20 As o August 2008, over hal o all registered projects were based in either India (30 percent)or China (22 percent) with only 2 percent located in sub-Saharan Arica (Gallagher 2008).Tis bias towards middle income countries has also been highlighted in the World Banks(2009) World Development Report.

21 A recent policy brie produced by the FAO (2009) also makes this point. It states that:inclusion o agriculture in developing country Nationally Appropriate Mitigation Actions(NAMAs) may also help to balance the exclusion o most orms o agricultural mitigation

rom the Clean Development Mechanism o the Kyoto Protocol.

22 A companion bill—the Kerry-Boxer bill—is pending beore the Senate. I it is approved, thetwo will need to be reconciled.

23 See http://www.t.com/cms/s/0/299b984-61e9-11de-9e03-00144eabdc0.html. For a brie summary o the Act, see: http://energycommerce.house.gov/index.php?option=com_content&view=article&id=1697:house-passes-historic-waxman-markey-clean-energy-bill&catid=155:statements&Itemid=55

24 Tis was announced by the European Agriculture Commissioner, see EurActiv (2009). A

Commission Sta Working Document assessed the role o European agriculture in climatechange mitigation and suggested that the, “revision o accounting rules or land use, landuse change and orestry under the UNFCCC and Kyoto Protocol will be important in [thedevelopment o stronger incentives or soil protection and management and the protection o carbon-rich soils such as grasslands]” (Commission o the European Communities 2009c:4).

25 ODI (2008a).

26 Tis section ocuses on low carbon products in the agricultural sector, as opposed to more generally.

27 Te transportation o horticultural products is usually undertaken with chartered tourist ights.

28 More biouel means less use o ossil uels. Tis reduces some countries’ reliance on oil imports, and




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may also beneft those developing countries that cannot grow biouel eedstock, but which wouldbeneft rom the lower global oil prices that would result rom reduced global demand or ossiluels. Te fndings o the Gallagher Review (2008) concede that there is a role or a sustainablebiouels industry, but that eedstock production must be avoided on agricultural land that would

otherwise be used or ood production, see Ellis and Keane (2008) and Gallagher (2008).

29 See Ellis and Keane (2008) or a review o a range o ethical standards or which compliancecosts are typically high and scope o developing country exporters, low.

30 It is also noted that, within the international ramework or the CDM, many legal, fnancialand technical issues are currently under discussion in the context o the Bali Roadmap.

31 See Annex able 3.

32 Whilst cap and trade schemes create certainty as to the quantity o emissions reduced, they may

lead to uncertainty and volatility in carbon prices (i there is no commensurate managementto reduce price volatility).

33 See World Bank (2009a:268) or discussion on the relative merits o carbon taxes versus capand trade schemes.

34 See www.climateundsupdate.org or urther details on how climate change fnance unds arebeing developed, what they support, and the scale and the disbursements so ar.

35 An Adaptation Fund (AF) has also been set up under the Kyoto Protocol. Te AF will fnanceconcrete adaptation projects and programmes in developing countries that are particularly

vulnerable to the impacts o climate change.

36 See http://www.guardian.co.uk/environment/2009/eb/20/climate-unds-developing-nationsand http://www.climateundsupdate.org/

37 Further analysis across NAPA categories may be necessary beore drawing defnitive conclusions, sincesome interventions related to the agricultural sector may all in other categories, such as ‘orestry’.

38 Te principle o ‘restorative justice’ is a branch o ethics that examines how responsibilitiesshould ethically be assigned to those already causing harm. As noted by Brown (2009),because climate change emissions are already causing harm and uture emissions limitations

are needed to prevent uture harm, climate change is a problem that requires thinking through what justice requires as a matter o both distributive and restorative justice. Because nationsshould ollow principles o both distributive and restorative justice in allocating emissionstargets among nations, nations should explain how their proposed emissions commitments inthe Copenhagen negotiations comport with these ethical considerations.

39 Such mechanisms include the commodity compensation programmes and exogenous shock acilities provided by the IMF, which have recently been made more exible and accessiblegiven the recent ood and fnancial crises.

40 See http://register.consilium.europa.eu/pd/en/08/st11/st11994.en08.pd




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ANNEX

able 1: Non-Annex 1 Parties to the UNFCCC

Aghanistan Albania Algeria Angola Antigua and Barbuda Argentina Armenia AzerbaijanBahamasBahrainBangladeshBarbados

BelizeBeninBhutanBoliviaBosnia and HerzegovniaBotswanaBrazilBurkina FasoBurundiCambodiaCameroonCape Verde

Central Arican RepublicChadChileChinaColombiaComorosCongoCook IslandsCosta RicaCubaCyprusCôte d’IvoireDemocratic People’s

Republic o KoreaDemocratic Republic o the Congo

DjiboutiDominicaDominican RepublicEcuadorEgyptEl SalvadorEquatorial GuineaEritreaEthiopiaFijiGabonGambia

GeorgiaGhanaGrenadWaGuatemalaGuineaGuinea-BissauGuyanaHaitiHondurasIndiaIndonesiaIran (Islamic Republic o)

Israel Jamaica JordanKazakhstanKenyaKiribatiKuwaitKyrgyzstanLao People’s DemocraticRepublicLebanonLesothoLiberia

LibyaMadagascar

MalawiMalaysiaMaldivesMaliMaltaMarshall IslandsMauritaniaMauritiusMexicoMicronesia (FederatedStates o)Mongolia

MontenegroMoroccoMozambiqueMyanmarNamibiaNauruNepalNicaraguaNigerNigeriaNiueOman

PakistanPalauPanamaPapua New GuineaParaguay PeruPhilippinesQatarRepublic o KoreaRepublic o MoldovaRwandaSaint Kitts and NevisSaint Lucia

Saint Vincent and theGrenadinesSamoa

San MarinoSao ome and PrincipeSaudi ArabiaSenegalSerbiaSeychellesSierra LeoneSingaporeSolomon IslandsSouth AricaSri LankaSudan

SurinameSwazilandSyrian Arab RepublicajikistanTailandimor-Lesteogoongorinidad and obagounisiaurkmenistanuvalu

UgandaUnited Arab EmiratesUnited Republic o anzania, United Republico Te ormer Yugoslav Republic o MacedoniaUruguay UzbekistanVanuatuVenezuela (BolivarianRepublic o)Viet Nam

YemenZambiaZimbabwe

Source: http://unccc.int/parties_and_observers/parties/non_annex_i/items/2833.php




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International bunkers LUCF PFC, HFC & SF6

Aghanistan Antigua and Barbuda Congo

Antigua and Barbuda Armenia Fiji

Bahamas Azerbaijan Papua New Guinea

Barbados Barbados Samoa

Belize Belgium Seychelles

Bhutan Brunei

Bosnia and Herzegovina Cape Verde

Burkina Faso Comoros

Burundi Dominica

Cape Verde Eritrea

Central Arican Republic Georgia

Chad Grenada

Comoros Iceland

Congo Kazakhstan

Djibouti Kiribati

Dominica Kyrgyzstan

Equatorial Guinea Luxembourg

Fiji Macedonia, FYR

Gambia Maldives

Grenada Mauritania

Guinea MauritiusGuinea-Bissau Moldova

Guyana Palau

Kiribati Saint Kitts and Nevis

Korea (North) Saint Lucia

Laos Saint Vincent and Grenadines

Lesotho Seychelles

Liberia aiwan

Madagascar ajikistan

Malawi rinidad and obago

Maldives urkmenistanMali Ukraine

Mauritania United Arab Emirates

Mauritius Uzbekistan

Namibia

Niger

Palau

Papua New Guinea

Qatar

Rwanda

Saint Kitts and Nevis

Saint Lucia

able 2 : Countries or which GHG emissions data are missing




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International bunkers LUCF PFC, HFC & SF6

Saint Vincent and Grenadines

Samoa

Sao ome and Principe

Seychelles

Sierra Leone

Solomon Islands

Suriname

Swaziland

onga

urkmenistan

Uganda

Vanuatu

able 3: Additional Annual Investment Expenditure Needed to Counteract the Eects o ClimateChange on Nutrition (Million 2000 US$)

Source: Nelson et al. (2009)Note: Results are based on crop model yield changes that do not include CO

2ertilisation eects; NCAR: National Center or

Atmospheric Research; CSIRO: Commonwealth Scientifc and Industrial Research Organisation (Australia).

able 2: Continued

ScenarioSouth Asia

East Asiaand thePacifc

Europe andcentral Asia

Latin Americaadn the

Caribbean

MiddleEast andNorth Arica

Sub-Saharan Arica

Developingcountries

NCAR with developingcountry investments

Agricultural

research

172 151 84 426 169 314 1,316

Irrigationexpansion

344 15 6 31 -26 537 907

Irrigatione ciency

999 686 99 129 59 187 2,158

Ruralroads (areaexpansion)

8 73 0 573 37 1,980 2,671

Rural roads(yieldincrease)

9 9 10 3 1 35 66

otal 1,531 934 198 1,162 241 3,053 7,118

CSIRO with developingcountry investments

Agriculturalresearch

185 172 110 392 190 326 1,373

Irrigationexpansion

344 1 1 30 -22 529 882

Irrigatione ciency

1,006 648 101 128 58 186 2,128

Ruralroads (areaexpansion)

16 147 0 763 44 1,911 2,881

Rural roads(yieldincrease)

13 9 11 3 1 36 74

otal 1,565 977 222 1,315 271 2,987 7,338




41

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Proposal Source o unding Note Annual unding ($billions)

Group o 77 and China 0.25-0.5 per cent o grossnational product o AnnexI Parties

Calculated or 2007 grossdomestic product 201-402

Switzerland $2 a ton o CO2 with abasic tax exemption o 1.5ton CO2 per inhabitant

Annually (based on 2012projections)

18.4

Norway 2 per cent o auctioning AAUs

Annually 15-25

Mexico Contributions basedon GDP, greenhousegases, and populationand possibly auctioning

permits in developedcountries

Annually, scaling up asGDP and emissions rise

10

European Union Continue 2 per cent levy on share o proceeds romCDM

Ranging rom low to highdemand in 2020

0.2-0.68

Bangladesh, Pakistan 3-5 per cent levy on shareo proceeds rom CDM

Ranging rom low to highdemand in 2020

0.3-1.7

Colombia, least developedcountries

2 per cent levy on shareo proceeds rom JointImplementation andemissions trading

Annually, ater 2012 0.03-2.25

Least developed countries Levy on international airtravel (IAAL)

Annually 4-10

Least developed countries Levy on bunker uels(IMERS)

Annually 4-15

uvalu Auction o allowances orinternational aviation andmarine emissions

Annually 28

able 4: Potential Sources o Mitigation and Adaptation Finance

Source: World Bank (2009a), taken rom UNFCCC (2008a)Note: AAU: Assigned Amount Unit; IAAL: International Air ravel Adaptation Levy; IMERS: International Maritime EmissionReduction Scheme. Annex I Parties include the high-income countries that were members o the OECD in 1992, plus countries with economies in transition.




43

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• Promoting Climate-Resilient WaterManagement and AgriculturalPractices (Cambodia);

• Building the Capacity o the AgricultureSector in Congo, Dem. Rep. o the, toPlan or and Respond to the AdditionalTreats Posed by Climate Change onFood Production and Security (Congo,Dem. Rep. o the);

• Integrating Climate Change Risk into Community-Level Livestock

and Water Management in theNorthwestern Lowlands (Eritrea);• Strengthening Resilience and

Adaptive Capacity to ClimateChange in Guinea-Bissau’s Agrarianand Water Sectors (Guinea-Bissau);

• Integrating Climate Resilience into Agricultural Production or FoodSecurity in Rural Areas (Mali);

• Support to the Adaptation o Vulnerable Agricultural ProductionSystems (Mauritania);

• Integrating Adaptation to

Climate Change into AgriculturalProduction and Food Security inSierra Leone (Sierra Leone);

• Integrating Climate Change Risksinto the Agriculture and HealthSectors in Samoa (Samoa);

• Implementing NAPA Priority Interventions to Build Resilienceand Adaptive Capacity o the Agriculture Sector to ClimateChange (Niger);

• Implementing NAPA Priority

Interventions to Build Resilience inthe Agriculture and Water Sectorsto the Adverse Impacts o ClimateChange (Sudan);

• Adaptation to the eects o droughtand climate change in Agro-ecologicalZone 1 and 2 in Zambia (Zambia)

UNDP MDG AchievementFund –Environmentand Climate

Changethematic window

90 90 Enabling pastoral communities toadapt to climate change and restoringrangeland environments (Ethiopia).

US$4 million.

Administeredby

Name Pledged(USD

Millions)

Deposited(USD

Millions)

Possible Interventions Relatedto Agriculture (Mitigation or

Adaptation).

Resources Available or Agricultural

Sector

able 5: Continued




44

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World Bank Pilot Programor ClimateResilience

208 0 No specifc inormation available. No specifcinormationavailable.

World Bank Scaling-upRenewableEnergy Program orLow IncomeCountries

100 0 No specifc inormation available. No specifcinormationavailable.

GEF Special ClimateChange Fund

107 94 • Coping with Drought and ClimateChange (Ethiopia);

• Adaptation to Climate Change in Arid Lands (KACCAL) (Kenya);

• Mongolia Livestock Sector Adaptation Project (Mongolia);

• Integrating Climate Changein Development Planning andDisaster Prevention to IncreaseResilience o Agricultural and Water Sectors (Morocco);

• Coping with Drought and ClimateChange (Mozambique);

• Rural Livelihoods Climate Change

Adaptation Support Programme(Pakistan);• Coping with Drought and Climate

Change (Zimbabwe).

otal unds orthe 7 projects

listed: US$18million (theco-fnancingtotal amountstoUS$ 166million).

World Bank StrategicClimate Fund

1 585 0 No specifc inormation available. No specifcinormationavailable.

GEF StrategicPriority on Adaptation

50 50 • Adapting to Climate Changethrough the Improvement o raditional Crops and Livestock Farming (Namibia);

• Sustaining Agricultural Biodiversity in the Face o Climate Change(ajikistan);

• Adaptation to Climate ChangeUsing Agro biodiversity Resourcesin the Rain Fed Highlands o Yemen (Yemen).

otal undso the threeprojectslisted: US$6.8million.

Source: www.climateundsupdate.orgNote: Based on unds registered and/or disbursed as o 20 August 2009; Co-fnancing relates to grants provided in addition to loans

and/or private fnance.

Administeredby

Name Pledged(USD

Millions)

Deposited(USD

Millions)

Possible Interventions Relatedto Agriculture (Mitigation or

Adaptation).

Resources Available or Agricultural

Sector

able 5: Continued




45

ICSD - IPC

able 6: Plans or the Agricultural Sector in NAPAs

Country Adaptation Plan related to Agriculture (a) (b)

Indicative Project Cost in US$ (c)

Basis o Assumptions

Country-specicSource

Bangladesh

Promotion o research ondrought, ood, and saline-tolerant varieties o crops.

5 050 000 A mean annualtemperatureincrease o 2.4° C, amean annualprecipitationincrease o 10% and a sealevel rise o 88 cm, all by 2100.

NAPA Bangladesh,http://unccc.int/resource/docs/napa/ban01.pd Promoting adaptation or

coastal-crop agriculture tocombat increased salinity.

6 550 000

Adaptation in agriculturalsystems in areas prone toenhanced ash-ooding:North East and CentralRegions. 6 550 000

18 150 000 (sum o allNAPA projects: 77 275

000)

23% o NAPA allocatedto the Agricultural Sector.

Cambodia

Promotion o householdintegrated arming.

2 500 000 Not specifed. Cambodia projectlist http://unccc.int/fles/adaptation/napas/application/pd/06_camb_pp.pd NAPA Cambodiahttp://unccc.int/resource/docs/napa/khm01.pd

Development andimprovement o community irrigation systems.

45 000 000

Community-basedagricultural soil conservationin Srae Ambel district, KohKong Province.

2 000 000

49 500 000 (sum o allNAPA projects:

128 850 000)

38% o NAPA allocatedto the Agricultural Sector

Congo,DemocraticRepublic o the

Te strengthening o agricultural productioncapacities: multiplication o improved seeds o corn, rice,and cassava.

5 658 760 Not specifed. NAPA Congo,Democratic Republico the: http://unccc.int/resource/docs/napa/cod01.pd


16 475 654)34% o NAPA allocated

to the Agricultural Sector

Promotion o adaptation-oriented technologies.1. Dissemination o soilconservation practices.2. Intensifcation o bulrush millet crops in thenorthern region o Guinea. 3. Implementation o asystem o early-warning

climate orecasts to protectagricultural production.

300 000;350 000;150000 Not specifed. NAPA Guinea projectlist: http://unccc.int/fles/adaptation/application/pd/napa_index_country.pd NAPA Guinea: http://unccc.int/resource/docs/napa/gin01.pd




46

ICSD - IPC

Rehabilitation o the hydro-agricultural system o theplains and lowlands. 1.Implementation o irrigatedrice cultivation in Moyenneand Haute Guinea.

300 000

Promotion o income-generatingactivities. 1. Intensifcation o small ruminant breeding. 2.Development and promotiono vegetable growing. 3.Implementation o a ranch orcane rats to prevent unsustainable

hunting o wildlie

325 000;250 000;300000

1 975 000 (sum o allNAPA projects: 8 025

000)


Guinea-Bissau

Capacity-building inprotection o salt-water rice(mangrove) against high-tideinvasion.

600 000 emperature will rise 2%,rainall willdiminish by 11.7%, andthe average

seal level willrise 50cm (by 2100).

NAPA Guinea-Bissauhttp://unccc.int/fles/adaptation/napas/application/pd/15_guineab_pp.pd Promotion o small-scale

irrigation in Geba and

Corubal rivers project.

800 000

Rehabilitation o smallperimeters o mangrove soilsor rice growing in ombali,Quinara, Baata, and Oioproject.

500 000

Support to production o ashort-cycle animals project.

400 000


7 200 000)

32% o NAPA allocated

to the Agricultural Sector

Madagascar

Support to the intensifcationo crop and livestock production (throughmaterial acquisition,input distribution, anddevelopment o income-generating activities andsectors at regional level).

270 000 Not specifed. NAPA Madagascarhttp://unccc.int/resource/docs/napa/mdg01.pd

270 000 (sum o allNAPA projects:

2 130 330)


able 6: Continued



Basis o Assumptions





47

ICSD - IPC

Malawi

Improving community resilience to climate changethrough the development o sustainable rural livelihoods.

4 500 000 Not specifed. NAPA Malawi http://unccc.int/resource/docs/napa/mwi01.pd

Improving agriculturalproduction under erraticrains and changing climaticconditions.

3 000 000


22 930 000)


Senegal (d)

Implementation o agroorestry in northern region: 3rd Activity: Aiding fght againstsoil salinisation by plantinghalophyte species.

10 000; Not specifed. NAPA Senegal http://unccc.int/resource/docs/napa/sen01.pd

Implementation o agroorestry in Bassin Arachidier region: 2nd Activity: Aiding fght againstsoil salinisation: 1. Recoveringo ‘tannes’ by planting halophytespecies. 2. Reorestation by

planting amarix. 3. Restorationo dikes.

10 000;2 500 000;1 000 000

Implementation o agroorestry in southern region:ambacounda Kolda,Ziguinchor: 2nd Activity: Aiding fght against soilsalinisation: 1. Plantinghalophyte species. 2.Reorestation by plantingamarix. 3. Restoration o dikes.

10 000;2 500 000;100 000

Implementation o agroorestry in southern region:ambacounda, Kolda,Ziguinchor: 3rd Activity:Restoration o degraded soils:1. Restoration o compostpits. 2. Buying carts.

54 000;90 000

Sustainable use o water-conservation promoting dripirrigation.

372 000

6 646 000 (sum o all

NAPA projects:43 182 000)


able 6: Continued



Basis o Assumptions





49

ICSD - IPC

Source: Adapted rom Capoor and Ambrosi (2008:59)

Note: CDM EB: CDM Executive Board; CSR: Corporate Social Responsibility; DOE: Department o Energy; DNA: Designated

National Authority; IEA: International Emissions rading Association; IFI: International Financial Institution; MDB: Multilateral

Development Bank; PDD: Project Design Document; UNFCCC: United Nations Framework Convention on Climate Change

Figure 1: Players and Institutions in the Carbon MarketRegulation

Other Services

Legal ramework: UNFCCC, EU Commission, voluntary standard sponsors (such as the ‘Gold Standard’)Regulatory bodies: UNFCCC Secretariat, CDM EB, National Agencies, NGOs

Quality control: DOEs, NGOs; Legal advisory services; Inormation & Analysis; Capacity building: MDBs,development agencies, DNAs, IEA, NGOs, networking events...

Suppliers Intermediaries End Users

• Project developers: stand alone andaggregators• Mandatedinstallations willing tosell allowances• Financiers: IFIs,

unds, major banks• Consultants: developmentagencies, engineeringcompanies, PDD writers, methodology developers, NGOs• echnology development transer: traditional and greentechnology providers,local or international• Policy environment: local authorities,development agencies

• Brokers

• raders

• Exchanges

• Private sector

nancialcompanies: banks,asset managers,insurance agencies;liquidity, arbitrage,structured productsor project fnancingand risk mitigation,capital leveragingand fnancialdiversifcation

• Large compliancebuyers

• Compliancebuyers: Annex Bgovernments, EUES installations

• Voluntary buyers: privatecompanies (CSR or pre-compliancepurchases),public entities(governments,municipalities),NGOs, individuals(oten bundled withconsumer product)

Primary ERs

Secondary ERs

Structuredrisk

mitigationprojects

Financing & hedging products

Primary ERs

Figure 1: Players and Institutions in the Carbon Market



About the Platform

In 2008 the International Food & Agricultural rade Policy Council (IPC) and the International Centre or rade and SustainableDevelopment (ICSD) launched Te ICSD-IPC Platorm on Climate Change, Agriculture and rade: Promoting Policy

Coherence. Tis interdisciplinary platorm o climate change, agricultural and trade experts seeks to promote increased policy coherence to ensure efective climate change mitigation and adaptation, ood security and a more open and equitable global oodsystem. Publications include:

• International Climate Change Negotiations and Agriculture.Policy Brie No.1, May 2009

• Greenhouse Gas Reduction Policies and Agriculture: Implications or Production Incentives and International rade DisciplinesIssue Brie No.1, by D. Blandord and . Josling, August 2009

• Climate Change and Developing Country Agriculture: An Overview o Expected Impacts, Adaptation and Mitigation Challenges,and Funding Requirements.Issue Brie No.2, by Jodie Keane, Sheila Page, Alpha Kergna, and Jane Kennan, December 2009.

• Carbon Standards Policies and Agricultural rade rom Developing Countries.

Issue Brie No.3, by James Macgregor (orthcoming, December 2009).

• Te Role o rade in Food and Agricultural Products in Climate Change Adaptation Costs.Issue Brie No. 4, by Gerald Nelson, Amanda Palazzo, Claudia Ringler, Mark Rosegrant, imothy Sulser, and Miroslav Batka(orthcoming, December 2009).

About the Organizations

climate change and developing country agriculture

Documents