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Climate Business

Climate Business > Sectors  > Agriculture & Forestry 

Agriculture and Forestry

 

Nexus between water, energy, and food security

 

Climate change is central to the fragile nexus between energy, water and food security, and will significantly impact economic development going forward.  Our work in agriculture and forestry extends to other sectors as well, for example: 

 

  • Water: Because agriculture uses around 70% of the world’s fresh water, IFC provides advisory and investment assistance to help clients identify and adapt to water-related risks exacerbated by climate change, making projects more resilient to existing and potential adverse impacts. 
  • Waste: Agribusiness produces vast quantities of waste streams which are valuable resources and can be used to fertilize soil or produce cleaner sources of energy. 
  • Clean and efficient energy: IFC helps farmers utilize clean energy sources in their operations, use by-products from agriculture as clean fuels, or improve processes in order to use less energy and produce fewer greenhouse gas emissions. 

 

Agriculture

 

The world must manage its agricultural resources more sustainably and efficiently. With current estimates of almost one billion people not having enough food to eat, the adverse impact of climate change on agricultural output will undoubtedly increase food insecurity, especially in developing countries.

 

IFC seeks commercially viable solutions and helps companies set benchmarks for responsible production in line with industry best practices. In areas such as sequestering carbon, managing watersheds, preserving biodiversity, and producing renewable energy resources, IFC’s efforts can also help generate new income through environmental services. IFC is also working with clients to strengthen their supply chains by helping small farmers increase productivity and apply appropriate environmental, social, and quality standards. 

 

Agribusiness presents significant climate business opportunities for IFC, according to the table below: 

 

  Annual crops Perennial crops Animal and Fish Production Processing
Cleaner production and Energy efficiency No/minimum till to minimize GHG emissions from soil; precision application of fertilizers & chemicals Precision application of fertilizers & chemicals Insulation and better technology for heating, cooling and lighting of buildings Improved heating and cooling systems, (e.g. boilers, steam, systems, refrigeration)
Renewable energy Crop residues can be used as biofuel (e.g. in boilers) Anaerobic digestion of manure/animal waste & methane capture; use of solar collectors on livestock buildings Methane capture from anaerobic digestion of processing wastes; use of bio-gas; production of bio-fuels (e.g. ethanol from sugar cane  and biodiesel)
Recycling Bio-fertilizer Waste  
Water Appropriate irrigation (e.g. drip irrigation) Efficient water use
Sequestration   Woody crops can be a “carbon “sink”    

 

 

Project examples:

 

  • Through the SouthAsia Enterprise Development Facility, IFC has been actively supporting the promotion of climate-resilient agricultural practices in Bangladesh by working with both the private and public sectors to ensure the most efficient mobilization of resources. More specifically, IFC is working with four of the largest private seed companies in Bangladesh as well as the state-run Bangladesh Rice Research Institute, and the International Rice Research Institute.  With advisory and financial support from IFC, the partnership is is producing and marketing stress-tolerant rice seeds able to withstand extreme weather conditions as well as developing a contract farming system, and building farmers’ capacity.
  • IFC is currently implementing advisory projects in the palm oil sector in Ghana, Liberia and Sierra Leone that focus on promoting and piloting the adoption of the principles and criteria of the Roundtable on Sustainable Palm Oil to the countries’ conditions and regulations.

 

Forestry

 

Commercial plantations and natural forests in the forest products sector, as well as perennial woody agricultural crops like coffee, cocoa and rubber play a key role in removing carbon dioxide from the atmosphere through photosynthesis. In forestry, studies show that each cubic meter of new forest growth removes nearly 1 ton of CO2 from the atmosphere.

 

IFC invests in sequestration projects, both as stand-alone plantations and in association with downstream pulp, wood, or food processing projects. Both forestry and agriculture provide new sources of income for thousands of poor farmers and forest workers.    In  the  forestry  life  cycle,  CO2 is removed from the atmosphere – not only as trees grow but also after they are transformed into durable wood or paper products. Deforestation and forest degradation are the second leading cause of global warming, responsible for about 20% of global greenhouse gas emissions, which makes the loss and depletion of forests an important driver of climate change. IFC supports efforts among its clients and member countries to reduce emissions from deforestation and forest degradation (REDD) by supporting sustainable management of natural forests and avoided deforestation projects.

 

Project examples:

 

  • IFC helped Stora Enso, a market leader in forest products, enhance its plantation practices in China through a training program
    for forestry workers. The program aims to develop a core group of trusted subcontracting companies able to undertake forest planting, cultivation, and harvesting operations to a high standard. IFC’s financing and advisory services will contribute to projects sequestering approximately 2 million tons of CO2 each year and will help reduce China’s reliance on unsustainable timber imports and fiber.
  • In India, IFC’s forest products clients sequestered 2 million tons of CO2 in 2007, and estimates suggest the number will increase to 3.5 million tons of CO2 by 2010.
  • In Tanzania, IFC is supporting Green Resources’ ambitious reforestation project, estimated to sequester 10 million tons of CO2 equivalent from a single new plantation in Tanzania over the course of 10 years. The effort will reduce the amount of greenhouse gas in the atmosphere and help offset Africa’s rising level of deforestation. Future plans include certification by the Forest Stewardship Council to ensure that the company’s plantations in Mozambique, Tanzania and Uganda are environmentally and socially sustainable.
  • To counter the unsustainable practices leading to deforestation in the Amazon, IFC has been involved in Agricultural Commodity Roundtables since 2001, and more recently, began working in partnership with Aliança da Terra, a non-profit organization that developed the Registry for Social-Environmental Responsibility, providing incentives to local cattle ranchers and soy producers to adopt better environmental practices. The IFC’s support has included recommending additional environmental and social criteria to bring registered producers closer to internationally recognized standards, developing a Carbon Monitoring and Accounting System to assess the carbon footprints and mobilizing additional financial resources such as the Gordon and Betty Moore Foundation ($823,000), IFC’s Biodiversity and Agricultural Commodities Program ($500,000), and industry players whose suppliers are from the Amazon ($1 million).

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