A $150 million fund backed by the Asian Development Bank and Global Environment Facility aims to mobilize $500 million in co-financing to help farmers and food companies in Asia and the Pacific grow and prosper while conserving and protecting nature through the use of more sustainable fertilizers, pesticides, and practices.
Agriculture is vital to humanity. But today’s unsustainable farming practices are placing an untenable burden on the planet.
Not only is our global food system the number one driver of biodiversity loss, it is a key contributor to climate change and a massive consumer of natural resources.
The production of crops and livestock requires 70 percent of all fresh water used each year while the expansion of crop and grazing land causes 90 percent of all global deforestation, according to the UN Food and Agriculture Organization.
In regions such as Asia-Pacific, where economic forces and climate effects have caused a spike in the number of people facing acute food insecurity, nature can seem a secondary consideration. But unless farmers find a way to address mitigate their impact on the climate and on nature, the food security crisis will only worsen.
With forecasts suggesting the world will need to produce 56 percent more food by 2050 to sustain a population projected to approach 10 billion, it is urgent that the agriculture sector works fast to find balance with nature.
“Factoring nature into agriculture planning is not just a nice-to-have – it is essential,” said GEF CEO and Chairperson Carlos Manuel Rodríguez.
Market forces, however, reward damaging forms of agriculture – those that rely upon using increasing quantities of fertilizer, pesticides, energy, land, and water to lower the cost of food. Many producers are forced by economic and climate realities into following suit, and often lack access to the expertise, resources, and technology needed to sustainably meet market demands in challenging and changing conditions.
Finding financing to bridge this gap can be next to impossible for the operations that want to implement new technologies and approaches. Investors are generally too impatient to wait out the long lead times that such projects require before reaching fruition. And the capital that is available is often offered at high rates and on unfavorable terms.
The Natural Capital Fund, a planned $150 million blended finance fund that will be managed by the ADB, will provide a lifeline to farmers and technological innovators that plan projects in agri-food systems that at once protect, restore, and sustainably use natural capital in developing economies that are part of the ADB.
The fund will cultivate a pipeline of enterprises rolling out climate- and nature-smart agri-food systems and will encourage private sector investments into its portfolio companies.
With access to proper financing and support, farmers and innovators can be encouraged to take such steps as growing higher-value crops and using more nature-friendly inputs: from sustainable fertilizers to low- and non-chemical pesticides.
Financing from the fund will be deployed in various forms, including grants, debt, equity, and loan guarantees and offered either directly to public and private sector enterprises, or to financial intermediaries serving the sector.
The fund aims to attract co-investment of $500 million.
Among the environmental benefits seen stemming from projects financed through the fund are the introduction of sustainable management to 2 million hectares of productive land and the restoration of 1 million hectares of degraded agricultural land, 500,000 hectares of natural grass and woodlands, and 100,000 hectares of wetlands. The project will also tackle pollution, eliminating 3,000 metric tons of hazardous pesticides and avoiding 2,000 metric tons of residual plastic waste.
