Improving the sustainability of agriculture requires transforming financial incentives for farmers and landowners, including scaling up overall flows of finance toward improved productivity and land conservation.
Traditional financial systems fail to factor in the environmental costs of agriculture, making sustainable practices more expensive in comparison to industrial agriculture. But that is slowly changing, thanks to forward-thinking financial institutions, governments, and companies.
We demonstrate that sustainable agriculture is a good investment
Investors channeled $2 billion into sustainable agriculture investments between 2004 and 2015, accounting for nearly a quarter of all nature-based “conservation investments” tracked in our research.
These banks, fund managers, corporations, and other investors aren’t simply being philanthropic. They’re looking for competitive, sensible additions to their portfolios – and they’re finding them. Six in 10 of the private investors we’ve surveyed expect to see returns of 5 to 15 percent from their investments in sustainable agriculture.
In order for this emerging asset class to continue gaining steam, transparent information is critical. Forest Trends is committed to filling that gap as demand for investable sustainable food opportunities continues to grow.
We find innovative strategies to overcome finance hurdles
Forest Trends works in key tropical forest countries to deploy creative approaches that leverage public and private finance to overcome obstacles to large-scale sustainable agriculture.
In Brazil, we’re finding ways to use international public funding through the UN program Reducing Emissions from Deforestation and Forest Degradation (REDD+) to help Brazil accelerate its transition to more productive and sustainable agriculture. Large-scale performance-based REDD+ payments can be used to unlock more favorable loans for landowners who practice good land stewardship, lower risks borne by the public banks that provide those loans, and attract private investment from food producers looking to meet sustainability goals.
In neighboring Peru, deforestation in the Amazon region accounts for over half of the entire country’s greenhouse gas (GHG) emissions. Together with partner organizations and the Peruvian government, we’re tackling key drivers of deforestation in the Amazon – supply chains built around coffee, cocoa, and oil palm – by implementing a “Production-Protection Compact” that simultaneously protects forests and benefits small-scale farmers. By making this sustainable development vision a reality, we can replace the vicious cycle of poverty, low productivity, and deforestation with one of prosperity, productive agriculture, and forest conservation – all while helping Peru meet its goal of reducing GHG emissions by 30 percent.
In Ghana, we’re working with a broad coalition to make “climate-smart agriculture” practices less risky for cocoa farmers by increasing their access to credit and developing specialized insurance products. In doing so, we can turn what has historically been a major driver of environmental harm into a resilient and sustainable source of income for Ghanaian farmers.
We document best practice for greening agricultural subsidies
Governments around the world paid farmers and other private landholders nearly $10 billion in 2015 to reward them for good stewardship of lands critical to watershed health. Our research highlights that the traditional agricultural subsidy model can be successfully retrofitted for the green economies of the future – to focus on long-term landscape health as well as agricultural productivity.
