by Celina Schelle
Agroforestry, combining adaptation and mitigation, has been the repeatedly suggested solution to address agriculture and deforestation in the light of climate change and increasing populations. The question of how to finance agroforestry initiatives has been answered by several experts with a discussion on the potential of impact investments.
What does impact investment mean? Impact Investors can range from retail investors and enterprises to banks, while recipients can be microfinance institutions, SMEs and small farmers. They are beyond the return in form of profits concerned about the sustainability aspect of their business as well as their positive contribution to nature conservation. Every business depends on natural resources; therefore, their sustainable use is an investment into the future.
While returns in form of profits may reveal after 3-5 years, impacts on nature conservation and biodiversity are a lot more difficult to monitor and measure. Moreover, they do take a longer time to show results and bear risks of uncertainty about outcomes. During a side event on the potential from reforestation Peter Saile from GIZ pointed out: “There is money out there, but impact investors need to be attracted.”
Efforts into the measurement of the value of nature and ecosystem services as well as the increased sharing of respective data need to be accelerated. Access to such, data is especially lacking in developing countries and once there, results are often insufficiently communicated.
Additionally, the entire chain of benefits does not yet seem to be well understood. During a presentation on Private Capital to finance Forest Conservation and Biodiversity, Speakers from ORO Verde promoted the analysis of risk reduction potentials of environmental and social improvements”, thereby referring to advantages of agroforestry to ensure healthier lives and better nutrition through changes in ecosystem structure. The interlinkages between food security, health and climate change mitigation and adaptation are not well understood by society.
We need to measure the contribution of agroforestry in building resilience and make this knowledge accessible! Only when impact investors can see the full potential of investments and farmers realize the full advantages of agroforestry, a transformation of the agricultural sector can be accelerated!