Elwyn Grainger-Jones is Head of the Climate Change and Environment Group (CEG) at the UK Department for International Developement (DFID). He has worked at the World Bank and the European Bank for Reconstruction and Development (EBRD) on trade, poverty and energy issues.

Where does climate change financing fit into the overall agriculture and rural development framework?

Grainger-Jones: Our collective response to climate change can be a positive driver for change. It can drive more sustainable production techniques. It can drive better, much better, risk management as part of efforts to build more resilient rural and urban economies, and rural communities. Or, it can be a force for disintegration, excluding agriculture from climate finance including the carbon market and ignoring it in adaptation efforts.

So over the next five years or so we’re at a juncture where we’re setting up new frameworks for mitigation and adaptation. And if agriculture and rural development are not part of the frameworks, and if the frameworks are not part of agriculture and rural development, the agriculture sector will suffer.

Climate change financing can support efforts to build a more sustainable agriculture system – for example developing information systems that enable farmers to take better decisions about organising their business, around providing financial systems that benefit rural development and enable them to genuinely deal with risk.

What’s happening is that the development context is getting a lot more risky - there could be abrupt shifts. We know that temperature will go up. We don’t know completely what will happen to some weather systems, particularly monsoon systems. So in some areas of agriculture and rural development we have to plan for increasingly extreme but imprecise variables.

This requires a very different way of thinking. It might imply that in some cases we look at economies of scale in a different way. Specialising in crops and systems that are highly efficient in certain temperature or precipitation ranges may not be effective in the long run. So there might be trade-offs between short-term returns and sustainability that need to be dealt with either through a financial risk-management or through different forms of agricultural management.

In the short run there will be a growing and possibly incremental shift in the climatic context for agriculture and rural development. But, if we look at the extreme scenarios over the longer run we’re into very different territory where you’ve got large scale movements of population and inundation of vast areas. Then you’re talking about civil disorder, about societies under greater pressure. And that’s not just an issue just for the agriculture and rural development sectors, it’s an issue for entire economies.

What do we need to do to ensure that climate change finance (1) benefits the rural poor, and (2) improves food security in the South?

I think that we need to encourage agriculture ministries, ministers and international bodies working on agriculture and rural development to get much more plugged into the climate agenda. We mustn’t see agriculture as something separate from climate change that ministers don’t need to think about. Agriculture ministries should get engaged in the new financing systems that might be put in place and think through the potential for farmers to benefit from carbon markets or interim measures, quasi markets, that might be put in place for example on forestry.

So I think it’s just getting involved and up to speed and trying to shape carbon markets to the maximum extent possible to allow the rural poor - the mitigation actions of the rural poor - to be rewarded through carbon markets. But we need to ask: what is the maximum achievable for the poor to directly benefit from expanding carbon markets? Do we know? I don’t feel we have been ambitious enough so far, but need to identify what’s the most realistic level of ambition.

What challenges are there (e.g. regarding Monitoring, Evaluation and Validation) that could scupper agriculture’s inclusion in the Copenhagen outcome?

I think extending the inclusion of land use in carbon markets is often put into the ‘too difficult’ box by many negotiators because it is seen as hard to make monitorable, reportable and verifiable (MRV). The agricultural community needs to demonstrate what is possible and help those nations that will benefit put the options on the negotiating table.

There may also be some in-built resistance to including agriculture in negotiations – the negotiations are already hard enough to deal with. Basic energy systems are tough to negotiate and there may be a sense that agriculture is so hard that either we’ll get it wrong and flood the carbon market with cheap credit or we’ll waste public money. Or if we do get it right it will take too much effort which would be better devoted to dealing with – for example – new power stations coming on line in China every one or two weeks. This caution means we need to explain better what is possible.

How can we overcome these challenges?

As I’ve said, we need to demonstrate what is technically possible and have clear methodologies for how this can be done. For example, making sure we make best use of science to measure impacts, communicating clearly not just at the technical level but also the political level, building agriculture, food security and rural development into the climate narrative – this means widening the current debate from one about energy use between high-emitting countries to a story about water and land use, rural development and urbanisation.

Does DFID have an official stance vis-à-vis the inclusion of agriculture in climate change negotiations? Where do you see room for improved collaboration between development partners to advance the agenda towards Copenhagen, and beyond?

The UK wants the maximum achievable in tackling forestry and incorporating agriculture in carbon markets. But, as part of the negotiations, we need to work with our partners and do more groundwork and come to a consensus - because we see agriculture as central to poverty reduction.

More broadly, I think also that agriculture, even if it’s not incorporated fully into carbon markets now, is going to be either a major victim or a major beneficiary of action on climate change. So whatever happens, it’s a non-neutral sector. We’ll either get this right and agriculture will benefit or get it wrong and agriculture will become a big problem within the adaptation agenda.

We set up a new team in DFID to work on the issues around agriculture and climate change. This is part of a general scaling up of our capacity on climate change – we’ve gone from about four people three years ago to forty in the climate and environment group now, of which about two-thirds work on climate change and the rest of environment and water. We see water, climate change and environment as overlapping.

As for how we work with development partners - I think we need a much clearer overall sense of what we want from Copenhagen on the agriculture agenda. We want as much consensus as possible about the pro-development outcome. We need developing countries – which are centre stage in agricultural and rural development - to have a stronger voice on agriculture in negotiations. We need more champions in the debate from the developing world.

A key issue is whether there should be separate funds for climate adaptation and mitigation in agriculture. Dedicated funds are under consideration for forestry, and there are a number of existing funds for adaptation. There may be significant new funds set up under the Copenhagen agreement. An immediate priority is to ensure that agriculture and rural development are given the appropriate level of priority and access within the existing and new climate funds. How to do this? Enabling governments, based on the right level of information, to decide how much they should be prioritising funding for agriculture when they access new climate financing structures - it’s about making informed decisions for allocations within their PRSPs and national development plans. So in a way it’s a familiar but unfinished agenda – giving agriculture and rural development its rightful place as a core part of national poverty reduction agendas.

As far as possible we need to be empowering governments to look at their national development strategies. They need to ask what the impact of climate change means for public expenditure. And, following from that, what do they need to do differently in agriculture.

A few people raised concerns though that if there aren’t separate funds for climate adaptation and mitigation then the work will be funded from normal aid.

Yes, that’s a really interesting point. The fear that climate finance will not be “additional” to aid (“additionality” in climate negotiations speak) is potentially driving the creation of separate delivery systems for climate finance. I think the best way to deal with that is to resolve the additionality issue in negotiations and then avoid creating an entirely separate financing infrastructure on the ground. Basically the money would be spent on the same thing - adaptation is good development – the key issue is being able to demonstrate that the source of climate finance is additional to existing ODA commitments.

Jim Weale. 13 Jul 2009