Encouraging private sector participation in climate finance

The demands of mitigation and adaptation policies are important to understanding a country’s climate change preparation by providing microfinance in the agricultural sector. This could be seen as a strategy to fight against the challenges of future food security. In 2014, Indonesia established climate change adaptation policies. This legislation aims to pave the way for making actions on climate change adaptation mainstream in national and local development planning. Public and private finance have supported the implementation of the climate actions. However, most funding is still used for mitigation. Adaptation finance needs support, especially in agriculture. This research paper studies opportunities for microfinance to play a role together with existing resources in supporting climate change adaptation in Indonesia.  The data was acquired and analysed through a literature review, analysis of case studies and interviews with stakeholders in the climate change-related financial sector. The central findings regarding the opportunity for microfinance to contribute to the existing schemes in Indonesian climate change adaptation finance for agriculture are worthy of the result. This study found that adaptation finance is mostly used for indirect activities. Meanwhile, local communities, and farmers in particular, need directly targeted measures to adapt to climate change. An alternative approach is providing microfinance, insurance and capacity development for farmers to produce high quality agricultural products. This would contribute to optimizing the agri-food value chain, which supports socio-economic development of stakeholders, especially farmers. Hence, microfinance appears to be one potential solution to support direct climate change adaptation actions for the agricultural sector. However, this may not be strong enough to finance the entire needs for agricultural climate actions. Adaptation is contextual, so it has to be grounded in the needs of local communities.  Microfinance needs public sectors support as well as other resources from the private sector. In the case of rapid response to disasters, which often destroy the agricultural sector, microfinance should be advantageous in supporting adaptation. However, in reality, it does not work, as it is prevented by regulations. So, this can be an area the public sector can support as a risk-taker as well as by providing initial funds and resources for scaling up efforts.

Full paper will be published in Future of Food: Journal on Food, Agriculture and Society. Volume 4 Number 3.

Climate-smart agriculture not an oxymoron

“Is climate-smart agriculture [CSA] an oxymoron?”, Lisa Schipper, a researcher, questioned in regard to a new farming concept outlined in the 5th Asia-Pacific Climate Change Adaptation Forum in Sri Lanka recently.

The concept of CSA was invented by the UN Food and Agriculture Organization (FAO) in 2010 to sustainably increase productivity, resilience (adaptation), reduce/remove greenhouse gases (mitigation) and enhance national food security and development goals.

The concept has been introduced with a more sophisticated political approach, through a new initiative called the Global Alliance for Climate-Smart Agriculture. In a new twist, the Global Alliance provides for new ways of green washing “climate-smart” industrial agriculture, with the active involvement of private corporations such as Syngenta, Yara, Kellogg’s and McDonald’s.

The scheme may let agriculture remain a parking lot for poor farmers in Africa and South Asia, but it should not to be continued in the ASEAN region.

Investment planning for energy-agriculture nexus

15th WREC (World Renewable Energy Congress) took place at the Jakarta International Convention Center in Indonesia on 19-23 September alongside the Indonesia Renewable Energy and Energy Conservation Summit 2016. It was attended by 457 participants, comprising Indonesians and foreigners from 68 countries. As many as 122 scientific papers on renewable energy are presented at the congress. Some of them are discussing energy-agriculture nexus through bioenergy, geothermal and solar. Participants from Indonesia gained knowledge and network about business, policy and technological developments in the energy-agriculture sector, from from overseas businessmen and experts in the congress.

Renewable energy interventions in an agriculture-food enterprise include the introduction of renewable energy technologies or of energy efficiency measures, which can result in improvement in energy intensity. Each step of agriculture value chain presents different challenges to ensure that the relevant energy services are provided efficiently, cost effectively and minimizing the reliance on the fossil fuel market. Applying the value chain approach, it becomes evident how the value of food products tend to increase as more processing occurs and more inputs (energy, water, packaging materials) are consumed. The energy interventions considered span from solar-power irrigation systems to cooling and cold storage facilities, and from the use of residues for energy production to geothermal energy for food processing. These concepts were explored in the WREC.

Adaptation with respect to water resources

Java is being most heavily populated but having a small percentage of the Indonesia’s water, the island is predicted to face a clean water crisis. Java has less than 10 percent of the country's water, whereas more than 140 million people live on the island, nearly 60 percent of the country's population. The 2015 estimation by Robert Wahyudi Triweko, an expert on engineering and the management of water resources, disclosed that water demand on Java reached 164.672 million cubic meters per year, while the availability of water was only 30.569 million cubic meters per year, leaving a big deficit gap of 134.103 million cubic meters per year. Meanwhile, Kalimantan has 30 percent of Indonesia's water and only inhabited by six percent of Indonesia's population.

Water demand increase is triggered by urbanization. At the same time, it is also affected by climate change. It is started from sea level rise and increasing rainfall, as well as higher peak flood runoff which affected by urbanization. Those occurences increase flood volume in wider risk area. Finally, it becomes new problem which is increasing flood damage in more houses which builded due to urbanization. Therefore, improvements in water management and related infrastructure are important for solving the problems which threatening future economic success.