A warming world means it’s high time to rethink the composition of agricultural support

From the Old Farmer’s Almanac to cutting edge satellite systems, farmers have always been in the market for weather forecasts that help them decide when to plant and harvest to mitigate climate risks. Earlier this month, the 48th session of the Intergovernmental Panel on Climate Change delivered sobering news: the Special Report on Global Warming of 1.5°C (SR1.5) concluded that climate impacts are already occurring and will be much worse at 2°C than previously projected.

Moreover, at the current level of national commitments made in the run-up to the Paris Agreement, the world is on course for a disastrous 3°C of warming. UN Secretary-General António Guterres rightly called the SR1.5 report “an ear-splitting wake-up call to the world”. The findings of SR 1.5 and previous analyses are of special concern for those who manage and work on the world’s 570 million farms:  

• Climate change could force over 100 million people into extreme poverty by 2030, mostly through impacts on agriculture and food security.
• Up to 10 times more people could be exposed to lower yields in a 2°C world (396 million) compared to a 1.5°C world (36 million).
• Even a 1.5°C warming by the 2030s might reduce areas suitable for maize production using current cultivars by 40 percent in sub-Saharan Africa.

Other challenges include the impact that elevated CO2 concentrations may have on reducing nutrients in crops, creating vast nutrition-related health risks, and the thorny issue of balancing land for pasture and food, with land for energy crops and large-scale reforestation needed to limit global warming.

In light of these projections, SR1.5 included the following recommendations regarding agriculture: “Climate change impacts on food security can be reduced through adaptation.  While climate change is very likely to decrease agriculture yield, the consequences could be reduced substantially at 1.5°C with appropriate investment, awareness raising to help inform farmers of new technologies for maintaining yield, and strong adaptation strategies and policies that develop sustainable agricultural choices. In this regard, initiatives such as ‘climate smart’ food production and distribution systems may assist adaptation via technologies and adaptation strategies for food systems as well as meet mitigation goals.” ( Chapter 3, page 104)

Indeed, agriculture plays several roles in the climate change drama: it is a victim of climate impacts (see projections above), a significant culprit (about a quarter of man-made greenhouse gas emissions come from agriculture and related deforestation), but also a potential savior. The SR1.5 is a call to decisively shift the global food system toward a game-changing climate solution. 

What will it take? At the World Bank, we see growing demand from low- and middle-income countries for climate-smart solutions in agriculture projects that deliver triple-win benefits by simultaneously increasing yields, improving adaptation and enhancing mitigation. About 45 percent of our agriculture lending portfolio in Fiscal Year 2018 were designed to deliver climate co-benefits, while at the same time ensuring attractive economic returns. But short of major funding for large-scale climate-smart agriculture projects and programs (something we are not seeing currently in climate finance), we need to use other tools to steer public and private investments toward “sustainable agricultural choices”, as suggested by SR1.5.

In particular, a fast-warming world means it is high time to analyse the incentive structure provided by the current composition of agricultural producer support.

• Agricultural policies and public support provided US$570 billion a year on average to agricultural producers in 51 countries in 2015-17, according to the OECD.
• Of that total, US$86 billion were budget-financed expenditures on public good investments such as agricultural research and extension, infrastructure, and skills development – the types of investments that are increasingly important in the struggle to adapt our farming practices to a changing climate.
• US$200 billion were budget-financed payments to producers often tied to the products farmers produce or the inputs they use.
• And US$284 billion were from market price supports that kept domestic prices for agricultural products above world market prices at a cost to consumers.
• Unfortunately, these latter two forms of support often impact producer incentives in ways that neither improve climate resilience nor reduce greenhouse gas emissions from agriculture.

Arguably, better steering this half-trillion-dollar annual envelope towards incentivizing climate adaptation and mitigation in agriculture and the broader food system is a major opportunity to take forward the SR1.5 recommendations for scaling up and mainstreaming climate-smart agriculture, while at the same time improving opportunities for further leveraging private investments in agriculture.

The example of the European Union is a case in point: reforms introduced by the EU Common Agricultural Policy, including the scaling down of price guarantees, the decoupling of direct payments to farmers from the types of products produced or inputs used, combined with stricter environmental directives, led to a 20 percent reduction in nitrogen fertilizer use between 1990 and 2015, and a 17 percent decline in nitrous oxide emissions – a powerful greenhouse gas. Over the same period crop yields increased.

Given the urgency of the SR1.5 recommendations, the time to start redirecting this massive half-trillion-dollar annual envelope is now! It’s our best shot at achieving system-wide change for farmers and the planet that sustains them.