Climate Capital: Financing Adaptation Path ways for Smallholder Farmers

Developing nations are disproportionately affected by climate change; a Stanford University study found that economic inequality between developed and developing nations has increased by 25% since 1960 due to climate change.

These developing economies are heavily dependent on agriculture and are home to the majority of the world’s 500 million smallholder farmers, as well as fishers, herders, and forest-dependent communities – whose livelihoods are derived from renewable natural resources.

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AgFunder and ISF Advisors recently released a report highlighting the urgent need and significant opportunities for private investment in climate adaptation within the agriculture sectors of emerging markets, focusing on the critical role of smallholder farmers.

The report, entitled “Climate Capital: Financing Adaptation Pathways for Smallholder Farmers”, underscores the importance of both mitigation and adaptation financing to support smallholder farmers in adapting to climate change. Usually, private sector adaptation funding needs to be supplemented by concessional finance and government support. In this context, blended finance is crucial for enhancing climate adaptation efforts for smallholder farmers. Since 2012, tech investors— predominantly venture capital, private equity, and impact funds—have invested over $5.7 billion in adaptation tools and services for smallholders. Among the most popular categories for tech investors are digital tools and platforms, including agribusiness marketplaces and farm management services. Notably, Southeast Asia stands out as the most active region for investment in smallholder-relevant adaptation tech, attracting $1.9 billion since 2012.

By mobilising private investment and connecting investors with innovators, Carbonica can facilitate funding for the development and upscaling of place-based carbon farming solutions. This approach aligns well with the report’s emphasis on the importance of blended finance and the need for both mitigation and adaptation investments to support smallholder farmers in adapting to climate change.

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