FCPF’s engagement with the livestock sector
The livestock sector is a pillar of the global food system and contributes to poverty reduction, food security and agricultural development. According to the FAO, livestock contributes 40% of the global value of agricultural output and supports the livelihoods, food and nutrition security of almost 1.3 billion people.
However, if managed unsustainably, it is also a sector that can contribute to significant forest loss and land degradation. There is wide scope to improve livestock sector practices so that they increase productivity, reduce GHG emissions, and increase resilience while maintaining livelihoods and reducing poverty.
The World Bank’s Agricultural Global Practice, supported by the Forest Carbon Partnership Facility (FCPF), works with the livestock sector to help public and private entities in FCPF countries to make the transition to sustainable practices. Through innovative new tools, resources and reports, this work is developing a strong proof-of-concept on how to bring together multiple partners under an integrated framework to advance sustainable livestock management.
FCPF Report:Opportunities for Climate Finance in the Livestock Sector
Traditional sources of financing have long been difficult to access for livestock smallholders who often do not hold collateral except for their animals and have little experience working with financial institutions. Traditional lenders see the livestock sector as overly risky, with little potential for significant profits, leaving them uninterested. Expanding financial inclusion would improve livelihoods, increase resilience, and help reduce GHG emissions.
The FCPF's 2020 report “Opportunities for Climate Finance in the Livestock Sector: Removing Obstacles and Realizing Potential“ analyses the diversity of animal protein production systems and value chains, and examines barriers, mitigation options and challenges for mobilizing climate finance.
The report identifies six investment opportunities for increasing climate finance in the sector and driving its sustainable transformation:
- Condition credit lines on climate mitigation actions
- Encourage value-chain finance for native ecosystem protection
- Drive clean investment through Emissions Trading Schemes
- Verify sustainable sourcing of livestock feed
- Reward innovation in livestock climate finance through prize-based programs
- Reward proactive policy commitments through Official Development Assistance
The Global Livestock Community of Purpose
Since 2020, the World Bank has hosted the Livestock & Climate Finance community. This Community of Purpose is a space for knowledge exchange, learning, collaboration, and peer support to mainstream climate change in the livestock sector. The group is also helping to increase capacity and readiness to access climate finance and to explore investment opportunities.
So far, the community has held six events on a wide range of topics including: overcoming climate finance barriers for sustainable livestock value chains; transparency and traceability; climate finance opportunities in the sector; sustainable feed sourcing and deforestation in Latin America and MRV, and the last one, on closure and next steps. The Community of Practice is also serving as a space to inform stakeholders of initial findings and gather input to further development of the investment opportunities identified in the report above.
Case studies: Expanding climate finance in the animal protein sector
The FCPF has funded the development of two investment opportunities, one in Colombia and the other in Kenya, to advance deforestation-free and low-emission intensity production of animal-sourced food commodities. This work aims to deepen the integration of the livestock sector in climate finance, providing key conclusions for current and future World Bank Group funded projects in this sector.
Sustainable dairy production in Kenya
The FCPF’s investment opportunity in Kenya has focused on the development a credit line conditional to climate mitigation actions in the dairy sector. Work undertaken in Kenya showed that its dairy industry is well-established and growing, offering a range of products for the most dairy-conscious and dairy-consuming populations in Africa. Investments in dairy production are, however, difficult to secure because of the reluctance of the local financial institutions to assume the risk associated with the dairy sector. To overcome this, the FCPF is helping public and private stakeholders in Kenya to explore a credit-line approach that could be acceptable to financial institutions if parallel technical assistance is offered both to the borrower and the lender.
Sustainable cattle production in Colombia
With support from the FCPF, Colombia is focusing on the development of sustainable value chain finance in the country’s beef sector. The work undertaken showcases that transparency and accountability can add value to the final product on the market, providing benefits to every stage along the value chain, and encouraging low carbon and low methane modes of production.
This World Bank investment initiative in Colombia has helped to identify climate finance opportunities and challenges using a consolidated modelling framework. This framework provides key lessons for the development and implementation of an MRV system for Emission Reductions in the selected jurisdiction as well as at a global level, both in terms of technical approaches and cost-effectiveness. More information can be found in the information note about Soil carbon stocks in tropical pasture systems in Colombia’s Orinoquía region: supporting readiness for climate finance.
MRV framework for Emission Reductions from livestock intensification
Supported by the FCPF, the World Bank’s Agricultural Global Practice has advanced a Measurement, Reporting and Verification (MRV) conceptual framework, looking at interactions between livestock intensification, emissions and land use change. Developed in collaboration with the French Research Institute for Agriculture, Food and Environment (INRAE) and the BioCarbon Initiative for Sustainable Forest Landscape, the framework is applicable at a macro scale (country, jurisdiction) but generic in terms of geographies and production systems.
The framework lays out basic principles and key recommendations for the development of MRV systems for emissions and removals associated with livestock intensification, and it identifies options to improve cost effectiveness.