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According to the World Resources Institute, Nigeria’s 2014 GHG emissions were primarily from the land-use change and forestry (LUCF) sector accounted for 38.2%. The energy sector accounted for 32.6%, while the agriculture sector accounted for 13.0%. this shows the Agriculture, Forestry and Other Land Use (AFOLU) accounted for a total of 51.2%.
World wide AFOLU is responsible for almost one quarter of global greenhouse gas (GHG) emissions. Reducing emissions from AFOLU is a key part of combating climate change. The best impact in this regard can be achieved through interventions in the developing countries to avoid the development mistakes of the past and achieve sustainable results.
Climate action measures in the AFOLU sector are crucial for all strategies to stay within the remaining budget for a 1.5°C target (with high confidence). When implemented with care and appropriateness, AFOLU mitigation strategies have a unique ability to provide significant additional benefits such as ticking more SDG boxes and assist in tackling broader sustainable development challenges. Hence there is the need to take additional steps to increase funding to this sector in the developing world where it is needed most.
Distribution of CDM projects in Nigeria by sector with estimated emission reduction potential as at 2018
As at 2018. only a few CDM projects have been approved and implemented in Nigeria, for some reason, the Energy Industry dominates the number of registered CDM projects in Nigeria. As depicted in the Table above, out of the eleven (11) registered CDM projects in Nigeria, eight (8) are energy related falling under subsectors such as oil and gas, energy generation, energy efficiency and renewable energy. The waste sector has two registered projects, and one is registered under Manufacturing Industries.
Recently also, there has been a lot of activity in renewable project such as:
Commitment to Energy Transition: Nigeria’s commitment to energy transition and renewable energy solutions has been reaffirmed by Vice President Kashim Shettima.
Hydropower Investments: The Federal Government is seeking increased investment in small hydropower projects to improve electricity stability.
Solar Expansion: Arnergy, a Nigerian startup specializing in distributed renewable energy, secured $3 million for solar expansion.
World Bank’s DARES Project: The World Bank approved the Nigeria Distributed Access through Renewable Energy Scale-up (DARES) project, which aims to provide over 17.5 million Nigerians with new or improved access to electricity through distributed renewable energy solutions. This project is financed by an International Development Association credit of $750 million and will leverage over $1 billion of private capital.
These points highlight the ongoing efforts and financial commitments towards renewable energy projects in Nigeria. However you will struggle to find similar scale of climate projects in AFOLU.
The above information demonstrates a pattern of under investment in AFOLU, despite the high percentage of the emissions from AFOLU sector.
Exploring the Reasons Behind the Imbalance
My take is that enough attention is not being given to country specific needs, particularly in low-income countries where there is no commercial incentive to develops alternative approaches.
The disparity in international investments between AFOLU and energy generation can be attributed to several factors:
1 Global Priorities and Urgency:
Energy generation is often considered a critical global priority due to its impact on climate change, energy security, and economic development.
The urgency to transition to cleaner energy sources (such as renewables) drives international investments in energy projects.
2 Mitigation Potential:
While AFOLU emissions are substantial, their mitigation potential is often limited by various factors (e.g., land use practices, socio-economic challenges).
Energy generation, on the other hand, offers more immediate and scalable opportunities for emissions reduction.
3 Quantifying and Valuing Outcomes:
Progress or projects in energy generation are easier to quantify and value through metrics like CO2 emissions saved.
AFOLU, on the other hand, are sometimes a mix of mitigation and adaptation measured with metrics that can include: Crop yield resilience, Water-use efficiency, Biodiversity enhancement, Livelihood improvements
4 Technological Readiness:
Energy technologies (e.g., solar, wind, hydropower) are well-established and have demonstrated success globally.
AFOLU solutions (e.g., sustainable agriculture, afforestation) may require more complex implementation and face challenges related to adoption and monitoring.
5 Investment Returns:
Energy projects often yield direct financial returns (e.g., electricity sales, grid integration).
AFOLU projects, such as reforestation or soil carbon sequestration, may have longer payback periods and indirect benefits (e.g., ecosystem services).
6 Policy and Regulatory Environment:
Energy policies and incentives (subsidies, feed-in tariffs) attract private investments.
AFOLU lacks similar targeted policies, hindering private sector engagement.
7 Risk Perception:
AFOLU projects face uncertainties (e.g., climate variability, market fluctuations).
Investors perceive energy projects as lower risk due to established markets and technology.
8 Project Scalability:
Energy infrastructure can be scaled up rapidly (e.g., building power plants, expanding grids).
AFOLU projects often involve localized efforts (e.g., community-based forestry), making scalability challenging.
9 Awareness and Advocacy:
Energy-related campaigns and advocacy receive more attention globally.
AFOLU needs stronger awareness and advocacy to attract investments.
10 Climate Finance Channels:
Climate funds and mechanisms (e.g., Green Climate Fund) prioritize energy-related projects.
AFOLU projects struggle to access these channels effectively.
11 Historical Bias:
Historically, energy infrastructure received more attention and funding.
Shifting this bias requires deliberate efforts to promote AFOLU investments.
While AFOLU is crucial for sustainable development, energy transition projects are easier to transact, hence receive more attention and funding. Deliberate action to encourage AFOLU investments is essential for achieving climate goals and ensuring a resilient future.
How to reorient international organisations to focus on unique requirements of developing countries
International Finance Institutions (IFIs) tasked with facilitating transactions stick with solutions and approaches they are used to, typically used in developed countries, when dealing with developing countries, hence are not poised to exploit unique opportunities in developing countries.
Enhancing investment in this sector requires targeted policies, risk mitigation strategies, and increased global awareness and advocacy.
The conventional way of looking at the challenges that hinder investments in the AFOLU sector usually focus on the perceived short comings of the stakeholders in the developing world. Such as:
Economic and Policy Barriers: The AFOLU sector often lacks the targeted policies and financial incentives that are available to the energy sector. This includes subsidies, tax breaks, and other forms of government support that can make investments more attractive1.
Technological and Infrastructural Limitations: There is a need for more advanced technology and infrastructure to support sustainable practices in agriculture and forestry. However, the costs associated with developing and implementing these technologies can be prohibitive2.
Land Tenure and Property Rights: Unclear land tenure and property rights can discourage investment in land-based projects. Investors require assurance that their investments are secure and that they will be able to reap the benefits of their investments3.
Market Access and Value Chains: AFOLU products often face challenges in accessing markets and establishing value chains that can provide sufficient returns on investment. This is particularly true for smallholder farmers and community-based projects4.
Risk and Uncertainty: Investments in the AFOLU sector are often seen as risky due to factors such as climate variability, market fluctuations, and political instability. These risks need to be mitigated to attract more investment3.
Capacity Building: There is a need for capacity building among local stakeholders to ensure that they can effectively manage and implement AFOLU projects. This includes training in sustainable practices, financial management, and project development2.
Access to Finance: Small and medium-sized enterprises (SMEs) in the AFOLU sector often struggle to access credit and other forms of finance. Financial institutions may view these enterprises as high-risk, which can limit their ability to invest in improvements and expansion.
I chose to approach the problem differently. The problem and solutions above are usually phrased as limitations of stakeholder in the developing world such as governments, SMEs and communities. The stakeholders in the developing world are what they are. If we are serious about meeting the climate targets, we have to look at the problem in a different way. We have to look at it from the stand point that the international finance institutions are failing to adapt their practices to meet the requirements for working with the developing world.
We need to focus on the need for international finance institutions (IFIs) to adapt their practices to the AFOLU sector in developing countries, we can consider the following points:
Let’s reframe issues to highlight positive actions that International Financial Institutions (IFIs) can take to better support the AFOLU sector in the developing world where they are:
Tailored Financing Solutions: IFIs should actively align their financing mechanisms with the specific needs and contexts of the AFOLU sector in the developing world. By doing so, they can develop effective funding strategies that address the unique challenges faced by local stakeholders.
Improved Risk Assessment Models: IFIs need to enhance their risk assessment models to accurately reflect the realities of the AFOLU sector. This will enable them to offer appropriate financial products and services that cater to the sector’s specific requirements.
Enhanced Capacity Building: IFIs should prioritize capacity building for their own staff and decision-makers. This is to equip them with the necessary skills and knowledge to better understand the unique contexts of developing countries. With this understanding, they can more effectively fashion programs, products, and services that are relevant and implementable in these countries.
Flexible Financing Options: IFIs can play a vital role by providing more flexible financing structures. These structures should consider longer payback periods and account for the indirect benefits associated with AFOLU projects, such as ecosystem services and social impact.
Local Partnerships: IFIs should actively engage with local financial institutions. Collaborating with institutions that understand the nuances of the AFOLU sector will facilitate better access to finance at the grassroots level.
Advocacy for Supportive Policies: IFIs can advocate for policy changes that incentivize investment in the AFOLU sector. This includes advocating for subsidies, tax breaks, and other forms of government support that encourage sustainable practices.
Market Development Initiatives: IFIs can contribute significantly to market development for AFOLU products and services. By establishing value chains and ensuring sufficient returns on investment, they can foster growth and sustainability for local producers.
By addressing these points, IFIs can adapt their practices to better meet the needs of the AFOLU sector in the developing countries, thereby facilitating more effective and sustainable investments.
In conclusion, the Agriculture, Forestry, and Other Land Use (AFOLU) sector plays a pivotal role in our collective efforts to achieve global climate targets. Despite its significant contribution to greenhouse gas emissions, the sector has been historically underfunded and overlooked, particularly in developing countries.
The potential of AFOLU for both mitigation and adaptation strategies is immense. From enhancing crop yield resilience and water-use efficiency to promoting biodiversity and improving livelihoods, the sector offers a range of sustainable solutions that go beyond emissions reduction.
However, realizing this potential requires a shift in our investment priorities. More funding needs to be deliberately targeted towards AFOLU projects, particularly in developing countries where the impact of climate change is most severe and the need for sustainable solutions is most urgent.
This is not just about rectifying historical biases or balancing investment portfolios. It’s about recognizing the value of sustainable agriculture and forestry practices in building a resilient and climate-smart future. It’s about investing in our planet and in communities that are at the frontlines of climate change.
By increasing funding for the AFOLU sector, we can drive innovation, support local economies, and make significant strides towards our climate goals. The time for action is now. Let’s seize the opportunity to transform the AFOLU sector into a powerful ally in our fight against climate change.
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