NDF - Financing for climate change and development projects

Financing to Catalyse Private Sector Investments in Climate-smart Agriculture

Coffee pickers in Matagalpa, Nicaragua. Photo: IDB
Coffee pickers in Matagalpa, Nicaragua. Photo: IDB

NDF Board approved EUR 5 million grant to support the Climate-smart Agriculture Fund for Latin America and the Caribbean (CSAF or Fund).

CSAF is an innovative concessional finance facility focused on promoting climate resilience and sustainable agriculture, forestry and rangeland development across the Latin America and Caribbean (LAC) region. It aims to mobilize capital for climate-smart investments, change market risk perceptions around such investments and build a portfolio of projects which can reliably and convincingly demonstrate both commercial and environmental benefits of climate-smart business models.

The Fund is an initiative of the Inter-American Development Bank (IDB) and follows on a growing portfolio of successful co-financed climate initiatives by the NDF and the IDB.

Unsustainable land use from deforestation, habitat conversion and poor agriculture practices accounts for nearly half of all LAC greenhouse gas (GHG) emissions and severely limits resilience to extreme climate events. Climate-smart methods and technologies offer solutions for mitigation and adaptation to climate change while achieving more sustainable productivity.

However, climate-smart business models routinely face critical barriers to finance, notably, extended payback period requirements and misinformation about risks and returns. CSAF will address these barriers by channeling concessional finance and technical assistance to select private sector led climate-smart projects.

The direct clients of the Fund will be small, medium and large scale agribusinesses developing innovative climate smart projects in the region. Poverty reduction will be a direct outcome of support to these projects, with the number one drivers for poverty reduction at sub-project level being job creation and sustainable income generation for the rural poor and smallholder farmers in the value chain.

Expected outcomes include increased investment in climate smart agriculture in the region, increased climate resilience and reduced emissions from the land use and agriculture sectors, and improved livelihoods and income opportunities for the rural poor in the region.

More information
The Climate-smart Agriculture Fund for Latin America and the Caribbean (CSAF) [NDF C86]