publication

Policy Levers to Unlock Climate Finance in the Livestock Sector

Photo: S. Mann (ILRI)

Citation

Alemayehu, S, Cramer, L, Gonzalez-Quintero R, Kimoro B, Kohler G 2024. Policy Levers to Unlock Climate Finance in the Livestock Sector. LD4D Solutions Group Evidence Brief. DOI: https://www.livestockdata.org/climate-finance

A Guide for National Policymakers to Integrate Livestock in Climate Strategies

Key Messages

  • Measures that can improve livestock productivity while reducing greenhouse gas (GHG) emission intensities from the sector are available right now for implementation.
  • An enabling livestock policy environment and clear target setting provides a framework for effective mobilization of climate finance to implement such measures in the livestock sector.
  • The key success factors for setting targets and attracting climate finance are:
    • Coordinating different actors involved in resource mobilization for implementation of climate policies, including Nationally Determined Contributions (NDCs);
    • Standardizing livestock data and enhancing capacity for effective implementation and monitoring, including a functioning measurement, reporting and verification (MRV) system in place to justify investments from climate finance; and
    • Tailoring national climate action plans to local agroecological and socio-economic contexts to support inclusive livestock climate solutions.
  • Implementation of livestock climate actions will also help achieve other national development priorities, including food security, nutrition, and economic development.

The livestock sector is uniquely placed to help countries address both climate change adaptation and mitigation, and by incorporating goals for sustainable livestock sector development in their national plans, countries will be able to direct climate finance investments from public and private sources into the sector. The brief presents case studies from three countries (Ethiopia, Kenya and Uruguay) where this has already proven successful. These countries have national plans and strategies such as Nationally Determined Contributions (NDCs) and national climate change action plans that include climate action in the livestock sector, and as a result they are implementing several climate-related projects that are resulting in improved productivity and reduced emissions intensities from animal production.

Overcoming barriers to integrate livestock sector goals in climate policies

Despite their significance to climate adaptation of vulnerable communities and to mitigation of greenhouse gases, agrifood systems receive only 4.3% of total climate finance and smallholder farmers receive only 0.8% of climate finance, with the livestock sector receiving just a fraction of that. Integrating agricultural commitments into national climate targets and planning is critical to unlock climate finance investments in the livestock sector. Currently, only 36% of Nationally Determined Contributions (NDCs) include livestock mitigation actions, while 55% include livestock adaptation actions. Practices to mitigate greenhouse gases from livestock and to help rural communities adapt to climate change should be integrated into national targets (e.g., NDCs, National Adaptation Plans), climate action plans, and sub- sectoral planning documents (e.g., Livestock Masterplans). Policy experts in gender, pastoralist, and indigenous affairs can provide further guidance in overcoming social equity gaps in implementing climate projects. Effective coordination mechanisms lay a foundation for successful integration of livestock development goals into climate strategies and policies between such ministries as agriculture, environment, planning and women’s affairs ministries as well as with national treasuries.

Critical barriers for this integration of the livestock sector in climate policies and strategies are low awareness across various ministries of low-cost opportunities to mitigate greenhouse gases from livestock production systems, inadequate capacity for data collection, and lack of technical expertise on livestock modelling and scenario development. While technical experts in agriculture might assume that setting mitigation targets will require reductions in livestock herd numbers, other intervention options that bring down emissions by managing herd growth while delivering income and nutrition benefits are possible. Environment officials may not be aware of methodologies for measuring emissions from livestock or of the intervention options available, and there may be a disconnect between people with technical knowledge of what is possible for the livestock sector and the people developing a country’s NDC. This brief provides decision makers in ministries of agriculture, environment, planning, and finance with case study examples of how countries have successfully laid the policy groundwork for attracting private and public climate finance investment in their livestock sectors. Following the case studies, we provide general guidance on how integrating livestock goals into national strategies and policies can help unlock climate finance.

Case studies of unlocking climate finance for livestock

To illustrate how setting targets can help attract climate finance into the livestock sector, we present the following brief case studies of countries that have successfully achieved this: Kenya, Ethiopia and Uruguay.

Kenya

Policy context

In Kenya, climate related impacts result in great socio-economic losses, estimated at 3-5% of the Gross Domestic Product (GDP) annually. To ensure the impacts of climate change are not a threat to the realization of national development goals, Kenya, through its economic development blueprint of Vision 2030 and subsequent Medium-Term Plans, dedicates budgetary support for flagship programmes and projects to address adaptation and mitigation needs. The agriculture sector is both impacted and contributes to climate change (mainly through livestock- based emissions). To address this, Kenya prioritized the agriculture sector in its first NDC, submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2016. Similarly, Kenya’s updated NDC submitted in December 2020, which commits to abate GHG emissions by 32% by 2030 relative to the business-as-usual (BAU) scenario of 143 MtCO2 equivalent, indicates that the sector will play a key role.

A herd of goats drink water at a river.
Goats drink water at a drying river in Isiolo county, Kenya. Programs that improve water management are helping to build the resilience of the livestock sector to climate change. Photo credit:  G. Njenga (ILRI).

To ensure coherence, the agriculture sector actions and targets in Kenya’s NDC have been aligned with sectoral climate action priorities elaborated in the Kenya Climate Smart Agriculture Strategy (KCSAS, 2017-2026) and the Kenya Climate Smart Agriculture Implementation Framework (KCSAIF, 2018-2027). Subsequently, four targets, one on mitigation and three on adaptation from KCSAS and KCSAIF have been included in Kenya’s NDC. The mitigation target included is: (i) Climate smart agriculture (CSA) in line with the Kenya CSA Strategy with emphasis to efficient livestock management systems. This will be achieved by addressing the emissions from enteric fermentation and manure management in livestock systems. Similarly, there are 3 adaptation targets in the NDC touching on the livestock sub-sector: (i) Mainstream CSA towards increasing productivity through value chain approach to support transformation of agriculture (crops, livestock, and fisheries) into innovative, commercially oriented, competitive, and modern sector; (ii) Build resilience of the agriculture (crops, livestock, and fisheries) systems through sustainable management of land, soil, water, and other natural resources as well as insurance and other safety nets; and (iii) Strengthen communication  systems on CSA extension and agro- weather issues.

Coordination mechanisms

The Kenya Climate Change Act (2016, Amendment 2023) provides the coordination of climate actions at National, Sectoral and Sub-National (County) levels. The Climate Change Directorate (CCD) is the lead government agency responsible for coordinating climate change plans and actions and related measurement, monitoring, and reporting of climate actions. In addition, the Climate Change Act has obligated different sectors and sub-sectors (through state departments and other agencies) and Counties (Sub-National level) to establish Climate Change Units (CCUs) for effective coordination and integration of climate actions into their strategies and implementation plans. Within the agriculture sector, the CCU at the ministerial level has the mandate of coordinating the climate smart agriculture multistakeholder platform (CSA MSP). In turn, the CSA MSP is instrumental in coordinating, advocating, and lobbying for an enabling policy and investment environment, as well as for climate actions among actors at national and county level. Through the CSA MSP, the sector has operationalized the KCSAS and KCSAIF and the CSA Monitoring and Evaluation Framework. Additionally, a CSA Investment Plan was developed and created an enabling environment for investment in agriculture climate actions. 

How climate finance was unlocked, and what it’s being used for in the livestock sector

The comprehensive legal framework at national, sectoral and sub-national levels has been instrumental in providing the enabling environment for mobilizing climate finance in Kenya. The livestock sub-sector is part of the food and nutrition priority area of Kenya’s NDC. Using livestock targets set in the KCSAS and KCSAIF and with policy direction from the National Livestock Policy (2020), the Government of Kenya has provided an enabling environment and the case for adaptation and mitigation needs to achieve livestock climate action targets set in the NDC.

In the updated NDC, priority mitigation and adaptation actions for the livestock sub-sector have been identified together with indicative costs that are clearly disaggregated on those that will be funded from local sources (unconditional support), foreign support (conditional bilateral and multilateral support), and private sector investments. This has helped the livestock sub-sector to mobilize resources from multilateral development banks and financial institutions, including the World Bank Group which funded the Kenya Climate Smart Agriculture Project (KCSAP – USD $65 million in 21 of 47 Kenya’s Counties) with 60% of funding classified as climate finance, and the De-Risking Inclusion and Value Enhancement for Pastoralists in the Horn of Africa (DRIVE) project, a regional initiative covering Djibouti, Ethiopia, Somalia and Kenya (USD $150 million for Kenya) with 40% climate finance for index-based livestock insurance (IBLI). Similarly, the International Fund for Agricultural Development funded the Kenya Livestock Commercialization Programme (USD $56 million in 10 Counties) which is 42% climate finance, and Green Climate Fund (GCF) funded Towards Ending Drought Emergencies (USD $20 million in 9 Counties) supports rangeland landscape restoration in drought feed reserve areas for pastoralists and is 100% climate finance.

These initiatives have resulted in increased animal productivity estimated at 10–30% due to improved feed and water availability. They have also increased incomes by up to 20% which have enhanced resilience of livestock keepers, reduced animal mortalities (from as high as 70% to 20%) among livestock keepers using IBLI, and reduced livestock emissions of up to 20% mainly due to improved livestock efficiency and better manure management practices. The enabling policy environment has created an opportunity for a pipeline project that will support the livestock sub-sector to achieve targets in Kenya’s NDC. In this regard, a Dairy Nationally Appropriate Mitigation Actions (NAMA) developed in 2017, which has an estimated mitigation potential of 8.8 Mt CO2 equivalent over a 10-year period, has been designed to receive climate finance through the GCF. Once implemented, this will abate about 20% of the national mitigation ambition in the updated NDC. Based on the potential of the dairy industry to support national mitigation ambitions, the dairy NAMA is being used as a foundation for a regional climate action initiative called Dairy Interventions for Mitigation and Adaptation (DaIMA). Through this initiative, climate finance from GCF and IFAD to the tune of USD $400 million will be mobilised, with Kenya expected to benefit from USD $144 million.

Ethiopia

Policy context

In Ethiopia, climate change poses significant challenges to the country’s socio-economic development. Climate change could reduce Ethiopia’s GDP by as much as 10% by 2045, primarily due to the negative impacts of drought on agricultural productivity. Past droughts have already resulted in a reduction of the country’s GDP by 1% to 4%, and rain-induced soil erosion could reduce GDP by an additional 1%. To safeguard the achievement of national development goals, Ethiopia has taken direct steps to prioritize adaptation and mitigation efforts. The 10-Year Development Plan of Ethiopia (2021-2030) proposes a variety of measures to reduce the impact of climate change on agriculture through the development of irrigation systems, granting smallholders access to additional land, and enhancing animal husbandry, fodder development, and animal health.

An Ethiopian woman stands by her flock of chickens. One side there is a traditional hut, with tropical vegetation in the background.
Ethiopia’s Nationally Determined Contribution incorporates adaptation measures and gender considerations to enhance resilience in agriculture. Photo: K. Yilma (ILRI). 

To ensure coherence and alignment with national climate action priorities, Ethiopia has developed its Climate Resilient Green Economy Strategy (CRGE) to combat climate impacts and protect the country from adverse climate change effects, aiming to achieve middle-income status by 2025. The CRGE strategy focuses on sustainable development and resource- efficient growth, resolving the potential conflict between economic growth and climate action by “leapfrogging” to the latest, most efficient technologies.

Like Kenya, the agriculture sector in Ethiopia is both impacted by and contributes to climate change, primarily through livestock-based emissions. Recognizing the significance of this sector, Ethiopia has incorporated it into its NDC, and is committed to address climate change by reducing livestock GHG emissions by 7.6% by 2030, relative to the BAU scenario of 194.8 Mt CO2 equivalent. The updated NDC also incorporates adaptation measures and gender considerations to enhance resilience in agriculture, identifies differences in roles, responsibilities, access to resources, decision-making power, and needs and capacities between genders. The CRGE Strategy builds on Ethiopia’s NDC commitments by emphasizing the role climate-smart livestock production systems can play to minimize greenhouse gas emissions and enhance the resilience of livestock to climate-related challenges. Ethiopia aims to promote sustainable grazing practices, improved animal husbandry techniques, and efficient feed management strategies to reduce the environmental impact of the livestock sector while ensuring its long-term viability. The strategy also highlights the need to enhance livestock productivity through improved breed management, access to quality veterinary services, and better animal feed. By focusing on these areas, Ethiopia aims to increase the production of meat, milk, and eggs to meet the nutritional needs of its people. 

Coordination mechanisms

The CRGE architecture is designed to enable a programmatic and transformative approach to implementing climate activities, reducing transaction costs, fragmentation, and duplication typical of project-based approaches. This system aims to translate the CRGE vision into practical actions, and its governance structure includes coordinating, implementing, and executing entities across Federal, Regional, and district (also referred to as Woreda) levels. The governance structure of CRGE has captured coordinating, implementing, and executing entities at all government administration levels - from the Federal to Regional to Woreda administrative levels.

How climate finance was unlocked, and what it’s being used for in the livestock sector

Climate finance projects in the livestock sector in Ethiopia aim to support initiatives that promote sustainable livestock practices, reduce greenhouse gas emissions, and enhance the resilience of livestock systems. One example, the Sustainable Land Management Program (SLMP) funded by the World Bank and other development partners, improved land productivity, enhanced watershed management, and promoted sustainable livestock practices across Ethiopia. The Livestock and Irrigation Value chains for Ethiopian Smallholders (LIVES) project, funded by the Canadian International Development Agency (CIDA) and implemented by the International Livestock Research Institute (ILRI), improved the livelihoods of smallholder farmers by promoting climate-smart livestock and irrigation practices. By supporting interventions such as improved pasture management, fodder production, veterinary services, water harvesting, and livestock breed improvement, these projects contributed to climate change adaptation and mitigation in the livestock sector.

Efforts are also underway to improve measurement, reporting, and verification (MRV) in the livestock sector in Ethiopia. Projects designed to enhance the accuracy and transparency of data related to livestock emissions and emission reductions have strengthened the MRV systems and processes in the country, enabling better tracking and understanding of the environmental impact of livestock production. By enhancing data collection and analysis, Ethiopia aims to have a more comprehensive understanding of the livestock sector’s contribution to greenhouse gas emissions and to identify opportunities for mitigation actions.

Uruguay

Policy context

Uruguay’s agricultural sector, particularly the livestock subsector, is both a cornerstone of the national economy and a significant contributor to greenhouse gas emissions in the national inventory. The country’s policies emphasize adaptation and mitigation co-benefits in the beef and dairy cattle sector, aligning with its commitments under the Paris Agreement. These commitments are reflected in Uruguay’s NDC, which sets specific targets for reducing GHG intensity emissions and enhancing the management of natural grasslands through the adoption of validated technologies by the national science.

A herd of cattle stand on a grassland.
Uruguay’s policies aim to transform the livestock sector to reduce its environmental impact while maintaining economic viability. Photo: S. Arteaga (Unsplash).

Coordination mechanisms

The “Ganaderia y Clima” project exemplifies a coordinated approach involving various stakeholders. It was executed by Uruguay’s Ministry of Livestock, Agriculture, and Fisheries (MGAP) and the Ministry of Environment (MA), with technical support from the Republic University (UdelaR), National Research Institute in Agriculture (INIA), Food and Agriculture Organization (FAO) and funding from the Global Environment Facility (GEF). The Climate and Clean Air Coalition (CCAC) funded the monitoring and reporting of the impact of improved management practices of grasslands and cattle on methane emissions from cattle. This collaboration fostered an integrated approach, engaging both governmental and non-governmental entities to promote sustainable livestock management and address the challenges posed by climate change. 

How climate finance was unlocked, and what it’s being used for in the livestock sector

The project has successfully unlocked international climate finance through partnerships with entities such as the GEF and the CCAC. The funding supports various climate-smart practices on farms, including optimizing grazing practices, improving livestock management, and establishing monitoring systems to assess and adjust management practices effectively. These actions aim to increase productivity, reduce greenhouse gas emissions intensity, preserve biodiversity, and build resilience against climate variability.

Overall, these measures and the coordination mechanisms in place aim to transform the livestock sector to reduce its environmental impact while maintaining economic viability. This holistic approach integrates with broader national goals for sustainable development and climate change adaptation and mitigation, demonstrating a proactive stance in aligning agricultural practices with environmental sustainability.

Policy integration support to help unlock climate finance in your country’s livestock sector

It is necessary but not sufficient to only include targets for livestock in climate policies and strategies: this is just one of the actions that must help mobilize climate finance for the livestock sector. Increasing climate finance to the livestock sector will require policy alignment across subnational, national, and international levels. Public commitments such as the Global Methane Pledge, launched at COP26, can boost political will in public and private financing institutions. As demonstrated in the case studies from Kenya, Ethiopia and Uruguay, national policy alignment on key livestock targets and measures across NDCs, national climate strategies, and agricultural policy can help guide climate finance to the livestock sector. Incorporating input from national livestock experts from lead ministries and producer associations early into the policy design process can ensure mitigation measures take local agroecological conditions of livestock production into account and promote national goals for food security and climate adaptation.

Developing data collection and management systems to support national greenhouse gas inventories of the livestock sector is critical to establish a baseline for national NDCs and monitor the impact of measures taken to reduce emissions. CCAC, FAO, IFAD, and the World Bank can all provide countries with the resources needed to develop a strong policy enabling environment for climate finance, while research-for-development institutions like CGIAR can help co-produce data and evidence and integrate this into policy processes.

Please reach out to one or more of the following groups to explore opportunities to integrate mitigation from livestock into your country’s policy framework.

The Climate & Clean Air Coalition (CCAC) finances projects requested by CCAC State Partners to support national policy, tier 2 inventory development, and mitigation action on short-lived climate pollutants. These requests for support are collected from developing country partners through our annual Expression of Interest (EOI) process. To learn more, please contact the CCAC Secretariat at secretariat@ccacoalition.org.

The International Livestock Research Institute (ILRI) is the only CGIAR research centre focused on addressing multiple development challenges through sustainable livestock solutions. ILRI can help partners improve MRV systems for the livestock sector and integrate climate-smart livestock solutions into NDCs and develop Livestock Master Plans that take climate change and environmental concerns into account. For more information please contact ILRI-Kenya@cgiar.org.

The Livestock Data for Decisions Climate Finance Solutions Group can link you to financial and technical resources to aid in developing policy frameworks for helping achieve this in your country. Please reach out to them at LD4D@ed.ac.uk for more information.

Acknowledgments

This document is the result of a collaborative effort of the LD4D Solutions Group on Climate Finance & Livestock. Lead authors: Laura Cramer (International Livestock Research Institute), Greg Kohler (Climate and Clean Air Coalition), Bernard Kimoro (Kenya Ministry of Agriculture and Livestock Development), Ricardo Gonzales (The Alliance of Bioversity International and CIAT), and Sintayehu Alemayehu (The Alliance of Bioversity International and CIAT). We gratefully acknowledge the feedback of Leah Arabella Germer (World Bank), Ben Henderson (World Bank) and Anne Mottet (International Fund for Agricultural Development).

The LD4D Climate Finance & Livestock Solutions Group brings together decision-makers and experts to generate evidence-based insights that help livestock development projects access climate finance. The group aims to unlock much-needed funding for a sector that is currently underrepresented in climate finance - despite its crucial role in adaptation and mitigation.

Livestock Data for Decisions (LD4D) is a worldwide community of over 1,000 members and partners working to improve livestock data and evidence in low- and middle-income countries. LD4D aims to support the transition to more sustainable and inclusive livestock systems by mobilizing trusted livestock data for better policies, investments, and strategies. Learn more at livestockdata.org.

This work is licensed under Creative Commons Attribution-NonCommercial- NoDerivatives 4.0 International. To view a copy of this license, visit https://creativecommons.org/licenses/by-nc-nd/4.0/. September 2024.

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