Climate Deep Dive

1 The climate challenge for smallholder households
2 Considering where climate change will most impact smallholder households
3 Understanding the effect on smallholder households: A Pathways approach
4 Responding to the challenge
5 Conclusions and recommendations

1 The climate challenge for smallholder households Add to My Resources

The 500 million smallholder farmers operating on land under two hectares produce an estimated 30–34% of the world’s food supply. The impacts of climate change make these farmers—and the more than two billion people whose livelihoods depend on the agricultural sector—an important constituency in the climate response. However, as global attention has focused on this crisis over the last decade, the response has often treated smallholder farmers as one homogenous group, if it considers them at all.

Climate Change and Agriculture in Context

The climate change crisis has the potential to undo decades of progress in global development. According to the latest Intergovernmental Panel on Climate Change (IPCC) findings, average global temperatures have already warmed by 0.5-0.6°C, relative to 1990 levels, and will likely reach a 2°C increase in the near future. Warming of just 1°C will lead to a worldwide decrease in food production yields, worsening as temperatures rise further.

Agriculture is a critical part of this global picture, with food systems being responsible for approximately 26% of global greenhouse gas (GHG) emissions.3 Agriculture-related GHG emissions are driven by land use (24%), crop production (27%), livestock and fisheries (31%), and the global food supply chain (18%), resulting from the evolution of our global food system over the past 50 years. Historically, while the Green Revolution increased farm productivity, it also accelerated the negative climate impacts of agriculture.

Agriculture and Climate in Four Numbers

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The Smallholder Link: Contributors or Victims?

While the agricultural sector as a whole is a major source of greenhouse gas (GHG) emissions, the contribution of smallholder farmers is concentrated in select commodities and is relatively small overall. By contrast, large-scale commercial farming contributes heavily to both GHG emissions and deforestation, including in low-income countries.

Relative to commercial agriculture and other sectors, smallholder production systems’ GHG emissions barely register—a fact that should guide the allocation of climate mitigation resources. For example, the average two-acre smallholder farmer in Kenya produces 55 times less carbon than the average American. With this context in mind, it is critical that mitigation efforts for smallholder farmers are focused on farming activities that contribute relatively more GHG emissions or drive land clearing, particularly conversion of wild shrubland, grassland, and virgin forest areas into farms.

Climate Change Impacts on Smallholder Farmers

Despite their low level of contribution to climate change, smallholder farmers are disproportionately impacted by climate variability and climate-related shocks. In the near future, many smallholder farmers will be forced to either leave their land, continue farming in difficult and risk-prone agro-ecological conditions, or adapt what and how they grow. In fact, the World Bank estimates that for 143 million people, climate change will result in land that is no longer arable by 2050, forcing them to migrate to other agricultural areas or to urban areas. At the same time according to a recent International Fund for Agricultural Development study, only 1.7% of climate finance from international financial institutions and other donors is going to climate adaptation activities for smallholder farmers in low-income countries.

2 Considering where climate change will most impact smallholder households Add to My Resources

If GHG emissions continue at the current rate, approximately 90% of farmers will experience food production losses, while less than 3% will live in regions projected to gain agricultural productivity by 2100. Vulnerability levels are a combination of three factors, including: 1) the likely change in productivity, 2) the dependence of said population on agriculture, and 3) the population’s adaptive capacity.

Likely Geographic Impacts of Climate Change on Different Regions

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Populations with the highest dependency on agriculture and the lowest adaptive capacity will be most severely impacted by climate change. Unfortunately, as seen in the regional maps above, these two characteristics are generally correlated. Countries that are most dependent on agriculture tend to be lower income, located in tropical areas most impacted by climate-related changes in agricultural productivity, and have limited economic ability to invest in adaptive capacities. Conversely, countries in higher latitudes— where food, jobs, and revenue dependency on agriculture is generally lower—will experience relatively fewer negative impacts and are less vulnerable across all categories.

The result of these cascading impacts in lower- income countries will be a large number of people unable to sustain their previous livelihoods from agriculture and therefore driven to migrate out of rural communities. By understanding this variation in vulnerability by region and country, we can develop national plans and the required dialogue among key stakeholders and policymakers to support the most vulnerable populations with adaptation and migration, as necessary.

3 Understanding the effect on smallholder households: A Pathways approach Add to My Resources

At a foundational level, farmers in all pathways will be impacted by climate change. But the extent and exact nature of these impacts will vary, as will the ability of households to contribute to climate change mitigation. In fact, transitioning between pathways may represent an adaptation strategy for farmers in reaction to climate impacts. With this in mind, in this deep dive, we explore how each pathway can uniquely mitigate or adapt to climate change.

Pathways Impact Model

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A pathways view on mitigation

The majority of climate change mitigation activities should focus on farmers that are consolidating land or expanding farm enterprises (Pathways 3 and 4), as they contribute the most to GHG emissions. The four farming activities contributing the most to GHG emissions (cattle, rice, soy, and palm) tend to be produced at a larger scale and using more resource intensive farming practices and also contribute the most to land clearance. Small vulnerable farmers building a resilience buffer or intensifying production (Pathways 1 and 2), on the other hand, contribute relatively little to GHG emissions; thus, mitigation should only be a focus for these pathways if they are involved in rice or cattle, or if they’re farming in particularly vulnerable ecosystems.

A pathways view on adaptation

For the majority of smallholder farmers, the focus should be on adaptation rather than mitigation. The capacity to deal with climate change vulnerability can be thought of in terms of resilience, a rapidly increasing goal of many donors and host-country governments.

Small vulnerable farmers building a resilience buffer or intensifying production (Pathway 1 and 2) are most vulnerable to climate change, given their high dependency on agriculture for their livelihoods and limited absorptive and adaptive capacity. These farmers are also most likely to be forced off of their land as the economics of farming worsen due to lower climate- associated productivity. This makes them particularly likely to migrate to an urban area (Pathway 7) or to move into rural laboring (Pathway 5) or starting a micro-services enterprise (Pathway 6) as a livelihood adaptation strategy. Farmers in these pathways are in dire need of resilience-building support to help them build more capacity to weather shocks and respond to new climatic conditions. In particular, subsistence farmers may not have the financial means to move or to pursue alternative livelihoods strategies.

Farmers that are consolidating land (Pathway 3), while still vulnerable, have an existing resilience buffer and greater levels of absorptive and adaptive capacity. They still need to adapt to new environmental conditions, but have more resources at their disposal; this reduces the likelihood that they will be driven to migrate. Farmers associated with larger farm enterprises (Pathway 4) are even more capable of adapting to climate impacts given their larger land size, which enables them to diversify or adapt strategies such as agroforestry. They also typically have more financial means to invest in their farms.

Those rural households that are not directly involved in farming are also affected by climate change in the form of market shocks. Extreme weather events and natural disasters can significantly affect demand for rural labor (Pathway 6) and services provided by rural micro-enterprises (Pathway 5), making them an equally important set of constituents when considering the effects of climate change.

4 Responding to the challenge Add to My Resources

Over the last decade, the global imperative around reaching net zero emissions and managing the climate transition has gathered momentum. But we still need a quantum leap in financing, research, innovation, and solutions that can scale in relation to smallholder agriculture, with a clearer focus on adaptation and resilience. While the more traditional agricultural development sector is largely behind the curve on this issue, a number of response frameworks have emerged from different stakeholder groups. It is important to note that none of these are mutually exclusive in scope. In fact, there are significant crossovers between many of the activities and solutions and a common integration point around the client/beneficiary (i.e., smallholder households).

Climate response frameworks

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A landscape approach has three interlinked goals: 1) Production – creating areas where commercial and food crops are grown sustainably; 2) Protection – sustainably using and protecting forests and other natural resources; and 3) Inclusion – enhancing farmers’ and communities’ livelihoods. This overall approach works with all actors across a certain ecosystem and finds ways each actor can contribute.

Climate-smart agriculture (CSA) refers to interventions that contribute to productivity, adaptation, and/or mitigation, focused on changing specific farming practices. This approach typically involves working directly with farmers to promote new techniques and technology.

Climate financing aims to reduce emissions and enhance GHG sinks through innovative financing, such as carbon credits, micro-insurance, and clean energy incentives. It often includes investment in infrastructure, as well as technical assistance to adopt new technologies and practices that increase resilience. Despite this broad definition, 93% of total climate finance targets mitigation activities—which we have seen are not applicable to most subsistence farmers. Of the 7% that goes toward adaptation, only a small proportion is allocated to programs reaching smallholder farmers.

Rethinking food systems refers to all activities involved in producing, processing, transporting, and consuming food, touching every aspect of human existence. The health of our food systems profoundly affects the health of our bodies, environment, economies, and cultures. By looking holistically at the different outcomes that food systems support—health, livelihoods, climate, gender, and employment—a more integrated and sustainable approach to market development can be pursued.

Technology-led solutions leverage the power of technology to more systematically transform agriculture across entire value chains. While technology can include new low-emission infrastructure and biologically modified, drought-resistant seeds, it increasingly refers to the potential for digitally enabled technologies. This includes agriculture sector-specific data, such as Climate Information Systems (CIS) and Early Warning Systems (EWS); hardware, such as irrigation solutions; and software infrastructure, such as digital platforms to support more climate-friendly agriculture at scale.

Sustainability standards and certification are typically used in tight, export-oriented value chains that are anchored by large multinational companies, including traders, manufacturers, and consumer brands. These sustainability standards and certification systems are used to create more traceability and transparency in the production practices of consumer foods; they often involve passing on premiums to producers for meeting specific quality and sustainability standards that are certified.

5 Conclusions and recommendations Add to My Resources

There’s little doubt that climate change will disrupt smallholder farming globally and that the time to act is now. Solutions that have delivered productivity gains in the past through carbon-intensive technologies and practices need to be rethought. At the same time, entirely new solutions need to be developed—particularly those that are financially viable for these segments. The response frameworks that have emerged provide a good starting point for ramping up the required action.

However, with so many strategies available, there is a real danger of new and unnecessary silos building up around ideological approaches, funding flows, and practical program associations (i.e., CSA vs. landscapes vs. food systems approaches, all of which are trying to solve similar issues). In reflecting on a pathways view of climate change we propose four specific recommendations to continue to guide the global action agenda.

Recommendations

Strengthen the science and research foundations with more localized, data-led climate science and modeling. More modeling should be done to project where smallholder farming is most likely to become untenable—and what types of farmer segments will be most affected over time—to support stronger global planning around managing climate effects. Organizations such as IPCC are mapping climate impact scenarios based on a huge number of inputs. To effectively act on this mapping, it needs to be brought down to the local level with more local impact data, where we can see how specific countries and landscapes will be impacted by temperature change, variations in rainfall, or desertification. Once we understand how a particular landscape is likely to change, we can look at specific crops that are grown in that landscape and which smallholder pathways will be most affected.
Anchor action in shared agendas that are government-led but built around a systems view of landscapes and markets. The effects of climate change will be different in each country and reflect the unique nature of the local food system, agro-ecological growing conditions, farming population, market actors, and policy environment. Host country governments are ultimately responsible for the long-term strategy, planning, and policy that safeguard the livelihoods of citizens and shape food markets to support a balanced set of outcomes. However, food systems and climate change are also global in nature and built around markets that are driven by the private sector. As such, all responses to climate change action need to be built around a systems view of markets, leveraging the very best global science and research and long-term in their outlook. This creates a critical need for more effective forums for the public and private sector to come together, aided by regional and international institutions where relevant, to co-design solutions.
Integrate a rural pathways view into all response frameworks to more effectively target, prioritize, and coordinate action. By breaking down responses based on different pathways, we can develop and prioritize specific interventions that are most suitable to each populations’ specific contribution and vulnerability to climate change. A pathways analysis of food systems approaches allows for more targeted interventions around households engaged in rural labor markets, services micro-enterprises, or urban migration (Pathways 5-7), who no longer work directly in agriculture but are still vital parts of our food system. This type of approach to targeting can lead to much more efficient and effective responses, while also uncovering opportunities for critical coordination between different actors focused on the natural point of integration: the smallholder farmer.
Increase funding for innovative adaptation solutions. This research has highlighted just how significant and complex the adaptation challenge will be for smallholder farmers in different rural livelihood pathways and the types of response frameworks that have emerged to support a response. With the scale of the current adaptation challenge for smallholder farmers rapidly increasing and only 1.7% of climate finance from international financial institutions and other donors is going to climate adaptation activities, a quantum increase in investment will be needed in innovative and scalable solutions. In the past ten years over 700 new digital agriculture service providers have emerged globally that are driving new types of products and services for smallholder farmers. Many of these innovations are directly related to the adaptation challenge. As these companies continue to refine and scale their solutions more grant-based innovation funding and sub-commercial impact investment will be needed.
Develop smarter ways of structuring finance to scale promising solutions. The concurrent challenges of continuing to feed a growing global population while using less resources, supporting adaptation needs and simultaneously moving to net-zero carbon is an immensely difficult problem to solve. Within this context, public funding is not going to be large enough to fund the scale up of the required solutions. Innovation will be needed within capital markets to create new investable asset classes (such as climate credits), developing new pay for result incentives and “blending” public and private capital to fund solutions at scale. This type of innovation will be critical to unlocking the right types of finance for solution providers supporting different smallholder pathways.

Climate Deep Dive

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