Climate financing gives Mexico’s resilience-building efforts a boost

The Balsas Basin – rich in natural resources and cultural heritage – is one of Mexico’s most impoverished and marginalized areas.

The watershed’s landscapes, nearly two-thirds covered by forests, provide essential ecosystem services such as rainwater regulation, storage and erosion control, and the generation of hydroelectric power.

But degraded soils, increasingly erratic rainfall, prolonged dry seasons, hurricanes and other climate risks have hamstrung agricultural productivity in the region, threatening livelihoods and food security.

The Mexican Government aims to boost the climate resilience and incomes of vulnerable communities by creating financial incentives for the protection, restoration and sustainable management of the Basin’s landscapes and ecosystems. It also seeks to improve extension services and access to timely climate information to inform adaptation strategies.

An interdisciplinary team from the FAO Investment Centre contributed substantially to the design of the Basin Approach for Livelihood Sustainability through Adaptation Strategies (BALSAS) project, providing expertise on environmental economics, forestry, climate change, value chains, land governance and Indigenous Peoples and institutions. The project received almost USD 80 million in financing from an International Fund for Agricultural Development (IFAD) loan and a Green Climate Fund loan and grant.

Nearly 2 million people living in the Balsas watershed speak an Indigenous language – more than one-quarter of Mexico’s Indigenous Peoples. The lack of employment opportunities in the region hit rural women, youth and Indigenous communities the hardest.

The project promotes social inclusion and community empowerment by championing bottom-up decision-making on sustainable forest management and value chain development.

Strong Government buy-in on BALSAS is a testament to the power of long-term country engagement in building trust with partners.

“This project is the result of solid partnerships on the ground, technical expertise, in-depth country knowledge and perseverance,” said FAO Investment Centre Director Mohamed Manssouri. “It will help Mexico realize its ambitions for more climate-resilient productive systems and rural livelihoods that contribute to the sustainable management of these vital ecosystems and natural resources.”

He added that BALSAS supports the country’s climate-related goals and commitments such as its Nationally Determined Contributions, initiatives to curb deforestation and forest degradation and others.

“The BALSAS project has the potential to become a milestone in the sustainable management of the Basin’s landscapes and ecosystems. The substantial technical and financial collaboration by all Government and international institutions involved is a testimony to the importance of the project and the relevance it poses for the Mexican Government,” said Daniel Anavitarte, IFAD Country Director for Mexico.

An innovative approach

BALSAS introduces several innovations. For one, it promotes an integrated territorial development approach. The project will strengthen the institutional capacity to manage, conserve and restore over 300 000 hectares of land.

Government programmes and community development plans will use climate change criteria, including social vulnerability and existing Indigenous communities, when prioritizing beneficiaries and interventions for forest-related financial incentives.

The project will support awareness raising among agrarian and Indigenous communities on how to benefit from incentive programmes, extension services and information systems that promote climate resilience.

In addition to timber, the forest landscapes provide a wealth of non-timber forest products with domestic and international market appeal, such as pine resin, oak charcoal, palm fibres for handicrafts, aromatic and medicinal plants and wild agave. Greater involvement of agrarian communities and producer groups, especially women, youth and Indigenous Peoples, in organic and certified agroforestry, timber and non-timber forest product value chains can boost household incomes and adaptive capacities.

Another important component is access to updated and relevant climate information, such as early warning systems and forest fire alerts. This data will help the watershed’s producers, inhabitants and authorities manage climate risks more effectively, feed into their decisions on community investments and improve disaster prevention measures.

Incentives for sustainable results

Incentive payments will be made multi-annually under a progress-based system that rewards high performing climate adaptation and mitigation initiatives that provide social benefits. CONAFOR, Mexico’s National Forestry Commission and a project partner, piloted this approach for the payment of environmental services.

The project will also encourage greater coordination with other government institutions and sectors and different water users, such as cities and irrigated agriculture, as well as private investors – a move designed to contribute to the project’s success and sustainability.