The global rate of deforestation was estimated at 10 million hectares per year from 2015-2020. In tropical and subtropical countries, 73 percent of deforestation is attributable to agricultural expansion. Despite several countries successfully reducing their deforestation rates, there is still an urgent need to both increase finance at scale for efforts to reduce agriculture-related deforestation and to make all financial flows align with multiple competing and overlapping objectives and demands to the same landscape. Increasing agri-food productivity to meet the demands of a growing population and halting deforestation are not mutually exclusive.  

Agriculture and land-use change can deliver up to one-third of the total desired climate mitigation solutions. Yet, global climate finance only allocates about four percent into the sector. While the Climate Policy Initiative (CPI) recorded a 574 billion USD allocation to annual international climate finance, from 2017-2018, only about 21 billion USD was financed to the land-use sector. Further, analysis on goals outlined in the New York Declaration on Forests (NYDF) highlighted the significance of the scale and influence of domestic agricultural subsidies and private sector on-farm investments. 

Investments into nature solutions must scale up to four-fold by 2050 to meet global climate, biodiversity, and land degradation targets. The role of climate finance in scaling up forest positive agriculture to achieve global objectives, before critical timelines, was the focus of a webinar organized by FAO's REDD+ team and Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF). The third session in the seminar series, “Halting deforestation: Tools and approaches for forest positive commodity value chains,” this webinar was held on 20 October 2021.    

Six main actions were proposed to scale up public and private financial efforts to mitigate the negative consequences of commodity production on forests: 1) Policy coherence, including fiscal reforms, strategic investments and repurposing of subsidies; 2) Innovation by pursuing new investment mechanisms; 3) Strategic use of national/international public investments to strengthen enabling conditions; 4) De-risk private investment and mobilize additional finance; 5) Carbon market/REDD+ results-based finance to foster positive agriculture; and 6) Redirect private sector investments to forest positive agriculture through addressing/eliminating deforestation risks in the existing investments of corporate and financial institutions​. Further details and action examples are shared in the presentation materials and recordings of the webinar. 

Strategic use of REDD+ results-based finance, to scale up sustainable livestock management, was also highlighted. A representative from Argentina shared the country’s actions aimed at reducing incompatibilities between livestock farming and the preservation of forest integrity. Simultaneously, these actions are supporting local livelihoods, through strategic coordination and implementation of the national plan for forest management with integrated livestock (MBGI ) - a technical agreement between the Ministry of Environment and Sustainable Development and the Ministry of Agriculture, Livestock and Fisheries. The GCF funded REDD+ results-based payment project, embedded in Argentina’s efforts to continuously curb deforestation and fight against climate change, was strategically designed to invest in scaling up MBGI forest-friendly livestock management, supplementing the already existing Forest Law funds. To further scale up actions and finance, opportunities are also being considered through mobilizing private investments, issuing green bonds, and forming a strategic partnership with the Central Bank of Argentina. 

Innovative financial mechanisms, including blended finance and green bonds, are pursued to scale up and sustain actions in areas where government commitment meets private sector interests to promote a green economy. In Indonesia, collective action from multiple ministries has been realized through bridging the financial gap by the national “financing hub” -- the Indonesia Environment Fund (IEF). With reducing deforestation set as one of the three core elements of IEF’s strategy, the government ensures cross-sectoral collaboration between private-public and agriculture-forestry sectoral actions. The regulatory framework of the IEF provides a legal basis for a growing and flexible fund for environmental activities for the public interest, including managing money, from international donors and the private sector, through various financial instruments (e.g., subsidy, grant, blended finance, revolving funds, and financing/loan expenditures).  

Financial support from institutional investors is emerging. Fondaction, a Canadian investment fund, shared its growing interest in natural capital and nature-based solutions investment, particularly given global carbon-neutral or net zero corporate objectives. The private sector - including development, impact funds and foundations, private equity funds, institutional investors, corporate investors and banks- has different motivations and appetites for risks associated with investing in forest positive agriculture. Two things are needed to de-risk private investments, 1) governmental support to strengthen the enabling environment, and 2) innovative financial incentives -- blended finance, fiscal incentives and environmental markets boost private investments. 

Trying different financial innovations, including various financial instruments and risk-sharing mechanisms, through setting a common agenda, will redirect agricultural production in a way that creates harmony with the forests supporting everyday life of local communities. Time is minimal for the systematic change necessary to meet the global climate, biodiversity, and sustainable development objectives coming due in 2030. Financial innovation can bridge the gap between the government and private sectors – we must work collaboratively to break the silos and seek transformative solutions to make our food on the table "forest positive" and sustainable for all.