Investments aligned with this Strategic Goal aim to improve the resilience of land-based farms and farm-related businesses to the impacts of global climate change.

The sections below include an overview of the approach for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

Climate change is the most pressing environmental issue facing humanity and the planet. Agriculture is a key source of carbon emissions, with an estimated 25% of total global greenhouse gas emissions caused directly by changes in land use and crop and animal production (1) and an additional 2% of emissions attributable to agriculture-adjacent related sectors (2). Conversion of land to agriculture and poor soil management practices also cause losses of soil organic carbon equivalent to the carbon emissions from burning 323,000 pounds of coal per hectare (2).

At the same time, farmers and their land also suffer the consequences of climate change. Rising temperatures are already affecting planting and harvest dates around the world, and further are driving new and intensified pressures from pest and disease, water shortages, droughts, and more frequent and more intense extreme weather events. Global yields of wheat, rice, maize, and soybeans will decrease with increasing temperature, impacting crops that provide two-thirds of human caloric intake. Such phenomena can also lead to political instability and civil strife, further destabilizing agricultural markets and operations (1).

For that reason, building climate resilience is critical to the future of farmers, land, water, and food resources around the world. In the context of sustainable agriculture, resilience is the capacity of agriculture, farming communities, households, and individuals to maintain or enhance system-wide productivity by preventing, mitigating, or coping with risks; adapting to change; and recovering from shocks (2).

Investments in climate resilience through sustainable agriculture seek to build long-term stability for farmers and agricultural systems in the face of intensified weather events and changing climate patterns. Such investments can improve resilience to climate change by:

  • purchasing or assisting in purchasing farmland or farming operations that use diversified cropping systems to conserve and enrich soils;
  • purchasing or assisting in purchasing farmland or farming operations that use pasture-based livestock systems;
  • advancing the development of new crop and livestock breeds that are weather- and disease-resistant, require fewer inputs, and have higher yield stability; and
  • offering risk-management strategies to help farmers prepare for and adapt to climate change–related events and increase farm profitability.

Outcomes of investments aligned with this Strategic Goal could include:

  • increased use of diversified cropping systems that incorporate polycultures, cover crops, and permanent crops, such as fruit and nut trees and other perennials, fix nitrogen and other nutrients in the soil, and do not require additional synthetic inputs;
  • increase in pasture-based livestock systems that provide animal nutrition, integrate management of health and disease, and restore grassland and soil;
  • increased resource efficiency, including reduction in water and energy inputs, waste, runoff, soil erosion, and carbon emissions from fossil fuels;
  • improved yield stability due to decreased pest and disease pressures and increased resilience to extreme weather events; and
  • formalized risk-assessment and risk-management strategies to prepare for and adapt to climate change-related events and increase farm profitability.

*The GIIN’s Understanding Impact Performance: Agriculture provides analysis of the impact performance of agriculture impact investments and showcase the real-world results associated with them.

What is the scale of the problem?

Climate change impacts agriculture in every region of the world. Based on current trends, climate change is projected to lead to a 17% reduction in global yields by 2050 (3). Rising temperatures and shifting precipitation patterns have not only ecological impacts but also increased risks and uncertainties for producers, leading to greater instability. Decisions made in the wake of disasters or crises can have consequences that lead households into long-term “poverty traps” (4). For example, farmers or business owners might lose their assets—such as land, trees, or water sources—or overuse or trade those assets in order to meet their immediate needs. This depletes critical resources for agricultural productivity, a negative feedback loop that can lead to further degraded lands and declining crop yields (2). According to the Food and Agriculture Organization of the United Nations, a third of the planet’s soil is now moderately to highly degraded, and more than 90% of the planet’s soil could be degraded by 2050 (25).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

Though investments aligned with this Strategic Goal could positively affect people and planet quite broadly, specific target stakeholders include the following.

  • Farmers and rural communities. Farmers, particularly smallholder farmers, are among the most directly affected by the impacts of climate change. They often lack resources and scale to tackle unexpected crises or weather events, and their livelihoods and broader rural communities require access to and control of land, water, and ecosystem resources. These communities, standing on the front lines of sustainably managing land and natural resources, can benefit from policies and practices that mitigate the impacts of climate change, such as carbon pricing strategies. Building climate resilience requires changes in production, storage, processing, and marketing systems that farmers may have difficulty implementing without additional investment. Increased resilience also helps stabilize farmers’ crop yields and incomes, as well as improving their dietary quality (5).
  • Women. On average, women represent 43% of the world’s agricultural labor force (6) and produce 60% of the world’s food (7). In many regions, particularly in the Global South, women bear the most responsibility for supplying household food, energy, and water, despite lacking the same level of access as men to capital, technology, training, and often land tenure rights. Women are frequently more exposed and more vulnerable to natural disasters, such as floods or droughts, as well as to other climate-related health risks, such as under-nutrition and malaria. Measures to support climate resilience will also support women’s financial stability and their families’ survival strategies (7).*
  • People living in the Global South. The Global South faces particularly high vulnerability and low resilience to the negative impacts of climate change. Climate change makes rural livelihoods particularly vulnerable as a result of factors that include higher malnutrition, lower yields, lower incomes, and forced relocation due to natural disasters (8). Climate change and malnutrition are deeply intertwined for people living in the Global South; the prevalence of undernourishment in Africa (19.1%) is more than twice the world’s average. In Latin America and the Caribbean (31.7%), where rates are rising the fastest, the prevalence of undernourishment is more than triple the world’s average. Nutrient-rich foods are particularly susceptible to the impacts of climate change, which makes them more difficult to grow, decreasing their nutritional value and impacting food security in many countries (5).

*For more on gender lens investing, see the IRIS+ Gender Lens theme and the GIIN’s Gender Lens Investing Repository.

What are the geographic attributes of those who are affected?

Climate change is a global problem; because of changing temperatures and other effects, crop productivity is predicted to decline most in tropical areas, where most of the world’s poor and food-insecure live (2). Yields in Asia and Africa are expected to fall by 8% by 2050 (2). Declining yields, paired with increased demands by a growing world population, will make food markets more volatile and hinder the livelihoods of the most vulnerable communities in these regions and around the world.

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Organizations can consider contribution at two levels—enterprise and investor. At the enterprise level, contribution is “the extent to which the enterprise contributed to an outcome by considering what would have otherwise happened in absence of their activities (i.e., a counterfactual scenario).” To learn more about methods for assessing counterfactuals, see the Impact Management Project.

Investors can contribute toward climate resilience through agriculture as follows.

  • Signal that impact matters. Investments to build climate resilience expresses the investor’s values that climate change is an immediate and ongoing threat to agriculture and food security. This can draw attention to this investment theme from other like-minded investors, in addition to “pricing in” the social and environmental impacts of climate change from capital markets.
  • Engage actively. Investors can leverage their expertise and networks to improve the performance of their investments in climate resilience through agriculture. For example, The Carrot Project, an organization that supports sustainable farmers and farm-related businesses through alternative financing in the northeastern United States, developed an agricultural land fund that pairs loans with technical assistance and financial management training. The small- to mid-scale enterprises they finance are implementing efforts around soil health, grazing management, and other climate-resilient practices (14). On a larger and global scale, Rabobank’s AGRI3 Fund offers financing through commercial and development banks, also linked to a Technical Assistance facility, to provide funding for external providers to offer technical training or specific research and feasibility studies, among other types of support (15).
  • Grow new or undersupplied capital markets. Lack of access to finance and inability to transfer risk has traditionally been a barrier to growth for sustainable farms and food businesses. Investors can fill this gap through new funding mechanisms—such as blended capital, catalytic capital, insurance-linked securities, and fixed-income financing (16)—all of which could reduce the barriers that inhibit sustainable investment. Further, values-aligned investors can provide early growth-stage financing to agricultural businesses and entrepreneurs, who often lack the resources to advance to the next stage of business.
  • Provide flexible capital. Absent appropriate public incentives, impact through investments in climate resilience may require acceptance of lower risk-adjusted financial returns. Creating new markets for climate-resilient perennial grain crops, such as sorghum, millet, or Kernza® (25), may require patient capital that is ultimately unable to offer a market-rate return (17).

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

Farmers, communities, land, and natural systems alike will benefit from efforts to increase resilience to climate change. As the world’s population reaches a projected 9.7 billion by 2050 (9), pressure will mount on agricultural land—much, if not all of it already affected by climate change—to meet growing demands for food.

Agriculture is the main source of income and employment for 2.5 billion people in low-income communities. Smallholder farmers generate approximately four-fifths of all food produced in Asia and sub-Saharan Africa (9). Furthermore, according to the Global Assessment of Land Degradation and Improvement (GLADA), land degradation will impact the lives of an estimated 1.5 billion people, while more than 42% of the world’s very poor already live in degraded areas (10). These lands and the communities they support would benefit most from investments in climate resilience.

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

Building climate resilience is an ongoing process that often requires investments with long payback periods. The extent of change from these investments will depend on the size, scope, and attributes of the land area and agricultural systems affected. Change will have greater impact if land tenure rights are secured for farmers. Other factors that influence the amount and duration of change include the co-benefits derived from projects to build resilience, as well as the length of the investment and technical support.

Climate change has led to more extreme weather events, causing greater financial and physical damage, more often, which is further compounded by the slow recovery from previous extreme weather events (11). Payback of investments in resilience may come quickly after withstanding the brunt of a natural catastrophe, or payback may come over a period without major catastrophes but with slowly eroding soils and a changing climate.

Projects with shorter timelines combined together can have significant impact, especially in countries and regions in the Global South. The payback time of installing new irrigation systems in Nepal, for example, ranges from one to five years (12). In Zambia, the payback for transitioning to ‘climate-smart’ soya production (grown in a ‘double-up legume’ system alongside maize and other legumes, such as pigeon pea) was seven months (13). The returns from these projects only increase as soils become more resilient and as farms fare better against events made more common by climate change.

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

The following are impact risk factors for investments in line with this Strategic Goal.

  • External risk. The most significant risks are likely posed by external weather or climate-related events. A major storm, drought, or other weather event may delay or derail a project or prevent its implementation altogether. Such events are often unforeseen until their rapid incidence leads to extreme consequences. Multi-stakeholder projects that involve a community or region may also be affected by conflicts or civil unrest, which can be heightened in areas most vulnerable to or already affected by climate change (18). Mitigating these risks is, first and foremost, the protective value of ecosystem and resilience efforts. Investors can also consider purchasing weather risk–transfer products, which are now available globally, or other crop re/insurance programs that protect against weather variability. Finally, investors can ensure that projects use regionally appropriate, stress-tolerant seed varieties, irrigation systems, and low-disturbance soil practices, all of which mitigate risks related to extreme weather.
  • Unexpected impact risk. The complexity of the causes and impacts of climate change increases the probability of significant unexpected positive and/or negative impacts as a result of an investment aligned with this Strategic Goal. For example, though many investors are aware of the relationship between climate change, which changes the land, and food insecurity, they may not understand how this relationship further affects farmer decision-making or the economic dynamics accompanying market instability. Investors can mitigate this risk by assessing climate risk with defined roles and clear input from local stakeholders, who can provide critical insights into community and environmental dynamics.
  • Drop-off risk. Investors should consider how quickly a farm or agribusiness would recover if a risk event occurred today or at any point during their investment cycle. Some risks associated with climate change are likely irreversible. Changing growing seasons and increased pest and disease pressure, for example, may have impacts that are difficult to mitigate through the same interventions over a period of time. Investors can mitigate these risks through careful assessment of climate risk over a much longer temporal horizon than is typically associated with risk management (19).

What are likely consequences of these impact risk factors?

These impact risks could prevent the investment’s intended impact from happening or, worse, could harm people and the planet. The risks may also lead to financial losses for both investor and investee. Loss of environmental or sustainability certifications for a project may present the most salient immediate risk for investors in terms of its impact on their reputation. Poor management of an investment may also tarnish an investor’s reputation and credibility. External risks associated with extreme or frequent occurrences such as droughts, storms, or floods may physically damage farms and agricultural businesses, leading to investor losses or delayed payback periods.

Illustrative Investment

Agriculture Capital invests in regenerative farmland and food-processing assets in Washington, Oregon, California, and Australia covering more than 20,000 acres of table grapes, blueberries, hazelnuts, and citrus. They track nearly 150 performance metrics, including worker safety, soil health, and emissions of carbon and particulates. In addition, Agriculture Capital is developing systems to track carbon impacts to help make real-time farming choices. Since launching, their U.S. properties have sequestered a total of 13,288 tons of CO2 equivalents through sustainable in-field practices (20).

SLM Partners acquired 44,000 hectares of land in Queensland, Australia at the end of 2012. After acquiring the land, they transitioned to holistic planned grazing, a practice that allows farm managers to vary the size of the herd and frequency of herd movements according to seasonal conditions. This practice mimics the effect of large, wild herds of herbivores in a domestic grazing context. Since its acquisition, the managers have installed 98 km of water pipes, 23 new water points, and 580 km of single-wire electric fence (21). This strategy has increased the ecosystem’s resilience, allowing SLM’s managers to better budget for changes and extremes in Australia’s climate (22) while increasing retained soil carbon, improving water cycles, and enhancing biodiversity (23).

The World Bank and Asian Development Bank funded the Pilot Program for Climate Resilience (PPCR) in Nepal to address vulnerabilities to climate change and expand agricultural adaptation measures. Their efforts included introducing additional crops to seasonal crop rotation, training and adopting more climate-smart practices, and investing more comprehensively across the value chain. The project required re-structuring and adaptation after an earthquake caused delays in implementation, but this challenge actually contributed to further understanding of the risks posed by climate-related weather events. Results included increased farmer demand for training and adoption of climate-smart farming practices after exposure from demonstration plots, as well as increased productivity of sugarcane and maize crops using crop-rotation techniques. Overall, the program provided training and mentorship for 15,000 farmers over five years (12).

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 2
NESTA: 2
Special Report on Climate Change and Land: Summary for Policymakers

IPCC. Summary for Policymakers. In: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems. 2019. https://www.ipcc.ch/srccl/chapter/summary-for-policymakers/

NESTA: 2
The Nutrition Advantage: Harnessing Nutrition Co-Benefits of Climate-Resilient Agriculture

Soma Chakrabarti and Dhanush Dinesh. The Nutrition Advantage: Harnessing nutrition co-benefits of climate-resilient agriculture. International Fund for Agricultural Development (IFAD) Environment and Climate Division, 2017. https://www.ifad.org/documents/38714170/40321185/Nutrition_Advantage_web.pdf/219cc7b6-db5b-4b30-a3ab-85cd73797541

NESTA: 2
Nature-Based Agricultural Solutions: Scaling Perennial Grains Across Africa

Brad G. Peter et al. “Nature-based agricultural solutions: Scaling perennial grains across Africa.” Environmental Research. Vol. 159 (2017) pp. 283-290 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5630205/

NESTA: 2
Water Scarcity and Rioting: Disaggregated Evidence from Sub-Saharan Africa

Christina Almer et al. “Water scarcity and rioting: Disaggregated evidence from Sub-Saharan Africa.” Journal of Environmental Economics and Management, Vol 86 (2017), pp. 193-209. https://www.sciencedirect.com/science/article/abs/pii/S0095069617303650?via%3Dihub

NESTA: 1
2016 Global Food Policy Report

International Food Policy Research Institute (IFPRI). 2016 Global Food Policy Report. 2016. https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/130207/filename/130418.pdf

NESTA: 1
Land Degradation, Poverty and Marginality

Nicolas Gerber, Ephraim Nkonya, Joachim von Braun. “Land Degradation, Poverty and Marginality.” Marginality (2013). https://doi.org/10.1007/978-94-007-7061-4_12

NESTA: 1
Building a Common Vision for Sustainable Food and Agriculture

UN FAO. Building a Common Vision for Sustainable Agriculture: Principles and Approaches. Good and Agriculture Organization of the United Stations, Rome, Italy, 2014. http://www.fao.org/3/a-i3940e.pdf

NESTA: 1
Climate Change Effects on Agriculture: Economic Responses to Biophysical Shocks

Gerald C. Nelson et al. “Climate change effects on agriculture: Economic responses to biophysical shocks,” PNAS, Issue 111, Vol 0 (2014) pp. 3274 – 3279. www.pnas.org/content/111/9/3274

NESTA: 1
The Economics of Poverty Traps and Persistent Poverty: Policy and Empirical Implications

Christopher B. Barrett and Michael R. Carter. “The Economics of Poverty Traps and Persistent Poverty: Policy and Empirical Implications,” Journal of Development Studies, Issue 49, Vol 7 (2013) pp. 976-990. http://barrett.dyson.cornell.edu/Papers/Barrett%20Carter%20Poverty%20Traps%2012%20May%20revision.pdf

NESTA: 1
The Role of Women in Agriculture

SOFA Team and Cheryl Doss. The Role of Women in Agriculture. The Food and Agriculture Organization (FAO) of the United Nations. ESA Working Paper No. 11-02, March 2011. http://www.fao.org/3/am307e/am307e00.pdf

NESTA: 1
NESTA: 1
Explaining Extreme Events from a Climate Perspective

American Meteorological Society, “Explaining Extreme Events from a Climate Perspective 2018”, Bulletin of the American Meteorological Society (BAMS), 2018. https://www.ametsoc.org/ams/index.cfm/publications/bulletin-of-the-american-meteorological-society-bams/explaining-extreme-events-from-a-climate-perspective/

NESTA: 1
Soil Wealth: Investing in Regenerative Agriculture across Asset Classes

Christi Electris et al. Soil Wealth: Investing in Regenerative Agriculture Across Asset Classes. Croatan Institute. 2019. http://www.croataninstitute.org/soilwealth

NESTA: 1
On Climate & the Future of Food

Global Alliance for the Future of Food. “On Climate and the Future of Food.” 2019. https://issuu.com/futureoffood/docs/ga_climate_food?e=33354163/72321739

NESTA: 1
Sequestering Carbon in the Soil: Addressing the Climate Threat

Breakthrough Strategies and Solutions. “Sequestering Carbon in the Soil: Addressing the Climate Threat.” 2017. https://futureoffood.org/wp-content/uploads/2017/09/Final-Report-Sequestering-Carbon-in-Soil.pdf

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.