* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Financing climate-smart rice production is key to global food security and urgently needed to avert social unrest
Alejandro Litovsky is the chief executive of Earth Security Group.
Rice could trigger the climate agenda’s ‘Arab Spring moment’. The staple commodity feeds 3.5 billion people uses 40% of the world’s irrigation water and is acutely sensitive to climate impacts. Being a subsistence crop, the knock-on effects of supply shortfalls on social unrest are high, underlining how important it is to put food security at the centre of climate solutions.
A radical overhaul of existing rice production systems is desperately needed. Across Asia and Africa, rice shocks quickly impact poverty and food insecurity, since rice accounts for a substantial share of poor households’ expenditure. After skyrocketing rice prices led to a food crisis in 2007-08, a study showed that a 50% increase in the price of rice would on average increase poverty by 2.2 percentage points in the poverty headcount across Central and West Africa.
At the same time, rice farming is an enormous contributor to global warming, emitting 10% of global methane, a potent greenhouse gas (GHG). In Southeast Asia, rice cultivation accounts for up to 25-33% of the region’s methane emissions and between 10-20% of its overall GHGs. Simple changes, such as removing rice straw instead of burning it, or alternating wet and dry field conditions instead of flooding could radically reduce methane emissions by up to 70%, and slash water use by 50%. ‘Climate-smart’ rice farming practices are a tremendous impact investment opportunity.
Financing the scale-up of sustainable rice practices is forcing us to rethink public-private collaboration. Earth Security Group’s report Financing Sustainable Rice for a Secure Future puts forward three innovative finance blueprints to help scale up sustainable rice production in line with measurable contributions to the UN Sustainable Development Goals.
Among our proposals is the design of a ‘rice bond’ to catalyse upfront capital for sustainable rice value chains. Such a bond would enable a global rice processor, trader, or retailer to provide farmers with capital to transition to sustainable production, improve farming practices, increase yields and revenue, and become more resilient to climate risks.
To catalyse the growth of green bond issuance in agriculture, the Climate Bonds Initiative (CBI), a standards-setting body, is developing the taxonomy to guide issuers, banks and investors in developing agriculture-related green bonds. We are recommending that this incorporates the indicators for climate-smart rice production that have been already developed by the Sustainable Rice Platform.
Another underutilised pool of capital sits in international climate finance. Given the GHG emissions of rice production, public climate finance could be used strategically to attract private investments in climate-smart agriculture. Country pledges that include rice in their Nationally Determined Contributions (NDCs) would be the first place to start. At present, forty-eight countries include in their NDCs the commitment to reduce GHG emissions from rice paddies but have not yet outlined how they plan to incentivise the private sector to achieve these targets.
The global rice sector offers impact investors a tremendous opportunity to invest in solutions that address poverty and put food systems on a sustainable and resilient track. We have brought together a coalition of partners, including the UN Capital Development Fund (UNCDF), the Sustainable Rice Platform (SRP), the leading commodities trader Phoenix Group, the World Business Council for Sustainable Development (WBCSD), and the Swiss Agency for Development and Cooperation (SDC), with whom we are working to design the partnerships and investment programmes to implement these ideas.
The investment profile of sustainable rice has so far been obscured by other high-profile commodities, that are large-scale drivers of deforestation, such as palm oil, soy and cattle. Rice is instead key to food security, and food security is key to social stability in the turbulent times that lie ahead. The challenge of putting rice on a sustainable footing is undoubtedly large, but the price of inaction is significantly larger.