Rice bonds and global climate finance are untapped opportunities to unlock finance for sustainable rice value chains
Leveraging climate finance to scale climate-smart rice production is the cornerstone of global food security and urgently needed to avert civil unrest, a new report by Earth Security Group (ESG) has found.
Proposing three innovative finance solutions to support sustainable rice production in line with the Paris Agreement climate targets, Financing Sustainable Rice for a Secure Future is published today by ESG, with support of the UN Capital Development Programme (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).
These include a ‘rice bond’ to finance sustainable rice value chains taking advantage of 2020 being a key year for the growth of green bonds in the agriculture sector, as highlighted by the Climate Bonds Initiative. A rice 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.
Coming ahead of the 2019 United Nations Climate Change Conference (COP 25) in Madrid, ESG recommends leveraging international climate finance to attract private sector investment for climate-smart rice production. 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 greenhouse gas (GHG) emissions from rice paddies but have not yet outlined how they plan to incentivise the private sector to achieve these targets.
Rice is vital to the food security of over half the world’s population (3.5 billion), with Asia accounting for 90% of global rice consumption. In lower-income countries such as Bangladesh, Cambodia and Vietnam, up to 70% of people’s dietary energy comes from rice. The commodity is the source of 10% of global anthropogenic methane emissions. In Southeast Asia – the world’s rice bowl – rice cultivation accounts for up to 25-33% of the region’s methane emissions, and between 10-20% of its overall greenhouse gas emissions.
Under a business-as-usual scenario, the Intergovernmental Panel on Climate Change (IPCC) anticipates that rice production will fall across the world. Asia will be particularly hard hit due to a convergence of land degradation, climate change, and water scarcity.
Larger rice-producing countries such as India and China, with extensive territories that cover a range of climatic zones, will have more space to shift rice cultivation to cooler areas that will become suitable for growing rice. However, smaller producers and importers in the tropical belt, such as countries in Southeast Asia and West Africa, lack such flexibility to adapt.