Despite Rise in Global Climate Finance, the Food System’s Share Falls to Just 2.5%

While public climate finance increased between 2017 and 2022, the amount flowing to food and agriculture declined during this time.

There’s a critical gap between the money the food system needs to safeguard itself from the climate crisis and the funding it actually gets, a new report has found.

Despite public finance for climate change adaptation and mitigation nearly doubling to $640B between 2017 and 2022, the percentage of investments allocated to the agrifood sector decreased from 3% to 2.5% (totalling $16.3B). And this dropped to just 1.5% (or $9.1B) for sustainable food system interventions.

But food and agriculture account for a third of the world’s greenhouse gas emissions, exacerbating a climate crisis that disproportionally affects smallholder farmers, fishers, pastoralists, and Indigenous Peoples, according to the Global Alliance for the Future of Food (GAFF).

Its Public Climate Finance for Food Systems Transformation report calls for an urgent increase “by orders of magnitude” in funding for greener agriculture production, healthier diets, and food waste reduction, among others, which can bring both environmental and economic benefits.

“Food systems transformation is crucial not only for climate stability and adaptation, but also to aid the very people and communities who are hardest hit by the climate crisis. We know that farmers, fishers, and Indigenous Peoples the world over are critical to building resilience,” GAFF deputy director Lauren Baker and executive director Anna Lappé said in a joint statement.

“The need for sustainable, agroecological food systems to receive significantly more climate finance is more urgent than ever,” they added.

NDCs need to redirect harmful subsidies

The majority (68%) of the finance dedicated to sustainable food activities came in the form of grants and loans from governments, while 27% came from multilateral organisations like development banks. Within these, mitigation projects received a slightly larger share (41%) than those focused on adaptation (35%).

But consumption-related efforts – addressing a transition to healthy and sustainable diets and the reduction of food loss and waste – got less than 6% of the $9.1B invested, despite being the two most effective actions to lower agricultural emissions. A third of the funding went to multiple intervention areas, while another 32% was slated for food production.

All this is a fraction of the $500B experts have said is needed to transition to a sustainable food system, meaning annual climate finance for the sector would need to be amped up nearly 55-fold.

Currently, 90% of countries’ nationally determined contributions (NDCs) mention mitigation and adaptation in the agriculture sector as a climate priority, but the scale of public finance currently flowing to the food system is not in line with a 1.5°C future.

In their updated NDCs next year, governments must outline plans to redirect the $670B of annual environmentally harmful agriculture subsidies towards planet-friendly products, says GAFF.

And the step-up in investment needs to happen across all areas of the system, helping transform agricultural practices and production, enable a dietary transition, tackle food waste, and support inclusive, equitable governance and decision-making.

The hidden costs of the current food system on human and planetary health are estimated to be between $12.7T and $15T a year. But greater investments into transforming food systems can provide at least $5T in annual economic benefits, resulting from a shift to sustainable agriculture, the reversal of biodiversity loss, lower demand for irrigation water, less nitrogen use, the restoration of ecosystems, and a smaller climate footprint.

The onus shouldn’t be on the Global South alone

New financial instruments must increase climate finance from the Global North to the South, a region that usually faces the worst of the climate crisis.

“The cost of food systems transformation in the Global South cannot be shouldered by those countries alone, as the legacies of colonialism, extractive economies, debt burden, vested corporate interests, and unequal power dynamics contribute to [the] extraction of resources and funding from poorer to richer regions of the world,” the report notes.

GAFF says governments must ensure that investment in food system transformation is a climate mitigation and adaptation priority, and enable policies to finance safety nets, enable reskilling training, and pour funds into adequate rural infrastructure and legislative frameworks.

Lawmakers also need to introduce coordination mechanisms to ensure finance flows to all key policy areas through comprehensive projects, including climate, food security, and biodiversity.

Climate funds, meanwhile, should aim to increase below-market concessional finance through blended finance instruments. “This may include leveraging private finance to scale and fund local and national food and nutrition security, agroecology, and regenerative food systems projects in line with the local and national food systems transformation priorities,” the report says.

Funding towards small-scale family farmers and Indigenous Peoples, who currently lack direct access to climate finance from international sources, should be substantially increased. And donors should take a food systems approach to climate financing to ramp up investment across all parts of the industry.