Green financing in agriculture describes about those challenges which policy markers are facing during initiating any project such as funds and sources , transaction cost and channeling and also in the monitoring bodies

1. Green financing in agriculture: Policy
challenges for India
Department of Agricultural Economics
College of Agriculture, Iroisemba
Central Agricultural University, Imphal-795004
Credit seminar
on
AEC 591: Master’s Seminar
Presented by
N.TANUJA 15A-21M
Ⅱnd year M.Sc. (Ag)
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2. Climate financing in agriculture
• Agriculture - major contributor -solution
(Miller, 2009)
• Small-scale farmers- challenges - financing - agricultural and non-agricultural goals
(Miller, 2009)
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3. Green Financing?
Green financing - raise the level of financial flows – public-
private - sustainable development priorities
(Jha and Bakhshi, 2019)
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4. Role of Green Finance
Financing both
private and public
green investments.
Financing for
environmental
goods and services
To prevent or minimize or
compensate for the damage to
the environment
(The Print, 2022)
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(Environmental Protection Agency, 1969)
3 Pillars of Sustainability

5. History of climate financing
• 1979: World climate conference
• 1988: Creation of the Intergovernmental Panel on Climate Change (IPCC)
• 1992: United Nations Framework Convention on Climate Change (UNFCCC)
• 1995: The first meeting of the UNFCCC - Conference of Parties (COP 1) (Germany)
• 1997: Kyoto Protocol (Kyoto, Japan)
• 2005: Kyoto Protocol enters into force
• 2015:‘Paris Agreement’- COP 21 (Paris, France)
• 2021: COP 26 (Glasgow)
• 2022: COP 27 (Egypt)
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(David,2020)

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7. • Current sources of funding- Categories focused
• Scale up – finance - Other possible sources
• Changes – current scaling
1. Sources of funds and scale of finance
• Magnitude - High transaction cost
2. Transaction costs
• Track – climate finance - tools and mechanisms
3. Metrics and tools
• Fintech companies – Digital solution
4. Fintech companies – Digital solution
• Greenwashing effect
5.Barriers to climate finance
• Modifications
6. Crop insurance policies
• Third party for monitoring
7. Organizations
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8. 1. Sources of funds and scale of finance in green finance
Current sources of funding
Funding comes from different sources of capital like
domestic public finance
international public finance
private sector finance (Schmidheimy et al.,1996)
- Domestic financial resources – significant alternative
State budget processes – Odisha – West Bengal – Tamil Nadu – Telangana – other states
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9. 9
S. no. State
Budget requirement under SAPCC
(in Rs crore)
1 Gujarat 24775
2 Madhya Pradesh 4700
3 Punjab
64731
4 Uttar Pradesh 46946
5 Uttarakhand 8833
6 Odisha 17000
7 Mizoram 3675
8 Tamil Nadu 404455
(State action plans on climate change, 2018)
Budget requirement under SAPCCs

10. Categories focused while funding
Mitigation activities: 93% of the total climate finance
Both mitigation and adaptation goals: 29% of the total climate finance
In Agriculture – nearly half - climate adaptation projects
- Low GHG emissions (36%) - Agriculture production (14%) - livelihood communities(14%)
National Adaptation Fund for Climate Change (NAFCC) - 30 adaptation projects ( total cost of INR
8,470 million)
(MoEFCC, 2021)
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11. Sl.
No.
Name of project State Executing Entities
Project Outlay
(Rs. in Crores)
1. Model Carbon Positive Eco-Village in Phayeng of Manipur Manipur Directorate of Environment, Government
of Manipur
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2. Sustainable Agriculture Development through Expansion, Enhancement
and Modelling
Mizoram Department of Agriculture (Crop
Husbandry), Government of Mizoram
10.38
3. Spring-shed development works for rejuvenation of springs for climate
resilient development in the water stressed areas of Meghalaya
Meghalaya Directorate of Soil and Water
conservation, Government of
Meghalaya
22.92
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Projects Sanctioned under National Adaptation Fund for Climate Change (North–East)

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4. Addressing Climate Change Vulnerability of Papum-Poma River for
conservation and recharging of its springs
Arunachal
Pradesh
Environment and climate change centre,
State Climate change cell
23.92
5. Management of Ecosystem of Kaziranga National Park by Creating
Climate Resilient Livelihood for Vulnerable Communities through
Organic farming and Pond Based Pisciculture
Assam Kaziranga National Park (KNP) under
Department of Environment & Forests
(DoEF), Government of Assam
24.57
6. Addressing Climate Change Vulnerability of Water Sector at Gram
Panchayat level in Drought prone areas of Sikkim
Sikkim Rural Management and Development
Department, Government of Sikkim
24.67
7. Gene Pool Conservation of Indigenous Rice Varieties under
Traditional Integrated Rotational Farming System for Promoting
Livelihood and Food Security as Climate Change Adaptation
Strategy in Nagaland
Nagaland Department of Agriculture, Government of
Nagaland
24.8
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(NABARD, 2021)

13. Scale up the finance
India’s Intended Nationally Determined Contributions(INDC) - India needs to spend at least USD 2.5
trillion to meet its climate change goals (2015-2030)
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Government schemes Total Cost (INR) Allocation of fund (INR)
Climate Change Action Programme (CCAP) 2,900 million 1,724 million (2017-2021)
National Adaptation Fund on Climate
Change (NAFCC)
3,500 million 4,706.80 million(31 March 2020)
(MoEFCC, 2021)

14. Other possible sources of funding
Climate-specific funds: Green Climate Fund (GCF), Climate Investment Funds (CIFs), the Global
Environment Facility (GEF), and bilateral climate funds
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US$
Green Climate Fund (GCF) 177 million
Global Environment Facility (GEF) 165.25 million
Domestic mobilization 1.374 billion
(GoI, 2021)

15. 2. Transaction costs involved in climate financing related to
agriculture
Transaction cost: connected with carbon sequestration projects
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Transaction cost
Initial/
development
expenses
Ongoing/
implementation
cost
Search cost (out-of-pocket costs): Price of the information
services, promotional and brokerage costs
Negotiation cost: Discuss the particulars of the project proposal,
liabilities, schedules, site visits, and hiring lawyers
Approval cost: Length of time (Project designs - approval) and
registrations fees
Monitoring cost: Expenses for verification - Technical expertise,
training, data collection analysis, and reporting
Enforcement cost: Litigation/ administrative proceedings
Insurance cost
(Dudek and wiener, 1996)
Carbon
initiatives

16. 3. Metrics and tools for the flow of carbon finance in agriculture
• Metrics – complex- inadequate
• Appropriate tools and financial instruments- increase the proportion of climate finance flow
Tools and mechanisms are followed currently for measuring climate-smart practices
Multilateral Development Banks’ climate finance includes the following financial instruments:
1. Advisory services (Prasad et al.,2022)
2. Grants
3. Guarantees
4. Investment loans
5. Working capital
6. Policy-based financing
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Sources
Government
NDBs
International
climate funds
Private
finance
institutions
Corporates
Rural households and
individuals
Instruments
Grants
Debt
Subsidies
Equity
Risk
insruments
Use
Adaptation
dual use
Mitigation
Types of
Activities
Improve
production
capacity
building
Improve
infrastructure
Improve
supply
chains
Policy
support
wellbeing rural
communities
Research &
development
First
Recipient
Government
Formal
financial
institutions
Informal
financial
providers
NGOs
Reasearch
institutions
Non-
financial
institutions
Final
beneficiaries
Final
Beneficiaries
Small-scale
producers
Rural
communities
Climate Policy Initiative,2020
Tools to map climate finance

18. 4. Fintech companies able to give digital solutions
• Fintech - business model - financial services- end-to-end process via the internet.
• India is one of the fastest fintech markets in the world with a market size of 31 billion dollars
• Expected to reach 1 trillion by 2030
• Fintech start-ups - Kenya, New Zealand, Australia, and India
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19. • Nirmala Sitaraman (Minister of Finance and Corporate Affairs of India)- Union Budget plan 2022-
fintech companies to take advantage of opportunities
• Green fintech – specific usage of funds for environmentally sustainable products
• Fintech companies lend money to small traders, households, and to rural activities that are climate
positive.
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Easier for
farmers to
get funding
Improve
payment
processes
Increase
market
access
Insurance
Role of fintech in agriculture

20. 5. Barriers to climate finance related to agriculture
Climate Policy Initiative framework classified the barriers into three categories:
• Political barriers (Tonkonogy et al., 2018)
• Technical barriers
• Commercial and financial barriers
Greenwashing affect climate policy- Greenwashed climate finance disclosures - ineffective climate
policy implementation and climate instability.
• In COP 27- 6 November 2022 in Egypt
‘Nature-based solution’ to “hijack the sustainability agenda”
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21. 6. Crop insurance policies to mitigate emissions of greenhouse gases
• United States Department of Agriculture (USDA) observation – Small modifications in crop
insurance policies - incentives - practices can reduce greenhouse gas emissions.
• Crop Insurance policies - focused - yield or revenue.
• Insurance companies - use nitrogen use efficiency data – as a measurement to create insurance
policies and premiums
• National Resource Conservation Services and Farm Services Administration- trained - the farmers
– environmental benefits - climate-resilient crop insurance.
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22. 7. Organizations involved in monitoring the commitments
Need a third party for monitoring the commitments
• Decentralization efforts - implement - Measurement, Reporting, and Verification (MRV)
• MRV - evaluate - plans and initiatives - roles of implementing bodies
Established by:
Government of India - NITI Aayog - Monitoring bodies- to track the Sustainable Development Goals
(SDGs)
Ministry of Statistics and Programme Implementation (MoSPI)- created monitoring framework-
National Indicator Framework (NIF)
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23. Monitoring bodies that are set up under green financing
• Monitoring bodies - at the national and state level
National Mission for Sustainable Agriculture(NMSA)
Compensatory Afforestation Fund Management and Planning Authority (CAMPA) :
• National Advisory council for monitoring- technical support- evaluating initiatives
• e-green watch web - development of projects funded by CAMPA
District level – Joint Director/ Deputy Director of Agriculture collaboration with Zilla Panchayati Raj
Institution
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24. Conclusion
• Green financing in agriculture - initial developmental stage
• Crucial for the government - changes - meet the challenges faced by policymakers: funding sources-
transaction costs- tools and metrics- fintech businesses- effects of "greenwashing“- organizations for
monitoring commitments
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