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Germany pledges 15 million euros to IFAD for ecological system services for small farmers

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Sharm El-Sheikh (EGY), 15 November 2022 - At COP27, Germany pledged 15 million euros to IFAD to create compensation mechanisms for ecological system services in favor of small farmers as part of the IFAD programme ASAP+ (Enhanced Adaptation for Smallholder Agriculture).

Jochen Flasbarth, State Secretary, Federal Ministry for Economic Cooperation and Development (BMZ) and Jo Puri, Associate Vice-President of IFAD's Strategy and Knowledge Department
Jochen Flasbarth, State Secretary, Federal Ministry for Economic Cooperation and Development (BMZ) and Jo Puri, Associate Vice-President of IFAD's Strategy and Knowledge Department© BMZ

Under the German G7 presidency, the G7 Food Security Working Group launched the initiative “CompensACTION for food security and a healthy planet”.

Smallholder farmers in developing countries play a key role in preserving ecosystems.

The initiative was designed to advance discussion among stakeholders from government, academia, civil society, and the private sector on compensation mechanisms to smallholder farmers for their ecosystem services and to foster partnerships for testing and scaling up.

Under the initiative and pilot, the United Nations International Fund for Agricultural Development (IFAD), with support from Germany, will remunerate rural communities and small producers for their environmental work through Payment for Ecosystem Services (PES) projects to support the essential contribution of rural people to ecosystem conservation.

Three PES pilot projects are being developed in Brazil, Ethiopia and Lesotho to help smallholder farmers increase their resilience to climate change, increase food production, better participate in markets and improve their access to nutrient-rich food. 

The focus is on

  • deforestation-free value chains,
  • establishment of a carbon certification system in agroforestry, and
  • ecosystem service compensation mechanisms.

All activities under the PES project are expected to contribute to the reduction of greenhouse gas emissions and promote carbon sequestration.

At the signing ceremony, Jochen Flasbarth, State Secretary at the German Federal Ministry for Economic Cooperation and Development (BMZ), said:

We must not slacken in recognizing and harnessing the strategic importance of rural communities in low- and middle-income countries to improve food security and preserve vital environmental resources for future generations.

Germany's funding pledge is also intended to encourage other partners to diversify financial instruments to finance sustainable climate adaptation and mitigation activities in the agricultural sector.

(Source: IFAD Press Release)

Background information

IFAD's thank you sign for Germany
IFAD's thank you sign for Germany© IFAD

The International Fund for Agricultural Development (IFAD) supports rural communities and smallholder farmers to reduce poverty, increase food security, improve nutrition and strengthen their resilience to, for example, the impacts of climate change, such as recurrent droughts and floods, through development interventions.

Since IFAD's establishment in 1977, Germany has provided $711 million for IFAD's work in climate change, gender equality, food and nutrition security, and building equitable and sustainable food systems.

In addition, the Kreditanstalt für Wiederaufbau (KfW) provides IFAD with promotional loans for its work (most recently a loan of up to EUR 400 million was provided in December 2021.

Germany also supports IFAD through co-financing with additional funding (currently around USD 89 million to support the development of inclusive sustainable value chains, climate adaptation and youth employment).

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