To support the essential contribution that rural people make to preserve ecosystems, the UN’s International Fund for Agricultural Development (IFAD) will remunerate rural communities and small-scale producers for their environmental work through a Payment for Ecosystem Services (PES) projects.

At COP27 on Tuesday, Germany pledged to contribute to the project by providing an additional EUR 15 million to IFAD's Enhanced Adaptation for Smallholder Agriculture Programme (ASAP+).

As the increasing speed and intensity of the climate crisis are outpacing the ability of poor rural people to cope, “we need to think out of the box and find new ways, such as this scheme, to bring justice and provide the support that rural people need,” said Jo Puri, IFAD’s Associate Vice-President, Strategy and Knowledge Department.

Three PES pilot projects will be developed in Brazil, Ethiopia and Lesotho to help small-scale producers build their resilience to climate change, boost food production, better participate in markets, and improve their access to nutritious diets. Each of the three pilots will be equally funded.

All the activities under the PES project aim to contribute to the reduction of greenhouse gas emissions and boost carbon sequestration.

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“We must not spare efforts in acknowledging and harnessing the strategic contribution of rural people in low- and middle-income countries to improve food security and preserve vital environmental resources for future generations,” said Jochen Flasbarth, State Secretary in Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), at the signing ceremony.

Germany's financing pledge is also a way to encourage the international community to diversify financial instruments to fund sustainable climate adaptation and climate mitigation practises in the agricultural sector. 

In Brazil, marginalized local communities will be paid to preserve forests by developing and marketing a wide array of non-timber forest products. Rural communities will protect forests by gathering, processing and selling forest products, activities that do not require cutting down or damaging trees. Remunerated activities align with traditional practices and are an income alternative for poor and food-insecure communities.

“It is about time to reward the economic value of these essential services that rural people are carrying out. These are key activities to preserve biodiversity and ecosystems, which also provide a significant contribution to mitigate climate change. They are indeed preserving our future,” Puri added.

The PES scheme in Lesotho will incentivize better water resource management in the Orange River Basin, spanning across Lesotho, South Africa, Botswana and Namibia, and rural communities will be able to contribute to restoring degraded soils and landscapes.

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In Lesotho and Ethiopia, as an income-generating opportunity, small-scale farmers will be connected to the voluntary credit carbon market, where companies and countries can buy credits to make up for greenhouse gases, they themselves emit.

Since the establishment of IFAD in 1977, Germany has contributed US$711 million to IFAD’s work on climate action, gender equality, food and nutrition security, and establishing equitable and sustainable food systems. Germany has also provided loans for up to EUR 800 million through KfW, Germany’s public development Bank, and contributed US$89 million in supplementary funds to support inclusive sustainable value chains development, climate adaptation, and youth employment.