Climate Finance for Ethiopia’s Productive Safety Net Programme (PSNP): Comprehensive report on accessing climate finance and carbon markets to promote socially and environmentally sustainable public works social safety net programs
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Ethiopia’s Productive Safety Net Programme (PSNP)—recognized as a model public works safety-net program—active for over ten years, provides food and cash payments to households suffering from food insecurity in return for labor that builds public infrastructure, including the rehabilitation of degraded lands. In addition to the target benefits of food security and infrastructure development, PSNP’s participatory watershed management interventions deliver climate-change mitigation benefits by sequestering carbon in soils and biomass, and reducing emissions of greenhouse gases (GHGs) from the agricultural, forestry and other land use (AFOLU) sector. To date, Ethiopia’s PSNP has been primarily funded by development assistance from bi- and multi-lateral donors. However, new opportunities from climate finance channels could be opened up by quantifying PSNP’s climate-change mitigation impacts (frequently referred to as “carbon benefits”). This study, conducted within PSNP’s Climate Smart Initiative (CSI), demonstrates that PSNP’s participatory watershed management interventions usually deliver net positive carbon benefits across varied agro-ecological zones. On average, the 28 CSI sites are expected to deliver a mean carbon benefit of 5.7 tonnes of carbon dioxide-equivalent per hectare per year (tCO2e ha-1 yr-1) over a 20-year accounting period. These benefits are attributable, in order of importance, to (i) above- and below-ground biomass sequestration, (ii) soil organic carbon accumulation, (iii) reduced GHG emissions from livestock management, and (iv) abatement of other land-use related GHGs. Considering that Ethiopia’s PSNP projects cover hundreds of thousands of hectares, this study provides compelling evidence to recommend that methodologies to quantify the carbon benefits be embedded in future PSNP 4 and related interventions, to facilitate access to climate finance. But, neither compliance nor voluntary carbon-offset markets are currently in a state to support ambitious carbon projects on a scale comparable to the size of PSNP. However, ongoing negotiations within the United Nations Framework Convention on Climate Change (UNFCCC) indicate that a binding international commitment to reduce global GHG emissions is likely to be reached in the near future. And it is probable that carbon offset markets will be one of the mechanisms available for countries to meet their GHG reduction obligations. In consideration of the above points, we recommend that Ethiopia act now to that it is well-positioned to take advantage of anticipated carbon market opportunities as they arise. By developing one or more carbon market projects on a scale of tens to at most hundreds of thousands of hectares (a scale that is compatible with current market opportunities), PSNP’s in-country capacity will be greatly enhanced, thus positioning Ethiopia to scale up rapidly as and when the carbon finance outlook improves. However, it imperative to note that all carbon market projects must meet additionality requirements. This has specific implications for PSNP in that a program of work that is already planned and financed would not be eligible for carbon finance. To demonstrate additionality, any carbon project established under PSNP will need to demonstrate: (i) an increase in the geographic scale, (ii) an improvement in implementation, or (iii) an increase in the longevity of the project that would not be achievable without the provision of the additional support from climate finance. It is also important to consider that project development, implementation and monitoring costs can be substantial, and PSNP should address this by focusing on large contiguous areas and deploying lost-cost and streamlined methods for monitoring, reporting and verification (MRV). To lay the foundation for larger jurisdictional carbon accounting methodologies, necessary for cost-effective scaling up, PSNP should pursue development of standardized methods to quantify carbon benefits across extensive land areas commensurate with PSNP’s wide geographic extent. One such type of initiative already under development independently of PSNP is the Oromia Forested Landscape Program (OFLP). OFLP can serve as a proving ground for jurisdictional carbon accounting approaches related to reforestation, avoided deforestation and degradation (REDD+) in Oromia Regional State. However, for PSNP’s diverse suite of climate-smart agricultural practices, Oromia remains too large a scale for jurisdictional accounting in the near term, given the current complexities of developing GHG accounting methodologies for smallholder agricultural systems. Given that it will be several years before OFLP mitigation finance begins to flow even for REDD+ projects, PSNP should work in parallel to the OFLP to advance policy objectives of carbon finance support for PSNP in the near-term. A proposal should be developed and submitted to PSNP’s development partners to support creation of a task team within the Climate Resilient Green Economy (CRGE) unit of the Ethiopian Ministry of Agriculture (MoA) for climate finance of PSNP. Notwithstanding the anticipated potential of carbon markets to support PSNP, direct income from bi- and multi-lateral donors in the form of grants and loans remains the mainstay of climate finance opportunities at present. The Green Climate Fund (GCF) is an attractive emerging multilateral climate fund for Ethiopia’s PSNP public works, being the main vehicle through which future mitigation and adaptation funds are expected to flow from developed to less-developed nations under the auspices of the UNFCCC. The GCF’s six investment criteria, are all well-aligned with the objectives and scope of PSNP. In addition to bi- and multilateral climate-focused funds, the potential for demonstrated mitigation benefits of Ethiopia’s PSNP to be used in support of negotiations for international development funding should not be overlooked. This is known as results-based finance and is increasingly used by international donors to justify expenditures for climate change mitigation.
Climate Finance; Food Security; Climate Markets; Sustainable Land Management; Climate Smart
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Tefera, Mulugeta; Strickland, Alastair; Lind, Jeremy; Woolf, Dominic; Jirka, Stefan; Solomon, Dawit (2015)This policy brief is one of a series produced by the Climate Smart Initiative (CSI), a two-year action research project (2013–15) designed to improve how Ethiopia’s national rural safety net deals with climate change ...
Guide to Developing Agriculture, Forestry and Other Land-Use (AFOLU) Carbon Market Projects under Ethiopia’s Productive Safety Net Programme (PSNP) Jirka, Stefan; Woolf, Dominic; Solomon, Dawit; Lehmann, Johannes (2015)This report outlines the general steps required for development of a carbon project intended for sale of carbon credits via a carbon offset program, whether compliance or voluntary. While there are differences among the ...
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