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At the GFFA expert panel, business representatives and associations consider opportunities and pitfalls of private sector financing for healthy soils. They emphasize the multidimensional advantages of sustainable soil management.
Healthy soils are the capital of our farmers. Investments in healthy soils are therefore investments in the future. However, there are usually not enough specifically tailored financing options to facilitate a transition to sustainable agricultural practices that also conserve our soils and restore and improve their fertility. Furthermore, the market for soil as carbon sink booms and is highly praised as a partial source of funding.
Healthy soils help adapt to climate change, are an important carbon sink, regulate and clean water through their porosity, are home to a variety of living things, are important for our nutrient cycles and are the foundation of healthy food. Nevertheless, the area of healthy and fertile soil is decreasing all over the world – and has been for years – even though we need to find balanced ways to feed more and more people
75 per cent of the world’s soils are already considered degraded.
Rolf Sommer, Director of Agriculture and Land Use Change at the World Wildlife Fund (WWF) says: ‘Restoring healthy and fertile soils is a triple win: It increases soil productivity and thus promotes food security, improves resilience to climate change, and increases organic matter.
In Germany, farmers are also under a lot of pressure to adapt to the climate changes in their region. Small farms in particular often still fall through the cracks here. This is despite the fact that these smallholders produce a third of our global food and do so on a tenth of our agricultural land.
Carbon markets may become one of the instruments we need to reward the added value of ecosystem services to society – once the money starts flowing. It is particularly difficult for smallholders to get this far in the first place. Rikke Olivera from the International Fund for Agricultural Development (IFAD) highlights three key aspects that are needed to achieve this transformation: investing in youth, building a market (and supply chains) for a wide range of agricultural products, and shifting financial incentives through subsidies.
We often expect a lot from soils, especially when it comes to how they can contribute as carbon sinks to mitigate climate change in the short term. Sommer (WWF) has this to say: ‘We overestimate the potential and have exaggerated expectations of soil as a carbon sink.
Soils are not the resolution of the climate crisis, but rather one of the many necessary measures to mitigate climate change.
Offsetting through carbon credits could undermine the necessary independent efforts (in other sectors) to reduce CO2 emissions. The agricultural sector needs change, not one-dimensional solutions. It requires a change in farming practices towards holistic soil fertility management.’
Sigried Griese, climate and sustainability advisor at the Bioland association, adds: ‘Smaller initiatives are very important as they help to gain experience on how something can be accomplished. But to boost our efforts, we also need a better policy framework. Climate certificates have the potential to promote more sustainable agriculture practices, but they do not compensate for an effective policy framework such as the EU Common Agricultural Policy (CAP), which promotes the efforts for environmental public goods.’
Opportunities to scale up these concepts could come from the financial sector. The general risk perspective in the financial sector has changed significantly in recent years.
Sustainability is now systemically relevant.
Investment opportunities with a positive impact are in high demand. Jan Köpper of GLS Bank opines: ‘We need a better valuation of the value created by companies – negative and positive. We need to put this multicapital approach more at the centre of our investment decisions.’
Malin Ahlberg from the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) says, specifically regarding soils: ‘We should have a more comprehensive idea of how we want to use our soils to solve both the climate and biodiversity crises. Carbon uptake is an important aspect of healthy soils, including for financing mechanisms. They contribute an even more versatile added value for society, which should also be given value to implement effective instruments for private sector financing.’
To sum up, healthy soils and their versatile added value are moving more and more into the spotlight. And they have truly earned it. If we can get politics and the financial market to collaborate, to reward the important work of our farmers cultivating and restoring our soils in a more targeted manner, our soils will continue to be the foundation of our lives.
More on the subject can be found on the homepage of the GFFA and WWF.
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