Presentation - Seventh Roundtable on Financing Agricultural Water - Daniel Zimmer, Director of Sustainable Land Use, Climate-KIC

1. Roundtable on Financing Agricultural Water
Mainstreaming finance for agriculture
Daniel Zimmer, Climate-KIC
Co-chair of the Finance
Working Group of WASAG
27 January 2021

2. Typical project timeline
Progressive de-risking
of the project
time
risk
Ideation,
incubation,
grants Validation of
the proof of
concept
grants? debt?
Scaling
Cumulative
resource
needs
Implementing at
scale: blended
finance
Project becomes
“investable”

3. Typical project timeline
Progressive de-risking
of the project
time
risk
Ideation,
incubation,
grants Validation of
the proof of
concept
grants? debt?
Scaling
Cumulative
resource
needs
Implementing at
scale: blended
finance
Project becomes
“investable”
Progressive de-risking
of the project
time
risk
Ideation,
incubation,
grants Validation of
the proof of
concept
grants? debt?
Scaling
Cumulative
resource
needs
Implementing at
scale: blended
finance
Project becomes
“investable”
Fund mobilisation
Valley of death

4. De-risking & risk
sharing tools
Financial
support
mechanisms
On-the
ground
activities
Generate and
capture value
Build trust to
attract funding
Allow actors to
take risks
Developing
a trustful
ecosystem
WASAG Proposed framework

5. De-risking & risk
sharing tools
Financial
mechanisms
On-the
ground
activities
Generate and
capture value
Build trust to
generate funding
Allow actors to
take risks
Developing
a trustful
ecosystem
The framework in action
Value can be created from:
- Increased production
- Provision of ecosystem services
- Reclamation of degraded land
- Provision of societal services

6. De-risking & risk
sharing tools
Financial
mechanisms
On-the
ground
activities
Generate and
capture value
Build trust to
generate funding
Allow actors to
take risks
Developing
a trustful
ecosystem
The framework in action
- Trust: transparency, traceability,
medium-long term visibility
- Finance: grants, debt, equity,
private sector participation

7. De-risking & risk
sharing tools
Financial
mechanisms
On-the
ground
activities
Generate and
capture value
Build trust to
generate funding
Allow actors to
take risks
Developing
a trustful
ecosystem
The framework in action
- Financial tools: Insurance, Guarantee
mechanisms
- Non financial tools: training,
contracts…

8. Financial de-
risking & risk
sharing tools
Financial support
mechanisms On-the ground
activities
Generate and
capture value
Build trust to
attract funding
Allow actors to
take risks
farmers
cooperatives
off-takers
retailers
all value-chain
actors benefit
from de-risking
Market pull
market pull is
essential to
generate the
value
Sustainable
practices,
education,
policies
non-financial de-
risking is critical
as well
Practical case: Value chain projects
(adapted from IFAD contribution)

9. Innovative Project Incubator
Market Infrastructure Innovation
& Knowledge Hub
Risk Innovation Lab
INCUBATOR/ACCELERATOR
MODEL
- Break the grant trap
- Use innovative finance
mechanisms to combine
public/private finance early on
- Bridge between incubation and
acceleration
- Fund pilot phase
CONNECTOR/STIMULATOR
- Taxonomy, indicators
- MRV
- Policy incentives
- Landscape/jurisdictional
approaches
- Governance
CATALYSER MODEL
- Develop/combine financial risk
mitigation products (insurance,
risk mitigating capital,
guarantees, etc.)
- De-risking at project/enterprise
and intermediary fund level
- Develop holistic risk mitigation
approaches
weak project pipeline…
inadequate market
infrastructure…
financial risk
unquantifiable…
Main barriers identified with investment funds
insufficient knowledge about opportunities

10. Integrated landscape approaches are needed
• Land use activities are connected
• Synergies (e.g. agriculture + water)
• Trade-offs (e.g. agriculture & forests)
• Systemic and multi-stakeholder
approaches are required and can
contribute to risk reduction and to
enhanced value creation
• Landscape approaches are increasingly
adopted by donors and investors
• Paradigm shift needed in finance to
develop adequate instruments (1000
Landscapes project, Transcap initiative)

11. Thank you for your attention
daniel.zimmer@climate-kic.org