The impacts of global climate change have become increasingly evident in recent years with rising sea levels, shifting weather patterns, and increasing frequency and magnitude of extreme weather events being observed all over the world. Significant progress has been made in decarbonising industries and sectors across the world, but unless greenhouse gas (GHG) emissions are steeply reduced, global temperatures will rise 2.0°C or higher above pre-industrial levels in the next century, according to the 2022 Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). Furthermore, the agriculture industry alone accounts for nearly a quarter of global emissions. The countries in the Lower Mekong subregion are not exception to the abrupt changes in climatic condition, which has worsened water-related issues (e.g., El-Nino effects, drought, and flood), affected agricultural productivity, and increased income inequality and subregional income disparity.

The countries in the Lower Mekong subregion are mainly dependent on agricultural production and trade due to its significant share in their respective economies, including its contribution to countries’ Gross Domestic Product and employment. Consequently, the agriculture sector has been an important driver for regional integration and cooperation. While the sector has experienced steady growth in recent years, climate change poses severe risks to the region’s socioeconomic development, particularly in food security, water management, value chain development, and biodiversity conservation. In the past decades, important efforts have been made to ensure climate action is integrated within various national legal, policy, and financial frameworks. Most notably, the Greater Mekong Subregion (GMS) Working Group on Agriculture (WGA) which in its 20th annual meeting underscored the need to enhance (a) subregional cooperation on green and climate resilient agri-food value chains, and (b) green financing of small and medium agribusinesses.

Climate finance is a critical element/input for the transformation of agrifood systems to be sustainable and resilient to the climatic shocks. This potentially can tackle triple challenges faced by these countries: Livelihood, Food security, and GHG emission. The recent landscape study conducted by the Food and Agriculture Organisation (FAO, 2023) confirmed that the agrifood ecosystem in the region under the current threat of climate changes are facing four major challenges: (a) disconnect between climate resilient agrifood and investments in developing green infrastructure; (b) underdeveloped green supply/value chains as all the actors do not have the access to finance from public and private sectors; (c) capacity of both the supply and demand side actors to estimate the magnitude of loss due to climate change and other related factors; and (d) non-availability of sustainable business models, low-carbon investment instruments, low carbon technologies, trade practices, and policies that encourage environmentally sustainable development to agrifood sector.

The national governments in the subregion have initiated a number of efforts to mainstream finance for adaptation to CSA efforts and have engaged with regional and national development financial institutions. However, the flow of climate investments (both from private and public sector) to the downstream of agricultural value chain actors is reported to be negligible. Investments in CSA technologies and resilient AgriTech startups are much lower than for other technology startups.

While a paradigm shift is essential in adapting sustainable agricultural practices, there is an emerging need to provide updated knowledge and capacity for key stakeholders to adopt CSA practices and lay foundations to ensure suitable financial services are available and accessible. The national consultative workshops organised by MI in October 2023 revealed that awareness levels varied significantly in the Lower Mekong countries. Overall, majority of the respondents are ‘somewhat aware’ of impacts of climate to agricultural production in their countries. Information gathered from the above consultation workshops served as basis in developing the design for this regional workshop. These variations in understanding the definition of climate finance contributed to the perception that awareness on the subject was lacking in certain areas and triggered to offer updated knowledge and information through organising a workshop and address the gap of both the supply and demand side support system for integrating climate smart financial services with sustainable agricultural practices.

The overarching objective of this three-day workshop is to increase awareness on the importance of inclusive climate-smart financing in the agriculture sector, provide a platform for knowledge-sharing and discussions among relevant stakeholders, and strengthen regional cooperation to adopt conducive policies for better economic incentives to small farmers and food producers in the Lower Mekong subregion. After the workshop, the participants must be able to:

1. Identify specific challenges and opportunities for climate finance to promote sustainable agriculture and pathways for CSA transition. This will help strengthen the capacity of the supply side support system (i.e., government line departments, civil society organisations, and financial institutions).
2. Understand enabling policies on inclusive CSA finance adopted by domestic financial institutions to strengthen financial sector to achieve the nationally determined contributions (NDCs) by the member states in the Lower Mekong subregion.
3. Recognise climate finance instruments to align financial services and integrate environmental risks and opportunities into decisions that would drive lending, investment, and insurance by the sector to support sustainable agricultural value chains.
4. Understand acceptable framework for voluntary carbon market in the Lower Mekong subregion and key financing mechanism in line with the ASEAN carbon market initiatives focusing agrifood sector.

The workshop is expected to cater (a) officials from the line ministries, international agencies (multilateral/bilateral), civil society organisations dealing with policies and implementing projects under climate resilient agriculture, green value chain development, and other related areas; (b) representatives from the financial service providers (central banks, development banking institutions, commercial banks, insurance companies, etc.) offering and supporting green transition related financial toolbox to scale up financial services; and (c) interested academic experts. Global financial institutions and multilateral development banks will also be invited to support climate finance adaptation practices by the national governments/regional need to provide technical assistance and long-term funding support.

Each of the workshop session will be conducted through short keynote addresses by the experts, panel discussions with pre-identified key issues of the session, and a question & answer round. Some of the sessions will also feature facilitated dialogues, group work, and presentations for higher engagements of the participants.

The workshop will be conducted in 4 distinct sections and each of the sessions will deliver a clear output and message on collective progress towards achieving the goals identified under the Paris Agreement with special focus on adaptation of CSA and sustainable development of its value chains.

To download the agenda, click here.

To organise group presentations, five groups are proposed to be formed on Day 1 and allow them to work on their assignments for presentation on Day 3 of the Workshop. An indicative group tasks is provided below for the workshop moderator to examine and finalise.

Group 1: How the understanding of CSA will be able to enhance impacts on food security in the subregion?

Group 2: Views of the group on climate finance taxonomy which will be helpful for the policy makers and the financial institutions to improve the reporting system.

Group 3: How do you explain the global trends in climate finance that would support achieving climate resilient agrifood system in Lower Mekong Nations?

Group 4: What kind of innovative financial services your group would recommend for the financial institutions to support the LMB subregion?

Group 5: To your understanding, what are the most critical policies which will support extending green finance?

Mr. Chakdao Sudsanguan
Project Officer
Sustainable Energy and Environment Department Mekong Institute
Email: chakdao@mekonginstitute.org

Ms. Jian (Tina) Wang
Program Manager
Sustainable Energy and Environment Department Mekong Institute
Tel: + 66 (0) 4320 2411 Ext. 4104
Email: jwang@mekonginstitute.org

• Concept Note