CompensACTION

for food security and a healthy planet


Background

The initiative CompensACTION for food security and a healthy planet was launched in July 2022 under German G7 Presidency by the German Federal Ministry for Economic Cooperation and Development (BMZ) within the Food Security Working Group.

Its vision is that agricultural producers worldwide, especially smallholders in developing countries, receive adequate compensation for their multifunctional services and thus earn a living income by selling their produce and by being paid for ecosystem services and for their contributions to climate adaptation along the entire agricultural value chain.

Smallholders in the Global South make a significant contribution to the preservation of ecosystems and their services and should receive appropriate compensation for this. This requires compensation mechanisms that combine income from agricultural production with a payment for positive externalities. Such a smart income mix can provide smallholders with a living wage and contribute to both food security and climate protection.

The initiative pursues two strands of action:

Initiation of discussions and exchange of experience between different actors on compensation mechanisms

Promoting partnerships to pilot and scale compensation mechanisms


Our Goals

01.

Income

02.

Climate-Friendly Incentive

03.

Various Co-Benefits

04.

Diversification

05.

Mobilization


Our Goals

Contribution to increasing and diversifying the income of smallholder farmers ​

Creation of incentives for climate-friendly agricultural practices adapted to climate change, which contribute to the long-term preservation of various ecosystem services​

Creation of various co-benefits, such as improved creditworthiness and easier access to finance for smallholders​

Contribute to the diversification of financial instruments and thus leverage public and private funding for the preservation of ecosystem services​​

Mobilization of international climate finance for Adaptation and Mitigation in Agriculture​​

COP28 Side Event


Payment for Ecosystem Services (PES) schemes need to be as diverse as smallholder farmer’s livelihoods. At our Side Event at COP28 in Dubai we invited practitioners to introduce their initiatives and share experiences from their work on the ground.

Youtube Screenshot of the COP28 Side Event: Innovation financial incentives for nature and climate-positive food systems

Policy Brief


Input subsidies focusing on inorganic fertilizer are widespread in many countries in Southern and Eastern Africa, yet often fail to achieve their food security objectives. The Policy Brief “From input subsidies to compensating farmers for soil health services” examines the potential of Payment Environmental Services (PES) schemes to complement fertilizer subsidies in Malawi and gives recommendations for their successful implementation. At COP28 in Dubai, the Policy Brief was launched at a Side Event hosted by BMZ, GIZ and Clim-Eat.

Cover Page of the Policy Brief "From input subsidies to compensating farmers for soil health services"

Policy Brief


The Policy Brief “Compensating farmers for ecosystem services- Lessons and an agenda for innovation“ was developed on behalf of the BMZ to provide recommendations for the development and implementation of compensation mechanisms – especially payments for ecosystem services. At COP27 in Sharm el Sheikh the Policy Brief was launched at a Side Event hosted by BMZ, IFAD and Clim-Eat.


Priority ACTION

to enable cost-effective transactions to make trading of ecosystem service conservation credits in smallholder agriculture competitive. This includes, in particular, the development of cost-effective and robust MRV (monitoring, reporting, verification) systems, also to ensure environmental integrity.

and thus, contribute significantly to climate protection goals by preserving ecosystems. Investments here can build on and complement existing payment programs. Governments can, for example, channel agricultural subsidies into rewarding ecosystem services and use public funds to develop innovative approaches, thereby reducing the risk of private sector investment and increasing willingness to invest.

that promote the successful development and implementation of payment mechanisms for ecosystem services. These include 1) setting targets for the provision of ecosystem services (e.g. carbon, water quality, agrobiodiversity), 2) establishing institutions for equitable payment of benefits, 3) setting equitable minimum prices for ecosystem services, 4) creating needed conditions, including for ensuring legal rights to traded ecosystem services and conflict management.


Our Projects

Ethiopia

Establishment of a system for carbon certification in agroforestry systems.

Brazil

Building a financing system for deforestation-free value chains.

The first three CompensACTION pilot projects will be implemented through IFAD in the framework of the ASAP+ (Enhanced Adaptation for Smallholder Agriculture) Program.

Lesotho

Establishment of a national fund for payment of ecosystem services (water, biodiversity, carbon).

What’s Next?

Planning the 4th pilot project

The CompensACTION Initiative is currently setting up a 4th pilot project. 

Planning accompanying research

Linking CompensACTION to the repurposing agricultural support agenda: a first concept

Road to COP28

The Initiative will actively engage in SB58, ACW 2023, Global Landscape Forum (GLF) and COP28 Side Events to further drive knowledge sharing about PES for smallholder farmers and to find new partners for the cooperation.

How To Get Involved?

CompensACTION is an open space to collaborate on the implementation of projects and to provide exchange on compensation mechanisms. If you are interested to connect, please contact us at

compensaction@giz.de


Our Partners