Threats to agriculture — ranging from water scarcity to soil degradation, biodiversity loss, and climate extremes – are becoming increasingly material and measurable, demonstrating the importance of financing resilient agriculture. While proactive measures to help the sector adapt to these threats often rely on philanthropic and public funding, the right approaches can enable private capital to unlock value in investable solutions.

Globally, 87% of agricultural lenders anticipate climate change as a material risk to business (EDF and Deloitte). A great example in recent news is climate impacts on chocolate production. Rising temperatures and shifting rainfall patterns are significantly disrupting cacao crops, particularly in West Africa, affecting both the quantity and quality of beans. As a result, cocoa prices have surged, posing substantial risks to supply chains and profitability for businesses reliant on cocoa products.

There’s an urgent need for agricultural adaptation solutions that aim to enhance the resilience and reliability of food systems by addressing climate-related risks. Such strategies include both on-farm actions (such as climate-resilient seeds, water management, and crop diversification) and off-farm actions (such as technical assistance, insurance, and market access improvements). When done right, they can reduce risks, boost productivity, and stabilize returns, making them attractive long-term investments.

For those with exposure to agricultural products or services, adaptation investments also offer a strategic way to mitigate climate-related risks across the value chain. For example, when climate shocks reduce crop yields across a region, producers who have invested in adaptation tools — such as drought-resilient seeds or improved irrigation — can maintain production levels and benefit from higher commodity prices due to limited supply. At the same time, by reducing the frequency and severity of climate-related disruptions, these investments help stabilize returns — minimizing losses and improving financial predictability, which can ultimately lower discount rates.

Investing in adaptation solutions and financing resilient agriculture also accelerates a growing market. The UNEP Adaptation Gap Report 2024 estimates adaptation finance across all sectors needs to reach 187 – 359 billion annually by 2030, 3-5 times current levels.

Read the full article about financing resilient agriculture by Jacob Davis and Kari Vigerstol at Climate and Capital Media.