The decisions and behaviours of the private sector have the potential to lock countries into either continued vulnerability, or a path toward resilience; understanding the role of the private sector in contributing to climate change adaptation can help nations to effectively achieve climate-resilient development. To aid in this understanding, the Climate Policy Initiative have produced this report examining a case study from Nepal, where the Pilot Program for Climate Resilience (PPCR) is supporting a private sector project run by the International Finance Corporation (IFC). The project utilises public resources to promote climate resilience in the agricultural sector by developing the capacity of agribusinesses and local banks to transfer skills and resources to farmers.
Following some background information on PPCR private sector activities in Nepal, the report examines the costs and benefits of making agriculture climate-resilient for each stakeholder involved: agribusinesses, local commercial banks, farmers, and the Nepalese government. Risk allocation within the project is then discussed, before the issues of sustaining, scaling-up, and replicating the project are addressed. This includes a section on the long-term business case for building climate resilience, and the challenges presented by barriers to private sector engagement. The conclusion of the report highlights a number of findings and observations, including that: The IFC-PPCR project shows that private actors have economic interests to include climate resilience considerations in their businesses.
Knowledge, capacity, and risk gaps were identified which acted as barriers to private action; early public-private consultations, evidence-based analysis, tailored knowledge and capacity building measures, and innovative financing mechanisms should all be considered to address these barriers.
While grant funding is essential, public support should be limited to avoid market distortions. In this case study, agribusinesses and banks were asked to contribute resources to avoid moral-hazard behaviours.
Further experimentation and analysis is required to replicate and scale-up efforts. Additionally, alternative strategies might be developed including competitive private sector funding windows, and extending pilot projects in middle-income countries.