Financing the Agricultural Transition: Driving Institutional Investment in Regenerative Agriculture at Scale

One important contributor to global CO2 emissions is agriculture, which today accounts for a third of global CO2 emissions and growing. Regenerative farming is one of a number of measures that could address the problem, but there are several barriers that prevent executing the practice at scale, such as fragmented ownership, diverse regulations and misaligned incentives.

Transitioning to, and sustaining, regenerative agriculture practices must become a compelling business decision for farmers in order for regenerative agriculture to scale faster and help tackle rising emissions. A critical financing gap exists, however, related to providing farmers with the capital needed to adopt regenerative practices, which can result in lower crop yields in the early years of adoption. Addressing this financing gap is made even more difficult due to the fragmented and decentralized farming ecosystem.

In this paper, authors propose a financing structure intended to help mobilize institutional capital (i.e. asset managers and asset owners) to provide necessary large-scale financing to the diverse farmer community, in conjunction with local government, banks, multilateral development banks (MDBs) and insurers.