This Output will support actions to overcome barriers that currently hinder finance (credit and grants) for the uptake of SLM at scale. It will do so through four parallel actions regarding: 1) government social programs, 2) grants, 3) bank credit, 4) fiscal and market-based incentives.
The first action will focus on improving the access of poor small farmers and settlers to resources in existing government social programs and ensuring these support SLM best practices to avoid, reduce and revert LD. The project will first develop guidelines on how SLM concepts should be included into the various social programs associated with the Brasil Sem Miséria plan. Once the municipal plans combating land degradation are complete (Output 1.1), they will also be integrated to relevant government social programs to optimize the channeling for resources to priority LD hotspots to combat desertification. An environmental safety net will be discussed and proposed.
A second line of work will be to facilitate the access to these and other financial instruments that could be used for SLM activities. This will include reviewing and simplifying procedures and ensuring that project proposal quality reaches required standards. One approach for this will be through support to set up a funding advisory facility to coordinate deal flows and provide guidance for lenders and borrowers, donors and grantees, so as to enable timely access to available funds for farmers and other stakeholders interesting in carrying out SLM activities in Sergipe. This will draw from existing government institutions that will select staff for specific training; create procedures manuals and determine long-term funding and operational structures so as to continue post project. Another approach will be to strengthen local capacities to access funds in order to increase the financial resource base for SLM in Alto Sertão by providing training in project proposal formulation skills for civil society and smallholder farmers and training for public officers to strengthen their project review skills. For instance, PRONAF is one of the main financiers for family agriculture in Brazil, however, no parameters for SLM practices are in place under their application guidelines.
A third line of action in this Output will be to work with key banks and restructuring of credit and financial services at the local level to increase the chances of success of credit policies and stimulate business investment in less urbanized regions. Despite the fact that Brazil has a very sophisticated banking system, with service networks, correspondent banks and post offices offering banking services throughout the country, there are large gaps in provision of many financial services to millions of Brazilians, primarily in rural areas. In addition the project will support strengthening the institutional capacity of the different banks and lines of credit by training for bank credit analysts agents, develop communication materials and promote a broad process of diffusion of SLM among finance agencies and farmers through various representations and ATER organization. The project will prepare specific guidelines for assessing SLM practices in projects and training bank credit analysts agents on their analysis with proper training and publications. The main targets will be the BNB, CEF, BB, BANESE and BNDES banks and funds (Climate Fund, FUNERH, FUNDEMA/SE). The project also will seek to promote liaison among BNDES, BNB and BANESE to develop appropriate instruments of credit and funding. Further details are included in Annex V.1, Part IV. The Governor of Sergipe will be encouraged to take a proposal for a credit bonus to the Council of Superintendency of Development of the Northeast (SUDENE).
The project will promote a process of training in best SLM practices for agents that provide credit and funding to improve state instruments regarding access to BANESE credit. The training process will include civil society and leaders of small farmers to formulate project proposals for SLM as well as civil servants to strengthen their capacity to analyze projects.
The project will propose institutional arrangements to extend to the municipalities the financial services that are needed to meet the demand for implementation of best practices in SLM. This involves public and private banks, ATER agencies, training in innovative SLM practices, environmental licensing, social movements, farmers and labor unions in a network with all government policies and programs of different origins. Its focus will be on socio-productive inclusion, sustainable land management and poverty reduction.
A fourth line of action will be to develop proposals for both fiscal and market based incentives. As regards fiscal incentives, the project will propose inclusion of LD criteria in the distribution of state ICMS tax revenues to municipalities that combat LD, as is done in some states to compensate municipalities that have large protected areas. As regards market mechanisms, review will be undertaken of existing approaches to link payment for environmental services (PES) schemes to combating land degradation. The immediate possibility is for CHESF royalties from the Xingó dam to be channeled to pay farmers for restoring and maintaining riparian vegetation.
An institutional link among MDS, MDA and MMA will also be established to propose creation and implementation of a safety net of protection to support environmental best practices (i.e. a sustainable socio-environmental stipend). The process of institutional coordination will also be geared to the preparation of calls for proposals for ATER to implement good practices of sustainable coexistence with the semiarid in the SAS and other ASD.
The project initiatives will create synergy with demands of programs that are under way or planned in the region, such as the initiatives of the State Prosecutor for PES related to water (the first in the Brazil's semiarid region), the ANA program for Water Producers, the Waters of Sergipe Project, the Dom Távora Project (sustainable value chains) and Local Productive Arrangements (APLs) for milk and ceramics.
Without the project, action to address LD in the Semiarid region of Brazil will probably continue as good intentions in official documents without significant change in policy, practice and funding. There are many diagnostics and recommendations, but much remains to be done. The national organization is in place, although there are few concrete results. Compared to other states, Sergipe has a head start, but implementation is lagging in the NE and Brazil as a whole because of lack of knowledge, qualification of human resources and specific national and international commitments through projects. The municipalities of the SAS are involved in meetings of various kinds, but with few concrete results on the ground. At all levels, consciousness needs to be translated into effective action.
The baseline in environmental and socioeconomic terms in the project area can be summed up as threats of increased land degradation due to economic pressures, new agrarian reform settlements and climate change, on the one hand, and rural poverty undergoing remediation, on the other. This is similar to the situation in Brazil's ASDs as a whole. The baseline in institutional or governance terms at the project level can be summed up as a state government and civil society that are willing and able to work together to revert the process of land degradation. The national and regional governance structures are generally favorable to achieving the solutions, although there are many competing priorities and limits on government spending. There needs to be specific stimulus to adopt new approaches to reverting land degradation that are economically and politically feasible.
The project is an important step in a process that will generate far-reaching benefits. First of all, the project will provide specific formal commitments about SLM with which authorities and stakeholders will be obliged to comply. There will be staff from local, national and international organizations dedicated specifically to achieving and disseminating the results foreseen. State-level training will benefit the entire state and information dissemination has no spatial limit. As results appear in terms of specific know-how, flows of funding and concrete SLM practices, visibility will create momentum to reach the rest of the ASD in Sergipe, the rest of the state, other NE states and the national level.
The project will contribute to global environmental benefits (GEB) primarily though reduced soil erosion, reduced risk of degradation and desertification and increased conservation of biodiversity. It is expected to lead directly to 2,000 rural properties with about 8,000 ha under SLM practices and reduce the rate of loss of Caatinga vegetation. It will provide models that can be used in other countries, especially in Africa.
The project will trigger SLM through strengthened licensing and oversight, enhanced extension services, facilitation of access to existing sources of funding and institutional capacity building. The project strategy will lead to greater implementation of various alternative production systems, which are outlined in Table 12, along with their associated expected benefits. Table 13 indicates the current practices; alternatives to be put in place by the project and global benefits.
