In July, landslides caused by heavy rains in the southern state of Kerala in India took over 300 lives, swept away entire villages, and destroyed nearly 770 acres of farmland in the region. Residents of these villages primarily belong to agrarian communities who have lived in the area for generations.

In India, climate events of this nature have risen at an alarming rate and pose severe threats – from deadly heatwaves and floods to shifts in seasonal patterns, rainfall, and temperatures that stress natural ecosystems and make farming increasingly challenging. It’s why the Intergovernmental Panel on Climate Change (IPCC) has found India to be ‘the most vulnerable nation in terms of crop production’, across all of Asia. The IPCC’s assessment suggests that without adaptation measures, yields of key crops could decline significantly, posing a threat to farmers’ livelihoods and to the nation’s food security. There are more than 100 million marginal farmers – smallholders and sharecroppers cultivating less than one hectare – and farm labourers in the country.

To meet this enormous adaptation challenge, India needs to mobilise adaptation finance, not only public resources, but also private finance from philanthropy and investors. Indeed, investments by the philanthropic community can be catalytic – they can ease access to government programs and attract more private institutions and investors to participate.

Bold bets can unlock capital to support climate adaptation at scale

Recognising that vulnerable communities know best what they need to adapt but are often excluded from decisions that affect their lives, The Bridgespan Group conducted a survey of nearly 800 farmers and 150 labourers in four Indian states – Andhra Pradesh, Bihar, Maharashtra, and Uttar Pradesh – along with in-depth interviews and field visits. The states cover a mix of agroecological zones, crops, local conditions, and climate hazards. Findings were published in a report, released with support from HSBC India, which also draws on conversations with more than 80 experts, leaders, and practitioners working on climate and agriculture issues, including investors, think tanks, government entities, and NGOs.

We found that though marginal farmers and farmworkers are well aware of the changing climate’s impact on their farming habits, they have fragile finances and social supports do not always reach them. For example, few farmers can document their land ownership, yet a land title is necessary to access many government schemes. This impedes their ability to cope with climate change disasters. Additionally, tailored support is also needed for particularly vulnerable social groups, such as women, Dalit, and Adivasi farmers and labourers.

The study identifies opportunities for private philanthropies and impact investors to target their investments to help farmers adapt their livelihoods to climate change and boost their income. A central question we explore is how different kinds of capital providers can best contribute to building climate resilience. In particular, we highlight the roles of philanthropies and impact investors—and the opportunities for their well-targeted investments to attract more finance from government sources or commercial sources. By providing capital that is patient, risk-tolerant, concessionary, and flexible, these investors can support people and organisations who are already doing extraordinary work to develop adaptation solutions. This will ultimately unlock additional government and commercial capital to implement solutions at the scale that India needs.

The research highlights six prime opportunities that were identified with the needs and preferences of smallholder farmers and farm labourers. If fully capitalised, these ‘bold bets’ could unlock Rs 3.49 lakh crore (nearly $45 billion) in adaptation finance.

• Support transition to natural farming practices, in which farmers enrich the soil with cow dung, mulched biomass, and cover crops; plant multiple crops instead of monocultures; manage pests through botanical means and by promoting biodiversity; and collect seeds for planting in the next season. Reducing chemical inputs can lower production costs per hectare, depending on crop type and usage.  
• Provide low-collateral loans to farmer producer organisations (FPOs) to invest in water conservation and livestock-based livelihoods. FPOs can develop water conservation infrastructure (e.g., farm ponds, common wells, bunds) and invest in community animal-rearing infrastructure (e.g., shelters, feed storage), which can help enrich household nutrition and ameliorate health outcomes.
• Support FPO-run seed banks for climate-resilient crops, which allow farmers to adapt to climate hazards such as droughts and floods, thereby safeguarding their incomes and bolstering agricultural sustainability and food security. These seed banks will also lead to lower water consumption for irrigation, improving groundwater levels in the long run.
• Support FPOs in bringing high-margin crops to the market, which can help them diversify their farms andundertake value-added activities such as processing, packaging, and marketing that can boost farmer incomes.
• Offer weather-indexed wage loss microinsurance, which would provide immediate payouts to marginal farmers and agricultural labourers when pre-defined weather thresholds (e.g., temperature, rainfall) are crossed. This would also help build financial resilience.
• Lend to agricultural micro- and nano-enterprises, which would provide farmers access to agricultural products (e.g., inputs, equipment, capital), generate employment opportunities for additional rural workers, and boost local economies.

The term ‘bold bets’ does not mean we think these investments are gambles. Just the opposite, in fact. The real gamble would be holding back on bold climate investments at scale. Changing weather patterns are already being felt everywhere by everyone, not least by the marginal farmers and labourers in our survey. Centring their voices, and the voices of other vulnerable communities, is the surest form of adaptation there is.

Anant Bhagwat is a partner at The Bridgespan Group in Mumbai, where Rishabh Tomar is a senior manager.