Chapter 3. Adaptation to climate change in Costa Rica’s agricultural sector

The long-term productivity of Costa Rica’s agricultural sector is at serious risk from climate change. Increasingly severe floods and droughts, rising temperatures and heightened exposure to pests all threaten to compromise the sustainability of its productivity growth in the coming decades. This chapter assesses efforts by the Costa Rican government to encourage farmers to adapt to climate change. Adaptation is key to minimising the negative effects and taking advantage of new opportunities in a changing climate. The government has already taken a number of important steps to support farmer efforts to adapt. This chapter highlights progress made, and discusses opportunities to take this further through four key dimensions of adaptation policy: (i) strategic prioritisation of adaptation objectives, (ii) information generation and dissemination, (iii) rule-based regulation, and (iv) financial incentives.

  

3.1. Introduction

Extreme climatic events are negatively impacting agricultural productivity in Costa Rica. From 1988 to 2014, Costa Rica’s agricultural sector experienced an estimated USD 461 million (2015 constant) in losses from extreme climatic events (MAG-MIDEPLAN, 2016). Climate change projections suggest that these effects will worsen as temperatures and the severity of natural hazards increase in many parts of the country. This in turn has broader implications for the economy: climate change-induced losses in agricultural production are projected to push down agriculture’s contribution to GDP by between 8% and 12% by 2100, relative to 2007 GDP (Ordaz et al., 2010).1

Costa Rica’s agricultural sector has attracted international acclaim for its efforts to help reduce the country’s carbon footprint (Box 3.1) – however, given the projected impacts of climate change, adaptation is equally critical. Costa Rican farmers can minimise the negative effects of climate change – and indeed avail themselves of new opportunities – through a range of adaptation measures. Soil conservation, for instance, can help to strengthen soil quality and reduce erosion resulting from natural hazards. Climate-resilient seeds can decrease yield variability as temperatures rise and precipitation levels shift. Adjustments in farming practices – such as when and which crops are planted – can be critical to maintaining productivity. Crop diversification, income diversification and insurance can help reduce income variability. Moreover, climate-proof infrastructure can limit risk exposure (Figure 3.1).

Box 3.1. Multi-stakeholder efforts to mitigate climate change within the agricultural sector

Costa Rica’s agricultural sector is renowned for its efforts to mitigate climate change. As the second-largest contributor to greenhouse gas (GHG) emissions – representing 37% of total GHG emissions in 2005, with 4.6 million metric tonnes of CO2 equivalent (Pomareda, 2015) – there is significant scope for the agricultural sector to help Costa Rica reach its carbon neutrality target. In recognition of this potential, the sector – often in co-operation with public and academic institutions – is actively involved in initiatives in coffee and livestock, among others, to tackle its two main contributors, nitrous oxide and methane.

Key examples of such initiatives are Nationally Appropriate Mitigation Actions (NAMAs)1, government-led multi-stakeholder actions to reduce GHG emissions. The Coffee NAMA was established in 2013 to reduce nitrous oxide emissions from coffee plantations, the source of 25% of Costa Rica’s GHG emissions. 25 000 hectares have been enrolled in the programme thus far, with the aim of covering 93 000 hectares by 2023 (SEPSA, 2016).

Livestock, Costa Rica’s primary source of methane emissions, has also been a key focus area for several mitigation initiatives. In 2015, a National Strategy for Low-Carbon Livestock was initiated by the Ministry of Agriculture and Livestock (MAG), with the active participation of the private sector, in order to guide a range of mitigation efforts. In particular, a Livestock NAMA was launched to reduce GHG emissions through practices such as rotational grazing, pasture improvement and live fences. The programme aims to enrol 70% of all herds and 60% of the total livestock area between 2015 and 2030 (MAG, 2015).

Lastly, a number of programmes to mitigate climate change are also being developed for other crops. The banana sector, for instance, has reduced water and nitrogen fertiliser use by 50% in order to cut GHG emissions (CORBANA, 2015). El Viejo, Costa Rica’s main sugar processing company, has also introduced emission-reducing practices on farms and in its processing plants (El Viejo, 2015).

Estimates suggest that these initiatives could collectively reduce GHG emissions by 120 000 metric tonnes of CO2 (World Bank, 2014). These efforts represent an important step forward in Costa Rica’s struggle against climate change, even more so considering the potential positive spillovers to other policy areas such as adaptation (Section 3.3.4).

1. These are in various stages of development for coffee, livestock, sugarcane, rice, and banana (World Bank, 2014).

Figure 3.1. Examples of adaptation measures for agriculture
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A range of adaptation measures is already employed by many Costa Rican farmers. Due to a strong national tradition of environmental protection, sustainable development and – more recently – climate change mitigation, Costa Rican farmers are well versed in many of the linkages between agriculture and the environment and a number of agricultural practices are already adaptive. For instance, low external input agriculture, soil conservation and crop diversification are key tenets for many Costa Rican farmers (Extension Services, 2016; INTA, 2016). Moreover, some farmers have started experimenting with more resilient seed varieties,2 while others are altering planting dates in order to adapt to changing climate conditions.3

In view of Costa Rica’s vulnerability to climate change, strengthening these efforts to adapt is critical for achieving the sector’s broader objectives of productivity growth and poverty reduction. While many adaptive practices are undertaken by farmers, public intervention is needed to encourage adaptation in some cases (Ignaciuk, 2015a). This chapter explores recent advancements and potential opportunities for further development in Costa Rica across four dimensions of adaptation policy: (i) strategic prioritisation, (ii) information generation and dissemination, (iii) rule-based regulations and (iv) financial incentives (Figure 3.2).

Figure 3.2. The role of governments in enabling adaptation of the agricultural sector
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Strategic prioritisation of adaptation in key government strategies is first needed for governments to signal political commitment and direction for adaptation policy. Building on this prioritisation, a strong evidence base is then needed on the specific effects that climate change may have on the agricultural sector, and on what can be done to address these risks. This requires effective information generation and dissemination, both within the government itself and also externally to enable informed decision-making by farmers (OECD, 2012a; Ignaciuk, 2015a). When the provision of information about risk exposure does not motivate farmers to adapt – either due to market failures or distortions from other policies, for instance (Ignaciuk, 2015a) – maladaptive4 behaviour can be limited by aligning rule-based regulations – such as standards and mandatory requirements – with adaptation. Aligning financial incentives, such as environmental payments and taxes, with adaptation can also help to address market failures and distortions.

As this chapter will highlight, the Costa Rican government is already making noteworthy strides across these four dimensions of adaptation policy. With an integrated approach to mitigation and adaptation – through climate actions – the agriculture sector has introduced a number of measures with potential for positive synergies across policy areas. Nevertheless, significant opportunity remains to maximise the impact of these policies through changes at the margin (in the short-term), as well as several more ambitious objectives (in the medium to long-term). Given Costa Rica’s heightened exposure to climate change (Section 3.2), the Costa Rican government requested an in-depth look at the agriculture sector’s adaptation policy to identify opportunities for greater impact (Section 3.3).

3.2. Vulnerability to climate change

Costa Rica is already one of the most exposed countries to natural hazards

Costa Rica is located in a multi-hazard zone, and the intensity of natural hazards has steadily increased in recent decades. Although subject to a range of extreme climatic events, floods and droughts are the most severe in terms of area coverage, frequency and intensity (MINAET, 2011). From 1988 to 2014, Costa Rica experienced 42 extreme climatic events (MAG-MIDEPLAN, 2016). While the frequency has remained relatively stable, the severity of these shocks has increased in recent years (Figure 3.3). According to the World Risk Index (ADI, 2014), Costa Rica has the seventh highest risk of disasters worldwide. Moreover, it is the second most exposed country in the world to multiple natural hazards: 37% of the geographic area is exposed to at least three hazards (World Bank, 2005).

Figure 3.3. Drought-prone and flood-prone areas in Costa Rica
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Source: MINAET (2011).

While Costa Rica is a water-abundant country, climatic trends have exacerbated droughts in several key agricultural regions. Agricultural production is threatened by water shortages across a dry corridor that runs from parts of the North to the Central Continental area to a dry nucleus in the South (MINAET, 2011) (Figure 3.3). The severity of droughts has increased in recent years in the Northern and Central Pacific during El Niño and in the Northern and Caribbean regions during La Niña. Guanacaste, a key region for livestock production in the North, is particularly prone to drought (MINAE, 2014). Most recently, agricultural losses from severe droughts were recorded in 1997, 2009 and 2014 (MAG-MIDEPLAN, 2016).

Increasingly severe floods are also a growing concern for Costa Rica. The Caribbean coast and Central and Southern Pacific regions are most affected, particularly due to heavy rainfall during La Niña years.5 Heavy rainfall and flooding also occur in the Northern and Caribbean regions, and intensify in El Niño years (MINAET, 2011). Agricultural losses from floods were particularly severe in 1994, 2005, 2007, 2008 and 2010 (MAG-MIDEPLAN, 2016).

Natural hazards are negatively impacting agricultural productivity

Extreme events have in turn reduced agricultural production. From 1988 to 2014, Costa Rica’s agricultural sector experienced an estimated USD 461 million (2015 constant) in losses due to extreme floods and droughts (Figure 3.4). This represents 21% of the total economic losses – USD 2.2 billion – across all sectors of the economy from climatic events during that time period (MAG-MIDEPLAN, 2016).

Figure 3.4. Number of climatic events and losses in Costa Rica’s agricultural sector, 1988-2009
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Source: MAG-MIDEPLAN (2016).

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A wide range of agricultural products has been adversely affected. Severe flooding curtailed pineapple exports in 2013 and 2014, and banana production in the Caribbean zone in 2005, 2009 and 2015. Meanwhile, droughts have curbed livestock production, most recently in 2014 (USDA, 2014). For instance, Guanacaste’s beef production – historically favoured by Costa Rica’s fertile pasture areas – has suffered due to weakened animal feed production resulting from droughts (CORFOGA, 2000). Changes in temperature and precipitation have also affected coffee yields – optimal temperature and rainfall levels have already been surpassed, and production has declined in certain long-standing coffee-growing regions (Ordaz et al., 2010). Temperature changes have also impaired bean production; some studies suggest current varieties in Costa Rica are not resilient in temperatures above 19°C (e.g. CIAT, 2015). Bean production is also vulnerable to El Niño and La Niña in the North, the Pacific North, and the Pacific South (MINAE, 2014). Moreover, optimal temperature and rainfall conditions for maize production have been exceeded in certain areas (Ordaz et al., 2010). Lastly, rice yields have declined during El Niño events, particularly in the Northern Pacific and Southern Pacific (MINAE, 2014).6

Rising temperatures – coupled with shifting rainfall conditions – have also contributed to the growth of pests and diseases. Between 1957 and 1997, temperatures increased by 0.4°C every 10 years in central Costa Rica (IPCC, 2014). Although temperatures have stabilised in the last decade (Ordaz et al., 2010), the spread of pests and diseases has in fact multiplied.7 In particular, the earlier increases in temperature and humidity enabled the roya fungus to flourish, stunting coffee production to such a degree that an “agricultural emergency” was declared between 2013 and 2015 (CGIAR, 2014). Warm and humid conditions and high precipitation have also encouraged the spread of the Stable Fly (Stomoxys calcitrans L) on pineapple plant residues and animal manure, triggering conflicts between livestock and pineapple producers.

Conditions are expected to worsen due to climate change

Existing projections, while relatively few, suggest that rising temperatures and the severity of natural hazards will increase in many regions of Costa Rica. Average annual temperatures are projected to rise by between 2.07°C and 5.15°C by 2100, with regional variations (IMN, 2012)8 (Figure 3.5). Both floods and droughts are projected to concurrently increase in severity in certain areas – although average precipitation will decline. Regions will again be differentially affected: average annual precipitation is projected to increase by between 10% and 50% in the Caribbean region and by approximately 30% in the South Pacific by 2100; yet it is projected to decrease by up to 10% in the Central Region and by up to 65% in the North Pacific region (IMN, 2012; Figure 3.5).

Figure 3.5. Changes in temperature and precipitation projections, 2071-2100
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Source: IMN (2012), PRECIS model (A2 scenario).

Climate change will impair the productivity of most agricultural products and regions

Climate change-induced losses in agricultural production are projected to lower agriculture’s contribution to GDP by between 8% and 12% by 2100 (Ordaz et al., 2010).9 These effects are likely to be compounded by rising competition for resources, such as water, and the large-scale degradation of land and water resources (Smith and Oelbermann, 2010). However, certain regions and crops are projected to disproportionately bear the brunt of these losses. On the basis of the climate change projections10 in Figure 3.5 above – and the limited literature on agricultural impacts of climate change in Costa Rica – the production of Costa Rica’s main crops is likely to be negatively affected over the next century (Box 3.2).

Box 3.2. Possible effects of climate change on Costa Rica’s main agricultural products

Projections suggest that climate change will negatively affect agricultural productivity in most regions, albeit to varying degrees. Only a subset of the North region will be spared from climate change.1 The implications of projections for Costa Rica’s (i) main agricultural products2 (pineapple, banana, livestock, coffee and sugar) and (ii) products with the highest proportion of farms (livestock, coffee, fruits [including pineapple]3, and basic grains [including rice, beans and maize]) are discussed below.

Due to the limited number of available projections and data on the vulnerability of key agricultural products, caution should be exercised when interpreting these findings: the trends identified are not comprehensive – rather, they provide rough approximations extrapolating from a single model (Precis4), scenario (A2) and supporting literature in order to illustrate Costa Rica’s potential vulnerability and the need for a more comprehensive risk assessment. A CGIAR (2015) model provides relatively similar projections for the six most important crops in each canton in 2030 under A1B climate projections.5 However, an in-depth assessment based on other models, scenarios and local conditions is needed to identify relevant policy recommendations for the crops below:

Pineapples. Pineapple producers in the North region may well face stable conditions, but less concentrated production areas such as the North Caribbean may experience increased flooding, due to rising precipitation.

Bananas. The projected increase in precipitation in the Caribbean is likely to increase flooding and negatively affect production in key banana regions, particularly in the North Caribbean.

Livestock. The majority of key livestock-producing regions are projected to face adverse effects from climate change. Drought-prone areas in the North Pacific and parts of the North region are particularly vulnerable. Other parts of the North and Caribbean regions may be affected to a lesser extent.

Coffee. Most of the country’s main6 coffee-producing regions are likely to be negatively affected by climate change. The South Pacific may face the highest risk – rising temperatures and declining precipitation may limit the area suitable for coffee production and increase the spread of pests. Production may also be negatively affected in the Central Region (due to declining precipitation and rising temperatures) and the Central Pacific (due to rising temperatures). Further north, conditions are likely to be more stable.

Sugar. Although stable conditions are projected in key sugar-producing areas in the North region, other parts of the North Pacific may suffer from declining precipitation. At the same time, sugar may actually benefit from climate change as climatic conditions begin to favour production across a broader area (CGIAR, 2015).

Rice. Most regions with concentrated rice production are likely to face more extreme conditions in the coming decades, although La Niña may provide some relief. In the North Pacific and parts of the North region, rising temperatures and declining precipitation may negatively affect future production, while other parts of the North region may remain unscathed. In parts of the South and Central Pacific regions, meanwhile, rising temperatures may be the greatest source of concern. At the same time, an analysis of the El Niño Southern Oscillation (ENSO) also suggests that most rice-producing regions will experience a net benefit from ENSO by 2100, suffering from El Niño, but benefitting to a greater degree from La Niña (MINAE, 2014).

Beans. The majority of regions with concentrated bean production – namely the South Caribbean, South Pacific, North Pacific and parts of the North region – may be negatively affected by rising temperatures. Declining precipitation may compound temperature effects in dry areas. The effects of rising climate variability from the ENSO cycle will be limited and will vary by region (MINAE, 2014).

Maize. Declining precipitation in the North Pacific and North regions may increase vulnerability and curtail maize productivity. At the same time, production prospects in the South Caribbean appear more optimistic. However, MINAE (2014) suggests that increased variability in the ENSO cycle by 2100 may negatively affect production in most regions (excluding the Caribbean): while most regions will benefit from La Niña, losses in El Niño will offset this gain.

1. Adaptation of key crops in this area – such as sugar, livestock, pineapple, beans and rice – is thus less critical.

2. Main crops are measured in terms of percentage value added for the agricultural sector in 2014 (pineapple (34%), banana (15%), livestock (14%), coffee (4%) and sugar (4%).

3. Agricultural products with the highest proportion of farms include: livestock (29%), coffee (25%), fruits [including pineapple] (10%), and basic grains [including rice, beans and maize] (9%).

4. PRECIS is a regional climate modelling system developed by the Hadley Centre.

5. Two exceptions to this are the North Caribbean and the Pacific North regions, which may benefit in the short term.

6. Main is defined in this context as regions with more than 4 000 hectares per canton.

Source: IMN (2012), PRECIS model (A2 scenario).

Poorer regions will be particularly affected by climate change-induced losses in agricultural production. As highlighted in Chapter 1, Costa Rica’s poor populations are currently concentrated in the North, Caribbean and South Pacific regions. With projections of rising temperatures and increased flooding and droughts in most of these areas, poor people in rural areas are particularly vulnerable. Eleven of the cantons that are most vulnerable to climate change also have the lowest Human Development Index (HDI) scores. This overlap is concentrated in parts of the North, South Pacific, North Pacific and Caribbean regions (MINAET, 2011).

3.3. Key areas of focus going forward

Building on a strong historical record of tackling environmental and climate change issues, the Costa Rican government is already making noteworthy progress across the four dimensions of adaptation policy. Yet, opportunity remains to maximise the impact of these policies. Adaptation is already prioritised in several strategies, and is also indirectly supported by synergies with other objectives – in particular, Costa Rica’s integrated approach to addressing climate change means that mitigation measures also encourage adaptation in some instances. Sustainable development objectives are also aligned with the country’s landscape-based approach to adaptation. At the same time, however, progress has been slowed by misalignment with other agricultural priorities and incomplete funding (Section 3.3.1). Costa Rica has also made noteworthy steps in both information generation and dissemination about vulnerability to climate change and adaptive solutions, although an adaptation research agenda has not yet been developed, and information dissemination to farmers remains uneven (Section 3.3.2). In terms of rule-based regulations, many rules could potentially affect adaptive practices, but their impact is likely to be limited because they do not explicitly consider adaptation and because of weaknesses in enforcement (Section 3.3.3). Lastly, although most financial incentives are aligned with adaptation, their impacts are limited due to a focus on current vulnerabilities (Section 3.3.4).

3.3.1. Making adaptation a strategic priority

Effective implementation of adaptation policies starts with the inclusion of adaptation in strategic documents. Clear objectives should be set for adaptation in national and sectoral strategies – this signals political commitment and is a prerequisite for policy effectiveness (OECD, 2012b; Chun and Rainey, 2005). Adaptation objectives must also be aligned with other objectives within and beyond the agricultural sector – alignment minimises trade-offs and reduces inconsistent signals (Ignaciuk, 2015a; Ignaciuk, 2015b; OECD, 2012c). Lastly, clear budget classifications are needed to track adaptation spending in pursuit of these objectives, and to support monitoring and evaluation (OECD, 2012c; OECD, 2006a).

Given the vulnerability of Costa Rica’s agricultural sector to climate change and its potential impact on productivity growth, adaptation should be a strategic priority within the country’s agricultural policy framework. Cognisant of the threat posed by climate change, the national government has taken the critical first step of identifying adaptation in several of its strategies as a tool for achieving the broader agricultural policy objectives of productivity growth and poverty reduction. These explicit objectives on adaptation are also aligned with strategic objectives such as climate change mitigation and sustainable development. However, other objectives – such as food sovereignty11 in rice, beans and maize – are misaligned with adaptation, promoting the production of crops that are not adapted to future conditions in many parts of the country. Moreover, budget allocations do not match the sector’s adaptation objectives – this is due in part to the fact that, as in most countries, adaptation expenditures are not systematically labelled in the budget. Against this backdrop, the gap between strategic adaptation objectives and adaptation practices highlighted in subsequent sections may not be surprising.

Adaptation features to some extent in Costa Rica’s national strategies and, more prominently, in its agricultural and climate strategies

The Costa Rican government’s interest in adaptation builds on a long-standing strategic prioritisation of environmental protection and sustainable development. The national Constitution, adopted in 1949, states that “everyone is entitled to enjoy a healthy and ecologically sustainable environment for development, and has the duty to preserve it” (Article 50). Since the 1970s, tax incentives and subsidies have actively promoted these ideals through a stronger emphasis on forestation and conservation. Since the 1980s, a range of government initiatives has also promoted sustainable development, including land and water conservation, biodiversity and agroforestry (Extension Services, 2015).

Building on this history, Costa Rica’s integrated approach to agri-environmental issues can be seen today in its approach to tackling climate change. Costa Rica’s focus on climate change mitigation in agriculture, for instance, illustrates the country’s recognition of interlinkages between agriculture and the environment. Synergies across adaptation and mitigation are also promoted across a range of strategic documents, including in the agriculture sector. Moreover, as illustrated in several of the strategies outlined below, Costa Rica is moving towards a landscape and ecosystem-based approach to adaptation (DCC, 2016).

This environmental history and integrated approach has favoured the prioritisation of climate change adaptation in a multitude of strategy documents (Annex 3.A1). These include national, sectoral, rural development, climate change and risk management strategies. National and sectoral strategies, for instance, highlight a clear vision for adaptation policy in the agriculture sector, notwithstanding certain caveats:

  • The Ministry of Agriculture and Livestock (MAG) (Annex 3.A2) first identified adaptation as an important priority in its long-term strategy for the agricultural sector, the “State Policy for the Costa Rican Agri-food Sector and Rural Development 2010-2021” (Política de Estado para el Sector Agroalimentario y el Desarrollo Rural Costarricense 2010-2021) (SEPSA/MAG, 2011). Mirroring shifts in environmental policy elsewhere in Latin America (PIADAL, 2013), this long-term policy has identified climate change and agro-environmental management as one of four strategic areas for the development of the agricultural sector.

  • Adaptation and mitigation have since appeared as a key pillar in the short-term strategy for the agricultural sector, the “Policies for the Agricultural Sector and Rural Territorial Development” (Políticas para el Sector Agropecuario y el Desarrollo de los Territorios Rurales) for 2011-14 (SEPSA/MAG, 2010) and 2015-18 (SEPSA/MAG, 2014) (henceforth referred to as the “Agricultural Policies” document. While not comprehensive, the 2015-18 “Agricultural Policies” document outlines a broad range of adaptation challenges and objectives. It highlights the importance of adaptation for maintaining production capacity, and identifies a number of useful adaptation policies and programmes, including on: (i) land use, agricultural zoning and digital soil maps; (ii) research on the responses of crop varieties to extreme weather events; (iii) the development and promotion of resilient seed varieties; (iv) water efficiency and the development of water-related storage systems, technologies and infrastructure investments; (v) the strengthening of irrigation and drainage to reduce excess water and expand areas for production; and (vi) the promotion of appropriate technology use in line with crop, region and economic conditions, as well as with climate variability and change. While covering a broad territory, it is unclear whether this list is comprehensive without undertaking a systematic needs assessment based on climate projections.

  • Building on the agricultural sector’s long-term strategy, the National Development Plan 2015-2018 (NDP) (Plan nacional de desarrollo) (MIDEPLAN, 2014) refers to adaptation; however, linkages between adaptation and the principal objectives set for the agricultural sector – increasing productivity growth and reducing poverty – are limited. This is an important omission as, in the long term, adapting the sector to a changing climate is central to achieving these objectives. The NDP does emphasise the importance of adaptation in broad terms throughout the plan. Nevertheless, specific targets for adaptation in the agricultural sector for 2015-18 are limited: there is only one sub-target for the agricultural sector and two objectives for environment (to increase the number of institutions, including MAG, which incorporate climate change into their plans, and to increase adaptation practices through the Adaptation Fund).

The following governmental climate change strategies have also promoted adaptation in the agricultural sector:

  • In 2009, the Ministry of Environment and Energy12 (MINAE)’s Directorate of Climate Change (DCC) published the National Climate Change Strategy (ENCC) (Estrategia Nacional de Cambio Climático) in an effort to reduce the negative impacts and make the most of new opportunities generated by climate change, through mitigation and adaptation (MINAE, 2009). The ENCC lays out Costa Rica’s vision for preparing for adverse situations related to climate variations, and reducing the economic costs of climate change.

  • The development of the National Climate Change Action Plan (Plan de acción Estrategia Nacional Cambio Climático) in 2012 was an important step forward for the strategic prioritisation of adaptation. The Action Plan was developed to guide the allocation of public and private resources in a more strategic, co-ordinated manner for mitigation and adaptation objectives. It includes ecosystem-based adaptation as one of its priorities.

  • Development and implementation of a National Adaptation Plan in the coming years is expected to accelerate and clarify the direction of Costa Rica’s adaptation agenda. With support from the Spanish Agency for International Development Co-operation, the National Adaptation Plan will be finalised by the end of 2017 (DCC, 2016). The plan aims to (i) identify risks at sectoral and regional levels, (ii) propose specific actions, (iii) estimate short, medium and long-term costs, and (iv) develop performance indicators for each action, among other objectives (DCC, 2014). Sectors included in this plan are water, energy, agriculture, fisheries and coastal zones, health, infrastructure, biodiversity and tourism. Implementation of the plan would constitute an important step forward for adaptation policy. Several of the recommendations contained within this chapter – including the need for performance indicators and a comprehensive vulnerability assessment – are directly aligned with the objectives of the Adaptation Plan.

  • The Costa Rican agricultural sector is also finalising a sectoral strategy for climate change (Estrategia del Sector Agropuecario para el Cambio Climatico y Gestion de Riesgos a Disastres). This strategy explores adaptation priorities in more depth than the National Adaptation Plan, with the aim of acting as a complementary document at sectoral level. In preparation for its finalisation, the Controller General has mandated the development of (i) a monitoring and evaluation scheme to assess climate change policies and programmes and (ii) an information system on agriculture-specific variability, climate change and risk management issues.

International and regional adaptation commitments complement national efforts

At the international level, Costa Rica’s UN commitments on adaptation have increased, mirroring a parallel evolution in the country’s domestic policies. In 2015, Costa Rica laid out a number of commitments for adoption by 2030 in its Intended Nationally Determined Contributions (INDC), including finalisation of the aforementioned National Adaptation Plan and efforts to integrate rural development, mitigation and adaptation actions.

At the regional level, Costa Rica’s adaptation agenda has also benefited from several related initiatives. Within the Central American Integration System (SICA)13 , the government has subscribed to the Regional Climate Change Strategy (ERCC) and its Regional Adaptation Fund. Moreover, Costa Rica is a signatory to the Regional Environmental and Health Strategy (ERAS), a consensus-led initiative of SICA’s councils of agriculture, environment and health ministers. ERAS’ Central American Agricultural Policy also includes a pillar on climate change and variability. SICA further provides a platform for bringing together experts, sharing good practices and technical support, and facilitating political co-ordination (as it did prior to the latest COP meetings, for example) (SEPSA, 2016). Many adaptation initiatives have, nevertheless, not advanced far beyond declarations of intent. SICA’s Regional Adaptation Fund, for instance, is yet to be implemented.

Several other government priorities implicitly support adaptive practices

Other strategic priorities for the agricultural sector indirectly promote several tenets of adaptation. In particular, Costa Rica’s integrated approach to tackling climate change enables mitigation objectives to also support adaptation. Depending on the local context and projected climatic changes, a range of measures can reduce emissions and also be adaptive (resilient seeds, efficient resource use and tree planting, to name a few) (DCC, 2012; Section 3.3.4). Mitigation is emphasised as a key political priority in the 2015-2018 “Agricultural Policies” document as well as the Climate Change Strategy and Action Plan and National Strategy for Low-Carbon Livestock.

Objectives related to sustainable development and resource efficiency also offer synergies with the national ecosystem-based approach to adaptation. For instance, the promotion of green business (a secondary objective of Pillar 4 in the 2015-2018 “Agricultural Policies” document) highlights the importance of sustainable practices and payment for environmental services – both of which can be adaptive in certain contexts (Section 3.3.4). Efficient use of water resources – a critical issue in areas with projected increases of drought severity – is also promoted in the Water Agenda 2013-30, a roadmap for integrated and sustainable water management. Finally, the National Water Policy (NHP)14 emphasises that water vulnerability should be reduced and that preparations should be made for the potential impacts of climate change.

Costa Rica’s strategic priorities on risk management also support adaptation. The “National Risk Management Policy 2016-2030”, developed by the National Commission of Risk Prevention and Emergency Response (CNE), highlights the importance of adaptation and recommends its integration within risk management.15 “Integrated risk management” is also a strategic focus of the Policy for the Agro-food Sector and Rural Development 2010-21, including suggestions for the incorporation of climate change in local and regional risk management plans. The 2010-21 policy also suggests raising awareness about climate change in the agricultural sector via information and training programmes.

Certain agricultural priorities are not fully aligned and may encourage maladaptive practices

The focus on food sovereignty in the 2015-2018 “Agricultural Policies” document as a means to achieve food security with vulnerable crops (Pillar 1) is a prime example of a priority that effectively discourages adaptation. As highlighted in Section 3.1, the production of staple food items, such as beans and rice, is likely to decline in the medium to long-term, due to climate change in certain regions. A range of policy measures to encourage production of these crops considerably distorts incentives to adapt in vulnerable areas, thereby limiting the resilience of the agricultural sector to a changing climate.

Furthermore, the objective of increasing agricultural exports (Pillar 5) could be further integrated with the adaptation objective for the agricultural sector. As mentioned in Section 3.1, the vulnerability of certain products is increasing. While productivity growth is an important objective for the country as a whole, it may not be sustainable for several crops in a subset of regions. To account for these vulnerabilities and take advantage of new opportunities in a changing climate, adaptation needs to be mainstreamed within the country’s export strategy. Costa Rica can increase the long-run returns to its agricultural export policies by targeting regions and crops that are less vulnerable to climate change, and encouraging adaptive measures in others.

Lastly, the rural development objective (Pillar 3) of the 2015-2018 “Agricultural Policies” document omits reference to the importance of product and income diversification. In light of the growing vulnerability of a range of agricultural products to climate change, product and income diversification represents an important safeguard for farmers’ incomes – and thus an important tool for achieving the government’s objectives of tackling poverty. Crop and income diversification objectives should thus be highlighted and prioritised under the rural development pillar.

Although limited by resources, recent efforts to strengthen co-ordination will improve alignment

Efforts to co-ordinate the climate change agenda have increased with the establishment of several inter-institutional bodies in recent years. The Environmental Sectoral Council (Consejo Sectorial Ambiental)16 , for example, supports high-level political co-ordination on environmental issues (such as the preparation of INDCs). The Inter-Ministerial Technical Committee (Comité Técnico Interministerial de Cambio Climático), meanwhile, is convened monthly by DCC to monitor mitigation and adaptation activities and provide technical inputs for the implementation of proposed climate change policies.17 In addition, following an order by the Controller General, the Sectoral Climate Change Commission (Comision Sectorial de Cambio Climatico) was established in 2016 to co-ordinate activities across the main agricultural institutions. Its role and interaction with MINAE is still under development. Finally, the Executive Secretariat for Agricultural Sector Planning (Secretaria Ejecutiva de Planificacíon Sectorial Agropecuaria [SEPSA]) is working with DCC to prepare a roadmap by October 2016 on how to mainstream the climate change agenda across the agricultural public sector, with clear objectives for each institution.

Noteworthy steps have been taken to co-ordinate efforts on the adaptation agenda, although these efforts are limited to some extent by resource constraints. For instance, DCC has a full-time staff of four people to implement its broad mandate of co-ordinating, managing, developing and implementing public policy on climate change across all sectors. As mitigation receives the most financing, staff time allotted for adaptation is particularly limited. In its 2015 INDC, Costa Rica indicated an intention to strengthen co-ordination across relevant stakeholders on adaptation and mitigation objectives; an executive decree later in 2016 will provide an important first step by expanding DCC into a cross-sectoral agency with wider co-ordination capacity and human resources. Finally, the role of MAG in co-ordinating the adaptation agenda is also limited by resource constraints. As only one person can be hired for every seven that retire, APS staff are responsible for more and more projects – in practice, this limits the capacity to push the adaptation agenda forward in the agricultural sector.

Budget allocations are not fully aligned with the government’s adaptation objectives

MAG’s budget allocations for adaptation target appropriate activities, but do not support all objectives identified for the sector. Pending a comprehensive assessment18 of the impact of climate change on agriculture, it is difficult to assess the funding available for adaptation; however, in broad terms, adaptation funding should target legitimate government activities such as providing farmers with information about climate change, and addressing market failures where information is not enough. In Costa Rica’s case, budget allocations appear to be in line with such broader priorities; however, not all of the specific priorities identified by the government have been allocated funding. According to the “Agriculture and Rural Development Sector Plan 2015-2018” (Plan Sectorial de Desarrollo Agropecuario y Rural 2015-2018), adaptation receives USD 8.7 million – or 1.3% of the total agriculture budget (USD 662 million) (Pillar 4 in Figure 3.6) for: (i) a project on water efficiency (USD 4.5 million); (ii) a project on soil mapping (USD 4.3 million); and (iii) a project on sustainable agriculture and good practices19 (USD 0.1 million) (SEPSA, 2015). Yet the objectives identified for adaptation span well beyond these three projects to areas such as strengthening land management programmes and zoning, research on climate-resilient seed varieties, and irrigation and drainage improvements.

Figure 3.6. Planned agricultural sector spending by strategic area, 2015-18
(Millions USD)
picture

Note: Pillar 1 is “Food and nutrition security and sovereignty”; Pillar 2 is “Opportunities for youth in agriculture and rural areas”; Pillar 3 is “Rural territorial development”; Pillar 4 is “Adaptation and mitigation of climate change in agriculture” (in which the blue bar denotes planned spending on adaptation); and Pillar 5 is “Strengthening the agro-export sector.”

Source: SEPSA (2015).

 http://dx.doi.org/10.1787/888933451933

It is noteworthy that MAG’s adaptation budget for 2015-18 (USD 8.7 million) is 68% higher than the 2011-14 budget (USD 5.2 million); however, this increase may stem from inconsistencies in budget classification rather than increased financial commitments. In 2011-14, adaptation funds focused primarily on sustainable production issues such as greenhouses, tree-planting and cover crops; awareness-raising among 726 farmers; and research on new varieties for maize and beans. Water efficiency projects were covered under competitiveness issues. By contrast, under the current plan, water efficiency expenditures have been reclassified within climate change mitigation and adaptation (Pillar 4). Given such shifts across pillars, it is difficult to assess whether the government has made substantive increases in adaptation spending.

In addition to MAG’s budget estimates, adaptation measures are also budgeted under the 2014-21 National Climate Change Action Plan (NCCAP). Approximately 13% of NCCAP’s USD 25 million budget – USD 3.3 million – is explicitly allocated to adaptation in the agricultural sector. Other NCCAP components include information generation (USD 4 million), capacity building and technology development (USD 3.5 million), public awareness (USD 6.5 million) and financing (USD 2.3m).20 As noted previously, without a comprehensive risk assessment, it is not possible to assess the extent to which these allocations target priority adaptation areas and whether they complement or duplicate MAG funding.

Next to these explicit budget allocations for adaptation, a number of line items in national and sectoral budgets may indirectly be targeted at promoting adaptation. Examples in the agriculture section of the 2015-18 NDP include: (i) extending the Arenal-Tempisque Irrigation District (DRAT) irrigation project to an additional 7 200 hectares (USD 14 million); (ii) installing irrigation technology on 1 131 hectares (USD 11.0 million); and (iii) extending drainage infrastructure to 11 912 hectares (USD 8.9 million).21 Examples in the Agriculture and Rural Development Sector Plan 2015-2018 include USD 17.2 million in spending on climate risk management measures (SEPSA, 2015).

CNE – the main department responsible for risk management – also indirectly supports adaptation through risk reduction efforts such as climate-proofing infrastructure. CNE also helps farmers to access financing (or extends loan periods), provides inputs and machinery, and provides some emergency cash payments when a disaster occurs. The limited scope of this safety net arguably supports adaptive behaviour by sending a clear signal to farmers about the government’s role in the event of a disaster: limiting the implicit contingent liability discourages farmers from taking on excessive risk with the expectation of ad hoc government support if a shock occurs.22

Lastly, local government funds for land use planning and water management could also indirectly promote adaptation. In particular, local governments can reduce the vulnerability of the agricultural sector by building climate-proof dikes, creating buffer zones and developing biological corridors. However, not all local governments are integrated into the adaptation agenda – some regions have developed regional adaptation plans and have climate change commissions, but others have more limited capacity (SEPSA, 2016; CNE, 2016; DCC, 2016).

Adaptation is largely funded by development partners, complicating longer-term budgetary planning

Development assistance provides a large source of funding for climate change-related activities in the agricultural sector. For instance, DCC – an important source of funding for adaptation – is largely funded by donor assistance (99.96% of DCC’s total budget in 2015 (USD 6.1 million) was donor-funded) (Sancho, 2016). Approximately 9.5% of this budget – USD 0.6 million – targets adaptation explicitly, 99.6% of which was funded by donors.23 The UN Adaptation Fund is also providing external support to Costa Rica – USD 10 million – in the coming years. This financing was first sought in 2012 to target adaptation projects in three sectors in 2015-20: (i) agriculture, (ii) water resources, coastal zones and fisheries, and (iii) capacity building (Annex 3.A3).

While financial support has indeed helped to jumpstart several adaptation programmes, Costa Rica’s high dependence on external assistance for the promotion of adaptation complicates the country’s longer-term strategic planning for adaptation. Donor funding cycles are often both brief and subject to changing priorities. Moreover, available funding does not necessarily match national priority areas for adaptation in the agricultural sector.

Inconsistent expenditure classification impedes identification, monitoring and prioritisation

As in most countries, inconsistent budget classifications complicate the assessment of adaptation-related expenditures and impede clear signals about the prioritisation of adaptation policies. As noted above, the classification of projects as “adaptation-related” shifted between the two most recent Agriculture and Rural Development Sector Plans. At the same time, measures which indirectly promote adaptation goals – for example, several interventions subsumed under Pillars 1 (“Food Security”) and 3 (“Rural Territorial Development”) of the 2015-18 Policies document – are not counted as adaptation. Moreover, adaptation spending is not tracked at institution level (INTA, SEPSA and the Office of Agricultural Extension). Such shortfalls in tracking adaptation spending are consistent with more general weaknesses in budgetary practices in other government entities that work on adaptation. In particular, MINAE and the National Meteorological Institute (IMN) scored 62.5/100 and 37.4/100 respectively in a national assessment of budgeting effectiveness in the Controller General’s 2012 Institutional Management Index (CGR, 2013). The introduction of a consistent, cross-institutional budget classification scheme for adaptation measures – within the agricultural sector and beyond – would allow a comprehensive evaluation of adaptation efforts and enable the government to budget appropriate funding for its strategic adaptation objectives.

3.3.2. Enhancing information generation and dissemination

Information is a key tool to encourage adaptation to climate change. Information generation – through in-depth assessments of the agricultural sector’s risk exposure and the identification of adaptive solutions – forms the foundation for an effective adaptation strategy (WRI, 2011). As asymmetric information can lead to maladaptive choices, building awareness among farmers is also key. Information dissemination about vulnerability to climate change and potential solutions is therefore necessary to enable farmers to make informed decisions (Ignaciuk and Mason-D’Croz, 2014; Stuart et al., 2014; Blennow and Persson, 2009).

Building on a longstanding interest in sustainable development and agri-environmental issues, Costa Rica has already made noteworthy advances in both information generation and dissemination efforts related to adaptation. Research into climate risks is institutionalised, with a range of public and private bodies researching some adaptive solutions. Similarly, government agencies, donors and agricultural supply chain organisations24 provide technical assistance on a wide range of measures that can potentially promote synergies with adaptation.

Nonetheless, farmer awareness of long-run climate changes and adaptive solutions is uneven due to both information generation and dissemination constraints. In terms of information generation, vulnerability assessments for Costa Rica’s main crops have yet to be completed. An overall research programme on adaptive solutions is also needed, as research activities remain fragmented. Co-ordination weaknesses and capacity shortfalls across institutions, as well as public resource misallocations, also limit awareness-building among farmers – a critical challenge, given the relatively low level of education in rural areas (Chapter 1). Lastly, the dissemination of adaptive practices is inhibited by budget and staff constraints, ad hoc inter-institutional co-ordination and inefficient resource decisions, such as high fees among government agencies for climate datasets.

Some climate change projections are available, but research on vulnerability is limited

While Costa Rica has conducted climate change projections, the number of models used is limited. At present, IMN assesses the country’s exposure to climatic risks, including forecasting and monitoring medium-term, climate change-related weather phenomena such as ENSO, cyclones and cold fronts. In collaboration with IMN, CNE also monitors weather phenomena in high-risk areas – for landslides and floods, for instance – and has published a preliminary inventory of current threats for different territories that could be expanded to incorporate climate projections.25 Given the uncertain impact of climate change, however, a wider set of models should be considered.

While there are some studies on the implications of climate change for agricultural production, vulnerability assessment coverage remains limited to certain crops. With support from UNDP, IMN has assessed the vulnerability of rice, maize and beans. A couple of agricultural supply chain organisations26 – the pineapple association (CANAPEP), for instance – are also conducting assessments.27 However, as detailed in Section 3.1, vulnerability assessments and projections have not been completed for all of Costa Rica’s main crops and regions. MAG-MIDEPLAN’s Database on the Impact of Natural Phenomena is a first step in this direction – this free online database provides data on historical losses by region and crop, and could offer a supporting reference for future vulnerability assessments. Costa Rica’s recent subscription to WAVES, a natural asset accounting system developed by the World Bank, will also provide an important source of information on the country’s water resources and ecosystems for these assessments.

A range of institutions are researching adaptive solutions, but an overall strategy is yet to be developed

Public institutions have advanced several adaptive solutions, principally through research by MAG’s research institute, the National Institute for Innovation and Transfer of Agricultural Technology (INTA). In recent years, INTA’s priorities have included a number of adaptation-related themes, both independently and in co-operation with public universities (MAG, 2014). For instance, INTA has four experimental stations that focus on water efficiency in order to combat land degradation, desertification and drought. INTA also conducts research on climate-resilient crop varieties. Most recently, the institute has explored solutions to specific challenges for – among others – rice (drought resistance), maize (drought resistance) and beans (high temperature) (INTA, 2015a). Studies have also been conducted on adaptation in grass, fodder and herd management. Moreover, INTA is developing land use maps with information on soil use, soil quality and water resources to help the government, private sector and farmers understand the optimal locations for certain crops.28 These maps will be developed over the next five years.

At the same time, INTA’s limited resources and focus on food sovereignty – rather than adaptation – preclude more far-reaching research on adaptive solutions. Currently, INTA has a staff of only four working on adaptation and has difficulty planning long-term projects as funding is only secured on an annual basis and only received on a monthly basis. The institute’s capacity to advance a comprehensive research agenda on this topic is thus limited.29 A number of INTA projects also promote resilience in the context of current climate variability, but the emphasis on adaptation is lacking. INTA’s research on climate-resilient seed varieties, for instance, focuses on crops linked to the food sovereignty goal (rice, maize, beans). An adaptive – and, arguably, more effective – R&D focus would re-orient research towards a broader range of crops which are projected to be more productive and resilient in Costa Rica’s changing climate. Similarly, INTA’s current land use maps inform geographic crop choices, but as of yet, they have not incorporated data on climate change projections.

Beyond INTA, a number of universities and non-governmental organisations pursue climate change and adaptation research. For instance, the Universidad Estatal a Distancia (UNED) conducts adaptation-related projects, frequently in co-ordination with MAG, on: (i) efficient fertiliser application, (ii) bean varieties, (iii) the use of greenhouses and micro-tunnels, (iv) alternative crops to cope with changing weather and soil conditions, and (v) mapping risks. The Universidad Nacional de Costa Rica (UNA)30 operates a programme aimed at developing indicators to measure adaptation progress – an important input if Costa Rica establishes an adaptation monitoring and evaluation scheme. The Centro Agronómico Tropical de Investigación y Enseñanza’s (CATIE) is currently exploring agricultural practices that curb the effects of weather shocks and excess rainfall on grains and coffee. Lastly, the Instituto Interamericano de Cooperación para la Agricultura (IICA) researches agricultural resilience in the context of climate change, focusing on soil and water in collaboration with, among others, INTA.

Finally, several agricultural supply chain organisations are developing more climate-resilient agricultural practices, albeit without a systematic focus on climate change. For instance, the livestock organisation (CORFOGA) conducts research on practices to strengthen the drought resilience of livestock. The banana producers’ organisation (CORBANA) is also developing new technologies to support the resilience of bananas – with a particular focus on wind and disease resistance.31 The sugar cane producers’ organisation (LAICA), and rice organisation (CONARROZ) are also studying variety resilience to changes in temperature and rainfall. It should be noted, however, that these organisations do not systematically take climate change projections into account in their research agendas.

While many of these research programmes are indeed co-ordinated across institutions, a comprehensive research strategy on adaptation is lacking. The current patchwork of research projects covers a wide range of topics, but certain areas – the vulnerability of export crops, and adaptive solutions, for instance – are less well developed. Limited INTA resources and prioritisation of adaptation are partly the cause. However, research fragmentation also stems from co-ordination failures. The National System of Agricultural Research and Technology Transfer (SNITTA) is responsible for co-ordinating research across public, private and academic sectors, including on adaptation. Yet in practice, SNITTA is largely not operational (Chaves, 2011). Given the large number of public and private institutions that would need to co-ordinate on an adaptation research agenda, high-level political commitment is likely to be a prerequisite to remedy the existing research fragmentation around adaptation.

Some information on climate change is disseminated, but most initiatives focus on current vulnerabilities

MAG disseminates some information related to climate change, although projections are not incorporated into technical assistance programmes on farming practices. MAG has launched a number of initiatives to raise awareness about climate change in recent years. These include an annual calendar with climate change facts (MAG, 2010c); references to climate change and mitigation – albeit not adaptation – in a technical guide for sustainable agriculture (MAG, 2010a); and a series of bulletins to inform 10 000 farms (11% of all farms) about climatic conditions (focusing on ENSO in 2014).32 MAG also disseminates information on practices that can indirectly support adaptation, including field trips for farmers to learn about innovative bean and rice techniques, and 133 integrated pedagogic farms to promote crop diversification (Extension Services, 2016). Moreover, several of MAG’s economic incentive programmes (Section 3.5)33 are accompanied by technical assistance for practices that can be adaptive, for instance: cover crops, precision planting, planting trees and bushes to reduce water loss, and more productive feed options for cattle.34 However, these programmes do not include information on climate change projections, or on which sustainable practices would be most relevant given these projections.

Some information about climate change risks and responses is also provided by other government institutions, albeit with a focus on current vulnerability as opposed to projected changes. For example, IMN publishes daily and weekly weather information via its website and mobile applications, and provides assistance, co-operation and extension to different institutions through lectures, training and agro-meteorological studies. CNE has developed a public online portal to bring together data and information generated by universities and research centres on threats – including landslides and floods – in different territories. CNE also operates an early warning system, supported by active community participation (Sancho, 2016). Moreover, the National Service of Underground Water, Irrigation, and Drainage (SENARA) has conducted a number of information campaigns on the importance of reducing water overuse. Lastly, INTA has successfully disseminated a new disease-resistant rice variety to nearly 90% of rice farmers (INTA, 2016). Moreover, INTA’s soil maps are sometimes considered when determining farmer eligibility for certain bank loans (Section 3.3.4) (INTA, 2015b).

Several agricultural supply chain organisations and donors complement information dissemination by government agencies, although information on future vulnerability is also lacking. For instance, the coffee-growers’, millers’, roasters’ and exporters’ organisation, Instituto del Café de Costa Rica (ICAFE), sends weather projections to coffee farmers by mobile. Dos Pinos – the milk producers’ co-operative – and CORBANA advise farmers on adapting products to different soil and climate conditions – with a particular focus on how to manage current droughts and floods rather than extreme events in a changing climate. CORFOGA has developed a workbook in collaboration with MAG and the United Nations Development Programme (UNDP) that provides its livestock members with information about adaptive practices such as pasture rotation, efficient water use, bush plantations for fodder, and more effective fodder storages (MAG et al., 2015). Donors also support a number of projects that indirectly promote principles of adaptation. The United Nations Food and Agriculture Organization (FAO), for instance, has encouraged crop diversification – a relatively neglected tenet of adaptation in other technical assistance programmes – amongst 1 000 poor farmers in Southern Costa Rica.

Farmer awareness is impeded by resource shortfalls, barriers to information sharing, and co-ordination failures

Notwithstanding these efforts, farmer awareness about climate change and adaptation remains low for several reasons. First, resource shortfalls in many agencies curtail information dissemination. Budgetary limitations, for instance, have precluded Extension Services from disseminating climate risk information to more than 11% of farms (Extension Services, 2015). Regional extension offices also lack – with the exception of certain regions – the requisite expertise to analyse climate data and, therefore, to identify and disseminate regional solutions. Moreover, extension staff are often taxed by heavy administrative responsibilities35 and have limited funds for field visits (Extension Services, 2015). Agricultural supply chain organisations are an inadequate remedy for limited public capacity, as 70% of producers are not members of any organisation (INEC, 2014). In practice, farmers therefore rely primarily on advice from input sellers, exacerbating vulnerability through input overuse (Extension Services, 2015).36

Barriers to information sharing also exacerbate the effect of budget constraints on information generation and dissemination. In particular, restricted access to IMN’s retrospective climate and weather-related data hampers the development of vulnerability assessments for key crops. IMN’s aggregate projections are freely available online, but disaggregated retrospective data is typically only available for purchase. Moreover, data is normally only provided for limited time periods, and data updates are difficult to obtain.37 At the extreme, these barriers encourage duplication of information collection and dissemination efforts. CORBANA and ICAFE, for instance, deemed it more cost effective to build their own weather stations to gather meteorological data. Although IMN may not have all of the crop-specific data needed, this decentralised approach to data collection is a less efficient use of existing resources and impedes farmer awareness and the identification of adaptive solutions.

Lastly, co-ordination weaknesses constrain the dissemination of climate information and adaptive solutions. For instance, mechanisms for IMN to disseminate information about climate change to other relevant government stakeholders (e.g. SENARA, and Extension) are ad hoc rather than institutionalised. Extension’s efforts to disseminate information to farmers – a handful of one-off initiatives rather than an institutionalised and cohesive adaptation education programme – are also impeded by limited co-ordination mechanisms with local offices and INTA. Lastly, as mentioned previously, DCC is making impressive efforts to co-ordinate across institutions – however, understaffing has slowed progress in its monitoring role. In line with the UNFCCC Paris Agreement, DCC aims to start fulfilling this mandate in the coming years with strengthened reporting and the development of baseline data on climate actions. To this end, DCC will develop indicators to measure adaptation for SINAMEC, a planned Integrated National Metrics System on Climate Change.

3.3.3. Ensuring effective rule-based regulation

Information is not always sufficient to incentivise farmers to adapt to climate change. Barriers to adoption such as market failures may impede adaptation. High set-up costs, for instance, constrain investments in climate-smart technologies (Stuart et al., 2014). Uncertainty about climate change – and thus about the benefits of adaptation – is another barrier (Eakin et al., 2015): farmers are less willing to invest in adaptive measures when the payoffs are unclear. Behavioural biases and the long-term nature of the payoff to adaptation can further limit incentives (Gruère and Ignaciuk, 2016). Moreover, regulations in support of other policy objectives may distort incentives to adopt adaptive practices. Lastly, regulations may also lack the requisite flexibility to adjust in a changing climate. Governments can overcome such barriers by aligning rule-based regulation and economic instruments (Section 3.3.4) with adaptation goals (Ignaciuk, 2015a).

Rule-based regulation is often referred to as a “command-and-control” approach – it entails setting a mandatory level of performance or prohibiting a specific behaviour. Individuals or firms that break the rule are penalised. A common approach in environmental regulation since the 1970s, rule-based regulation sends clear signals about expected behaviour (UNIDO, n.d.), although reforms can be slow to push through and enforcement can be resource-intensive.

Due to Costa Rica’s historical emphasis on environmental issues, many rule-based regulations could potentially encourage adaptation to some degree; yet their impact is limited, both due to the lack of integration of clear adaptation objectives and to difficulties in monitoring and enforcement. For instance, while a number of environmental regulations to ensure land and soil quality have helped to improve resilience, they focus on current vulnerabilities, and their impact has been hindered by implementation difficulties. Recent regulatory reforms have strengthened water resource management, although weak co-ordination and monitoring and enforcement also curb the impact of these improvements. Climate-proofing infrastructure is also encouraged, but is not mandated – a common oversight that leaves the sector exposed to significant long-term losses if future extreme events affect agriculture-related infrastructure. Lastly, farmer decisions to adapt through crop diversification are effectively discouraged by a number of permit and licence requirements and weak zoning regulation.

Land-related regulation supports adaptation indirectly, but requires effective implementation

Soil conditions are a key determinant of vulnerability to climate change. As a large part of Costa Rica’s crop cultivation and livestock production is carried out on sloping land, soil degradation due to water erosion is a growing challenge. Intensive farming techniques (in the case of agriculture) and overgrazing (in the case of livestock) are also contributing to degradation (SEPSA, 2016).

As discussed in Section 3.1, Costa Rica has attempted in recent decades to address soil degradation and thus to reduce farmers’ vulnerability to natural disasters. The Organic Environmental Law 7554 (1995), for example, promotes economic and environmentally sustainable development. The “Conservation Management and Use of Soils Law 7779” (1998) (hereafter, the Soil Law) also supports adaptive behaviour by promoting the protection, conservation and improvement of soils. In particular, this law ordered the creation of soil maps (Section 3.3.2), and obliges land owners and tenants to prevent soil degradation. In an effort to achieve convergence between the objectives of agricultural production and soil and water conservation, the law also states that MAG and MINAE should regulate the use of products, machineries and tools that degrade soil, and control fertiliser and pesticide waste. However, this is not enforced in practice, and improvements in soil conservation and the recovery of fertile soil have reportedly been limited (Pomareda, 2015; INTA, 2016).

Tree-planting – which brings important benefits in terms of the reduction of soil erosion, provision of shade and protection of hydrological resources (GWP, n.d.) – has been promoted by the Forest Law 7575 (1996). This law forbids land cover changes (Nachmany et al., 2015); in particular, trees cannot be cut down in areas prone to soil erosion. Moreover, households must maintain a forest plan and monitor the different soil conditions of their properties. While reducing erosion, the current law may be overly stringent and limit adaptive opportunities to Costa Rica’s changing climate. In particular, farmers are not allowed to use conservation land for wood production. Allowing sustainable wood production in certain protected areas could strengthen resilience through income diversification as climate change weakens the resilience of key products such as livestock.

Water resource management has been strengthened, but weak co-ordination and enforcement limit benefits for adaptation

Projections suggest that Costa Rica’s water resources will decline and become more erratic in a changing climate. While supplies are dwindling in several key agricultural regions, a number of studies suggest that water inefficiency on farms, and the transportation of water to farms is a key concern (e.g. Sancho, 2016).38 Coupled with quality issues due to rising water pollution39 – from municipal and domestic sources as well as agrochemical runoff from the pineapple industry (SENARA, n.d.) – future water shortages are likely to increase and negative public health consequences may occur. Rising demand for water, both due to the country’s dependence on hydropower40 and to increasing demand from other industries (ICE, 2012),41 will further exacerbate competition for water resources. A range of national water regulations aims to address these challenges, and positive steps can be seen in recent years, but a number of barriers impede progress.

Costa Rica’s water legislation, which was drafted in 1942, was not designed to cope with today’s challenges of climate change and rising resource competition. The law’s levy system (Box 3.3), for instance, caps water usage, but with such a high ceiling that it does not significantly curb water usage in the agricultural sector. The current law also decentralises water resources management across a number of institutions – MINAE, SENARA in MAG, and the Costa Rican Institute of Aqueducts and Sewers (AyA) – resulting in fragmented planning and overlapping functions that impede efficient management (Guzman-Arias and Calvo-Alvarado, 2013). Comprehensive revisions of the law were developed in 2014 and 2016 that could help to rectify current challenges, but these revisions have been held back by disagreements among stakeholders thus far.

Box 3.3. Water pricing

Improvements in water pricing have been made in the last decade. Public water users1 have paid for water access since the introduction of the 1942 Water Law’s levy system, but the rates were initially extremely low and heavily subsidised (Table 3.1). In 2006, MINAE reformed and dramatically increased water levies across all sectors,2 leading many in the agricultural sector to reduce their concessions (GWP, n.d.). The rate increase in 2006 has enabled noteworthy improvements in water efficiency – and thus adaptation – but overuse remains a concern (SENARA, 2016). Water pricing schemes are most effective in the context of carefully designed water allocation rights and proper measurement, complemented by other tools such as information campaigns. While it is possible that water is still under-priced – as the agricultural sector is entitled to one of the lowest rates relative to most other economic activities – other factors may be driving inefficient water use. For instance, an information failure may contribute: farmers may simply not be aware of projections that Costa Rica’s water resources are becoming scarce.

Table 3.1. Levy for water use by activity

Rate (USD/m³) until 2006

Rate (USD/m³) since 2006

Use

Surface water

Groundwater

Use

Surface water

Groundwater

Domestic

0.00093

0.00129

Domestic

0.00263

0.00293

Industrial

0.00005

0.00035

Industrial

0.00475

0.00585

Population

0.00002

0.00002

Commercial

0.00475

0.00585

Irrigation

0.00003

0.00023

Agribusiness

0.00342

0.00445

Hydropower

0.00000

Tourism

0.00475

0.00585

Other

0.00001

0.00058

Agriculture

0.00232

0.00252

Aquaculture

0.00022

0.00029

Hydropower

0.00022

Source: GWP (n.d.); Decree Nº 32868 Canon for Water Use (2005).

 http://dx.doi.org/10.1787/888933451940

A second water pricing scheme for DRAT users – the large-scale irrigation project in Guanacaste, a drought prone-region – has also recently been reformed to improve water efficiency. Until 2016, SENARA provided unlimited water access to qualifying farmers3 for USD 113/ha/year. Taking climate change projections into account, SENARA revised the pricing scheme and now charges a variable rate (0.0045 USD/m3 on average) to all farmers according to availability and the costs of maintaining the irrigation system (Sancho, 2016). Crop-specific rates currently vary and provide a cross-subsidy to specific crops (such as rice, a crop that commonly overuses water in Costa Rica) (Table 3.2). Crop-specific rates will be adjusted in 2019 to reduce this preferential treatment. Although the cross-subsidy will not be completely eliminated in the short term, this new pricing scheme is expected to improve water efficiency and adjust production away from water-intensive crops in drought-prone areas.

Table 3.2. Water pricing for agricultural production in drought-prone areas

Crop

Rate (USD/m³)

2016-19

2019 onwards

Rice

0.00340

0.00414

Sugar cane

0.00562

0.00470

Pastures

0.00704

0.00506

Papaya

0.00612

0.00482

Watermelon

0.01107

0.00607

Onion

0.00878

0.00549

Citrus

0.008082

0.00531

Cotton

0.00630

0.00488

Corn

0.00747

0.00517

Pineapple

0.00835

0.00538

Pisciculture

0.00356

0.00419

Source: SENARA (2016).

 http://dx.doi.org/10.1787/888933451957

1. Farmers rely on the following water sources: 37% on public-provided water; 55% on water directly from rivers, springs or wells; 1% on SENARA; 2% on water harvesting; 2% on other sources and 4% with no water use defined (INEC, 2014).

2. 25% of the levies is used to support the conservation of water resources in protected areas administered by the National System of Conservation Areas (SINAC), 25% is transferred to the National Forestry Financing Fund (FONAFIFO) for payment for environmental services on private land, and the remaining 50% is provided to MINAE’s Directorate of Water for resource management.

3. Qualifying farmers included gravity irrigation users (approximately 95% of SENARA’s users). For farmers that required pumping irrigation (approximately 5%), SENARA charged a variable rate based on volume (SENARA, 2016).

Notable efforts to improve information-sharing and co-ordination within the current system have been initiated in recent years. In particular, the Strategy for Integrated Water Resource Management took steps in 2014 to strengthen information management and sharing across MINAE and SENARA. For instance, an inventory of the country’s water resources and development of a water accounting system, as well as a programme on water quality issues were recently initiated. A water resource information platform was also launched in August 2016. Moreover, the National Hydrological and Meteorological Committee (CNHyM) was created in 2015 to strengthen inter-institutional co-ordination and information sharing on water hydrology, climate variability and climate change (UNECLAC, 2016).

A number of recent regulatory advancements have also tried to ease water stress within the current system by promoting water conservation. The Organic Environmental Law (1995), for instance, was the first to state that aquatic ecosystems and water resources should be protected, preserved and restored. The Law for Integrated Water Resources Management (2014) also defines a protection radius for springs, rivers and streams.42

Although the necessary regulations for the strengthened resilience of Costa Rica’s water resources are in place, monitoring and enforcement of these rules is uneven. As 50% of total water use is illegal (MINAE, 2013), and high pollution levels persist (SENARA, 2015; CGR, 2014), efforts have been made to strengthen monitoring and enforcement in recent years. Water meters have been installed on many wells in Guanacaste, a water-scarce region; however, other regions have been slow to follow. MINAE also conducts random checks at some farms to confirm appropriate drainage systems and ensure that production does not extend into vulnerable zones such as riverbanks. Moreover, MINAE has started to monitor groundwater: 40 measuring stations are already established in the North and Central regions, and 30% of Costa Rica will have stations by 2018. An online system called SIPECO is also being launched in the coming months to issue permits and levies. Many farmers operate without appropriate permits: 25% of wells are not authorised because of the long waiting periods and travel costs required to apply for a permit in San Jose (SENARA, 2016). Lastly, the recently-launched initiative, “Water for Guanacaste” (Agua para Guanacaste), aims to strengthen a number of dimensions of water resource management, including monitoring and efficient use to address long-term needs.

The lack of regulation for climate-proofing infrastructure puts agricultural productivity at risk

In addition to the direct effects of climate change on the agricultural sector, damaged infrastructure – such as roads, bridges, ports, electricity and irrigation – may indirectly inhibit production, processing and market access. From 2005 to 2011, the largest percentage of all economic losses due to natural phenomena was borne by road damage, with damage of USD 384 million (2011 constant). The electricity system was also negatively impacted, with losses of USD 309 million (CNE, 2015).43 Looking forward, the vulnerability of Costa Rica’s roads is likely to rise, with increasingly severe natural hazards. Rural roads, bridges and drainage systems are in particularly poor condition, and will likely suffer in areas with projected precipitation increases. Key ports – such as Limón, Puntarenas and Caldera – may also be vulnerable to floods (ProDUS, 2014). In addition, while most hydropower plants are located in water-rich areas of the country, several are in areas where droughts are projected to increase – such as the Northern Pacific and Central regions (Hidro Sur, n.d.).

Currently, Costa Rican construction law does not enforce minimum standards for climate-proof infrastructure. Climate-proofing is widely regarded as a critical tool for strengthening the resilience of infrastructure (Ignaciuk, 2015a; Siegel, 2015; Kay, 2015), as it ensures the risks and opportunities posed by alternative climate change scenarios have been taken into account in the project’s design and maintenance (UNDP, 2011). The lack of regulation on climate-proofing increases the vulnerability of infrastructure to the increasingly severe hazards that have been projected.

Although no law exists on climate-proofing, MIDEPLAN does require44 new public infrastructure projects to undertake a natural hazard self-assessment (as of 2009).45 Climate change is specifically listed in MIDEPLAN’s self-assessment as the most extreme example of socio-natural hazards. However, climate change projections are not included within the assessment framework (MIDEPLAN, 2010), and are not necessarily accessible for all users. Moreover, the assessment process is not monitored to ensure that users take climate change into account. An additional limitation is that this assessment is only required for public projects. The exclusion of the private sector may lead to underestimates of risk exposure and infrastructure vulnerability, as, for instance, only 30% of Costa Rica’s irrigation systems are public (Astorga, 2013).

Notwithstanding these limitations, some public efforts to adapt agriculture-related infrastructure can be seen since the introduction of MIDEPLAN’s risk assessment process in 2009. Costa Rica has, for instance, started mapping climatic risks to the infrastructure sector at the national level, focusing primarily on transport and water systems. One example is the programme of Investigation of Sustainable Urban Development (ProDUS, 2014), which assesses risks to transportation infrastructure – such as roads and bridges – due to bad drainage, as well as landslides, floods, rising sea levels and droughts (ProDUS, 2014). Costa Rica46 has also mapped risks in the water sector, estimating that an investment of USD 2.05 billion (2005 constant) is needed for the 2010-30 period (UNDP, 2010). Moreover, CNE has started working with local governments to raise awareness about the importance of infrastructure standards and risk assessments to prepare for increasingly-severe natural disasters (CNE, 2016).

The risk assessment mandate has also coincided with a number of climate-proof public projects that will help the agricultural sector to prepare for a changing climate. For instance, climate change projections were taken into account in the current expansion of the Terminal de Contenedores de Moín (TCM) port – a USD 196 million investment (IDB, 2013; Baird and CH2M Hill, 2013). ProGIRH – an important water infrastructure project – has also considered climate change projections in the expansion of the DRAT, expansion of the Irrigation Area of the Small Area Irrigation and Drainage projects (PARD), and improvement of farmland drainage (SENARA, 2016). These initiatives target areas where water scarcity is already a concern and is projected to worsen. At the same time, many private sector initiatives and smaller projects do not make use of climate change projections, underscoring the need for further strengthening of climate-proofing regulations.

Some permit requirements impede diversification, but zoning plans indicate a possible way forward

Costa Rica’s permit and licence requirements for changing crops are designed to protect the environment, but diversification – a useful strategy for reducing vulnerability to climate change – is impeded by their rigidity and slow procedures. For instance, the required permits to shift away from rice production or grassland to pineapple production aim to reduce agrochemical runoff into water, but also obstruct the flexibility of farmers to respond to changing climate conditions. Licences are also required to legally change business category, for instance from agriculture to livestock or to another economic activity. Moreover, the long-time horizons required for procuring such licences – 2-3 months in the best of cases, 6-12 when several ministries are involved (Sancho, 2016) – discourages diversification and thus constrains adaptation.

Costa Rica’s emphasis on land-use zoning could encourage adaptive crop choices, but – as in many other countries – implementation has been limited. As early as 1983, the Organic Law No. 7064 indicated that MAG should support the agricultural and livestock sectors through – among other approaches – zoning programmes. The Environmental Planning Executive Decree 29393-MINAE (2001) elaborated on this law, mandating that agricultural activities should be limited to areas with appropriate soil conditions, as improper land use acts as a catalyst and magnifies hazards into disasters. Proper soil use depends on soil classification and whether the farmer is growing permanent or annual crops.47 However, enforcement of this decree has been limited. Zoning was also identified as a priority for adaptation in the 2015-18 “Agricultural Policies” document and in the Second National Communication (MINAET, 2009). INTA’s land use mapping exercise in the coming years will provide an important foundation for implementation in the coming years.

3.3.4. Aligning financial incentives

When information is not enough to encourage adaptation – for instance, due to market failures – a second tool that governments can turn to is financial incentives, or economic-based regulation. For instance, direct payments can provide short-term incentives to encourage behavioural changes in a subset of the population (though they are challenging to monitor, and often fall prey to a focus on practices instead of outcomes). Taxes can be effective measures to target the entire population, such as the reduction of environmentally harmful behaviours (OECD, 2006b). Risk-sharing measures – insurance, for example – help manage the catastrophic risks that climate change will increase, although they require specific terms and conditions to limit adaptation disincentives. Other types of economic instruments, such as market price support and input subsidies, are more difficult to align, as they can distort market – and thus, often adaptation – incentives (Ignaciuk, 2015a).

Adaptation is indirectly encouraged by many of Costa Rica’s financial incentives for environmental protection and sustainable development, although the benefits for adaptation are constrained by the lack of systematic integration of adaptation objectives and a few distortive measures. For example, environmental benefits programmes encourage practices that are often adaptive, but adaptation is not explicitly referenced. Mitigation efforts (such as the NAMAs) and certain credit programmes may also indirectly incentivise a wide range of adaptive measures. In addition, the national insurance programme increasingly favours adaptation, although certain policy attributes counteract these benefits. Costa Rica also avoids using most types of input subsidies (Chapter 2); given the potential distortive effect that such subsidies can have for adaptation, Costa Rica is a model of good practice in this regard. On the other hand, other incentive-based regulations – namely, reference prices and trade restrictions – continue to encourage farmers to produce products that are not adapted to climate change in certain parts of Costa Rica.

Sustainable development and mitigation incentives can encourage adaptation

MAG may indirectly support adaptation through financial incentives for sustainable practices in a programme called “Recognition of Environmental Benefits of Sustainable Production” (‘Programa de Reconocimiento de Beneficios Ambientales’).48 This programme provides technical assistance and 20-30% of the investment cost for 93 eligible sustainable practices in an effort to incentivise environmental management among small and medium-scale agricultural producers. Many of the eligible practices can also be adaptive.49 However, climate change projections are not incorporated into the programme, a missed opportunity to tackle sustainable development and adaptation simultaneously.

The Soil Law (Section 3.5) set the legal precedent for other financial incentives that indirectly promote adaptation. For instance, land owners that comply with soil management, conservation and recuperation practices are eligible for property tax relief of 40% (Art. 49). Moreover, farmers that actively prevent soil degradation – through efforts to counter erosion, slump or salination, for instance – qualify for water use concessions (Art. 22). However, neither of these incentives are actually implemented in practice.

The Environmental Services Programme’s payments for planting trees and protecting water resources may also support adaptation by tempering climate variations. Established by the Forest Law (1996) through the Forest Fund and the National Forest Financing Fund (FONAFIFO), this compensation scheme provides USD 84 per year per hectare of land earmarked for conservation or agroforestry. The planting of an individual tree also qualifies for a payment of USD 1.30 per tree, although this small sum is unlikely to be sufficient to incentivise farmers, given the bureaucratic obstacles involved.

While not a direct financial incentive and still small in scale, Costa Rica’s Ecological Blue Flag (Bandera Azul) also deserves mention. This programme awards a blue flag to farmers in recognition of exemplary sustainable practices. While the farmer does not receive a financial payment from the government, a financial incentive is nevertheless implicit in the resulting publicity for the farmer’s products. Importantly, one of the eligibility criteria for the flag is adaptation to climate change. However, the impact of the programme is limited by the fact that only 100 farms have been awarded the flag thus far (Azofeifa, 2013).

Nationally Appropriate Mitigation Actions (NAMAs) for several agricultural products (Box 3.1) also promote synergetic practices that can concurrently reduce emissions and promotion adaptation). For example, the coffee NAMA which is jointly implemented by the Costa Rican government and the coffee sector, encourages a range of practices with potential adaptive benefits, including: (i) improvements in water efficiency;50 (ii) reductions in fertiliser use; (iii) the adoption of pest and disease-resistant seed varieties; and (iv) income diversification into agroforestry51 (Fundecooperacion and ICAFE, 2015). Equally, the livestock NAMA provides financial incentives for several practices that could also be adaptive, including: (i) pasture resilience through livestock rotation, and (ii) fodder banks (MAG, 2015).52 However, the strong potential of the NAMAs to promote adaptation is currently hampered by a lack of information-sharing; without information campaigns on regional climate change projections and relevant adaptive solutions for each local context, farmers cannot identify which practices maximise both mitigation and adaptation opportunities.

Financial incentives in several agricultural credit programmes have potential to promote adaptation

Although not actively involved in the adaptation agenda, and focused on current vulnerabilities, a number of agricultural credit programmes may also have the potential to indirectly encourage adaptation. Banks such as Nacional de Costa Rica, Banco de Costa Rica, Banco Popular and Bancredito allocate credit and determine loan availability partly based on current climate conditions. This incentivises producers to incorporate practices such as zoning according to land use potential and vulnerability. Banco Nacional also partners with ICAFE to offer preferential interest rates for farmers that buy specific seed varieties based on the farm location (highland or lowland). The Soil Law also provides the legal foundation for banks to withhold credit access in “critical areas” without a study about the ecological impact and land capacity – however, it is unclear whether any banks currently apply this.

The potential for Costa Rica’s credit programmes to foster adaptation continues to be constrained by two key factors. First, bank conditions depend on current risk, and do not necessarily take future exposure into account (Sancho, 2016). This means that loans may be issued based on conditions that are not sustainable and thus actually increase farmers’ vulnerability to climate change. Second, approximately 86% of farmers do not use credit to finance their activities (INEC, 2014). This is primarily due to cumbersome requirements for credit access. Thus, the benefit of these incentives for adaptation are currently limited.

Recent improvements in agricultural insurance encourage adaptation, but barriers remain

In 2015, Costa Rica’s National Insurance Institute (INS) launched a new insurance scheme with a number of adaptation-enhancing dimensions. In contrast to the previous scheme’s53 focus on rice producers – which implicitly subsidised rice production in spite of rising vulnerability in certain areas – the new scheme covers several of Costa Rica’s main crops (rice, coffee, sugar cane and pineapples for export) and plans to expand to others this year (palm, banana, beans and maize).54 , 55 INS also aims to reduce vulnerability by limiting insurance access to farmers that subscribe to planting dates identified for each region, crop type and variety – these criteria are adjusted depending on weather conditions and IMN forecasts. The new insurance products also improve farmer awareness about risk exposure, by pricing the products according to three levels of geographic risk (low, medium, high). Moreover, discounts are provided to farmers that invest in risk-reducing activities such as soil conservation, the monitoring of pests and disease, soil analysis, and organic fertilisers (INS, 2016). While climate change projections are currently not considered, INS is planning to launch a pilot in co-operation with Fundecooperacion and CATIE that reduces premiums for coffee, sugar, potatoes, palm, pineapple, rice, beans, vegetables (onion, tomato, broccoli, carrot), poultry, pigs and livestock if farmers implement specific mitigation or adaptation measures (INS, 2016).

In spite of recent improvements, the potential for Costa Rica’s insurance programme to facilitate adaptation continues to be constrained for several reasons. One concern is that take-up levels are extremely low (only 1.25% of all hectares were insured in 2015). Insurance is an important tool not only for enabling productive investments (Dercon and Christiaensen, 2011), but also for raising awareness about vulnerability to climate change and thus the importance of reducing risk exposure. Depending on the design, improving insurance coverage could thus simultaneously strengthen both productivity and adaptation. One barrier to take-up is the limited insurance culture among Costa Rican farmers (INS, 2015), suggesting the need for information campaigns or targeted insurance subsidies to overcome societal expectations that the government will step in when a disaster occurs and to encourage prudent management of lower levels of risk. As many of its products are still being fine-tuned, INS is taking a targeted approach to increasing coverage by collaborating with banks and co-operatives in the short-term.

Another key concern is that the structure of crop insurance may encourage maladaptive behaviour. In particular, crop insurance payouts are typically subject to lengthy waiting periods that disrupt efficient – and thus often adaptive – spending on farm expenditures. As claims are settled within 30 days, many farmers lack the liquidity needed to keep farms in operation, let alone to reduce vulnerability to future risks. Traditional forms of crop insurance can also incentivise moral hazard: as payouts are determined by losses at plot level, farmers may make less effort or engage in maladaptive practices in order to disrupt yields and benefit from the insurance coverage. Alternative insurance schemes, such as hybrid products with index components,56 can address these challenges to some extent by providing more timely pay-outs and reducing moral hazard. Costa Rica is starting to explore such products, with an index pilot programme for coffee insurance and a feasibility study on drones to measure losses.

Price support mechanisms often encourage maladaptive product choices

Costa Rica’s reference price system discourages shifts to crops that are more adapted to a changing climate. Of biggest concern is the reference price for rice, which encourages farmers to grow rice by offering stable prices that are often above the international price. As discussed in Chapter 2, the reference price is an improvement over the fixed price that benefited rice producers until 2015. However, the reference price is largely followed, and thus still distorts incentives to grow rice in regions with rising vulnerability. Price support can have negative environmental consequences and is moreover not an effective tool to sustain food security in a changing climate (OECD, 2005).

Tariffs may also encourage farmers to produce products that are not adapted to climate projections for certain regions. For instance, farmers benefit from tariffs on beef, dairy, onions, rice, beans and sugar, in spite of climate projections that the vulnerability of these products will increase in certain areas. These products are also excluded from many Free Trade Agreements (or are subject to extended phase-out periods). Trade is an important mechanism for countries to adapt to changing climate conditions and to develop sustainable comparative advantages (Nelson et al., 2009). Costa Rica’s tariffs and other trade barriers impede this adjustment, a further reason that they should be addressed as a priority.

3.4. Summary

  • Costa Rica’s vulnerability to extreme events is negatively impacting its agricultural productivity. Conditions are expected to worsen in many regions due to climate change, further harming the sector.

  • Adaptation can help Costa Rican farmers to minimise the negative effects of climate change and take advantage of the new opportunities that these changes will bring. While some adaptive practices are already widespread among farmers, others are underused.

  • Cognisant of the threats posed by climate change to the sector’s broader objectives of increasing productivity growth and reducing poverty, the government has prioritised adaptation in several strategies. Adaptation measures also benefit indirectly from the government’s integrated approach with other priorities such as sustainable development and climate change mitigation. Nevertheless, several strategic objectives – such as food sovereignty – are misaligned with adaptation, promoting the production of crops that are not adapted to all regions of the country.

  • Costa Rica’s budget allocations appear in line with the good practice of providing farmers with information about climate change, and addressing market failures where information is not enough; however, not all of the specific priorities identified by the government have been allocated funding.

  • Costa Rica has made noteworthy progress in both information generation and dissemination about the agricultural sector’s vulnerability to climate change and adaptive solutions. Research into climate risks is institutionalised, and a range of public and private bodies are researching some adaptive solutions. Similarly, government agencies, donors and agricultural organisations provide technical assistance on a wide range of measures that can potentially promote synergies with adaptation, although most focus on current vulnerability concerns.

  • Notwithstanding these efforts, farmer awareness of climate change projections and adaptive solutions is uneven, due to both information generation and dissemination constraints. In terms of information generation, vulnerability assessments for Costa Rica’s main crops remain incomplete, and institutions pursue a fragmented set of research activities. Moreover, resource shortfalls, barriers to information sharing, and co-ordination weaknesses also limit information dissemination.

  • Many rule-based regulations already encourage adaptation to some degree, yet their impact is limited by the lack of integration of clear adaptation objectives, and limited monitoring and enforcement. For instance, a number of environmental regulations to ensure land and soil quality have helped to improve resilience against disasters – however, their impact has been hindered by implementation challenges. Recent regulatory reforms have also strengthened water resource management, although co-ordination and enforcement challenges limit the impact of these improvements. Climate-proofing infrastructure is also encouraged, but not mandated – an important oversight that leaves the agricultural sector exposed to significant losses. Lastly, farmer decisions to adapt through crop diversification are largely discouraged by permit and licence requirements – however, the strengthened implementation of zoning plans in the coming years may help address these distortions.

  • Costa Rica has a number of financial incentives in place that encourage adaptive practices to a certain extent, although again, the benefits for adaptation are constrained in the absence of the systematic integration of adaptation objectives and climate change projections. Environmental benefits programmes, for instance, have the potential to encourage sustainable development practices that are often adaptive – however, adaptation is not explicitly referenced. Mitigation efforts (such as the NAMAs) and certain credit programmes may provide a similar incentive for a wide range of adaptive measures, although the impact is constrained without information about climate change projections and adaptive solutions for the local context. Recent improvements in the insurance programme have the potential to enable greater adaptation, although certain policy terms risk counteracting these benefits.

  • Lastly, Costa Rica’s limited reliance on input subsidies – a common distortion towards maladaptive practices – is laudable. At the same time, other incentive-based regulations – namely, reference prices and trade restrictions – encourage farmers to produce products that are not adapted to climate change in certain parts of Costa Rica.

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PIADAL (2013), “Agricultura y Desarrollo en America Latina: Gobernanza y Politicas Publicas, Panel Independiente sobre la Agricultura para el Desarrollo de América Latina (PIADAL)”, Buenos Aires, Argentina.

Pomareda, C. (2015), “Structure and Evolution of the Agricultural and Food Sector of Costa Rica”, Background Report.

ProDUS (Mesalles, R.P. et al.) (2014), Evaluación de la Vulnerabilidad y Adaptación de Infraestructura ante el Cambio Climático [Evaluation of Vulnerability and Adaption of Infrastructure to Climate Change], Informe Final, Programa de Investigación en Desarrollo Urbano Sostenible (ProDUS – UCR), Escuela de Ingeniería Civil de la Universidad de Costa Rica.

Sancho, F. (2016), “Role of Policies in Supporting Adaptation to Climate Change of the Agricultural Sector”, Background Report.

SENARA (n.d.), “Resumen Ejecutivo Sobre La Situacion por Comtaminacion con Plaguicidas, de las Fuentes de Agua Potable de los Acueductos Milano, El Cairo y Luisiana de Siquirres”.

SENARA (2016), Interview, July 2016, San José, Costa Rica.

SENARA (2015), Interview, September 2015, San José, Costa Rica.

SEPSA (2016), Factcheck Exercise.

SEPSA (2015), Plan Sectorial de Desarrollo Agropecuario y Rural 2015-2018 (Agriculture and Rural Development Sector Plan 2015-2018), San José, Costa Rica.

SEPSA/MAG (2014), Políticas para el Sector Agropecuario y el Desarrollo de los Territorios Rurales 2015-2018 (Policies for the Agricultural Sector and Rural Territorial Development 2015-2018), San José, Costa Rica.

SEPSA/MAG (2011), Política de Estado para el Sector Agroalimentario y el Desarrollo Rural Costarricense 2010-2021 (State Policy for the Costa Rican Agri-food Sector and Rural Development 2010-2021), San José, Costa Rica.

SEPSA/MAG (2010), Políticas para el Sector Agropecuario y el Desarrollo de los Territorios Rurales 2011-2014 (Policies for the Agricultural Sector and Rural Territorial Development 2011-2014), San José, Costa Rica.

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ANNEX 3.A1. Key strategy documents related to adaptation

National Adaptation Plan

2017

National Risk Management Policy

2016-2030

Intended Nationally Determined Contributions (INDC) to the UNFCCC

2015-2050

National Development Plan

2015-2018

Sector Plan for Agricultural and Rural Development

2015-2018

Low Carbon Livestock Strategy

2015

Third National Communication to the UNFCCC

2014

National Climate Change Action Plan

2012

State Policy for the Agro-food Sector and Rural Development

2010-2021

National Risk Management Strategy

2010-2015

National Climate Change Strategy

2009

Second National Communication to the UNFCCC

2009

C-neutral strategy

2007

First National Communication to the UNFCCC

2000

ANNEX 3.A2. Selected governmental departments involved in adaptation

The Ministry of Agriculture and Livestock (MAG) sets the strategic direction for the agricultural sector’s priorities – including adaptation – and supports implementation in certain areas through extension services (Office of Agricultural Extension).

The National Institute for Innovation and Transfer of Agricultural Technology (INTA) conducts research and development for the agricultural sector, including a number of adaptation-related projects.

The National Service of Underground Water, Irrigation, and Drainage (SENARA) is responsible for projects on water access and efficiency in drought-prone regions.

The Ministry of Environment and Energy (MINAE) is responsible for the design, development, evaluation and control of sector policies relating to climate change, including adaptation. Within MINAE, the Directorate of Climate Change (DCC) is the multi-sector co-ordinator in the formulation of policies, plans, programmes and projects focused on compliance with the National Climate Change Strategy.

The National Meteorological Institute (IMN) co-ordinates Costa Rica’s meteorological and climatological activities. This includes the systematic monitoring of weather and research on issues such as climate variability and climate change.

The National Commission of Risk Prevention and Emergency Response (CNE) focuses on risk reduction (e.g. through early warning systems and infrastructure projects) as well as emergency response when a disaster occurs.

The Inter-Ministerial Technical Committee on Climate Change is an advisory body of MINAE. The Committee monitors the implementation of the National Climate Change Strategy, the National Climate Change Action Plan and other initiatives at the national and international level, and provides technical inputs for the implementation of proposed climate change policies. The Committee meets every one to two months.

The Environmental Sectoral Council recently replaced the Inter-Ministerial Council for Climate Change to support high-level political co-ordination on environmental issues including adaptation (preparation of Costa Rica’s INDC, for example).

The Sectoral Climate Change Commission was established in 2016 to co-ordinate across the main agricultural institutions. Its role is still under development.

ANNEX 3.A3. Adaptation fund activities

Component 1: Agricultural sector

  • Implementation of new farm zoning scenarios for selected communities, according to vulnerability.

  • Identification of farming technology that can be adapted or implemented in order to enhance resilience to climate change (droughts, heat, intensive rain, plagues, and others) and the validation of technology by geographic areas.

  • Implementation of validated farming technology for climate resilience enhancement.

  • Creation of agricultural insurance policies and programmes, including criteria on climate resilience.

  • Provision of access to revolving funds to agricultural producers to enable the implementation of sustainable management practices for lands, and the implementation of strategies to adapt to climate change and/or invest in new rural economic activities as contingencies against the impact caused by climate change.

Component 2: Sector water resources, coastal zones and fisheries

  • Creation of water safety pilot plans at district and regional level to mitigate risks of water shortage or excess, and the implementation of irrigation management plans through an infrastructure vulnerability assessment.

  • Development and implementation of Management Plans for selected watersheds.

  • Implementation of measures to protect aquifer recharge areas.

  • Planning and design of water use and distribution infrastructure to strengthen adaptation, modernisation and improvement and thus enhance climate resilience.

  • Promotion of revolving funds to local water management associations, and national water systems to implement sustainable management practices for water.

  • Design and implementation of coastal protection and restoration measures.

  • Development of a comprehensive management plan for specific coastal marine resources and sustainable productive activities.

  • Development and implementation of strategies for the preservation and recovery of mangroves.

Component 3: Capacity building

  • Development and implementation of Early Warning Systems (SAT in Spanish) and district risk reduction plans.

  • Provision of assistance to communities in the development of Early Warning Systems, district risk reduction plans.

  • Stakeholder mapping and consultation to determine the level of awareness about climate change.

  • Promotion and training in new rural economic activities due to the impact of climate change, including technical and financial considerations.

  • The organisation of public information and awareness-raising programmes about the problem and measures to adapt to climate change in different vulnerability areas.

  • Workshops among community organisations, professionals, technical groups, producers, and beneficiaries to exchange knowledge and experiences.

  • Systematisation of lessons learned and good practices.

  • Dissemination of information through printed, audiovisual and electronic means.

  • Modernisation and expansion of the different hydrometeorological networks of the country through automated technological equipment and instrumentation.

  • Development and adaptation of information systems of satellite imagery, integrated information systems for disaster risk management, systems of updated digital geographic and cartographic information for the analysis of threats and the reduction of impacts of hydrometeorological events.

  • Creation of risk maps by using models for the development of future climate scenarios.

  • Systematisation of information about climate variability by territory of interest/farming, water or coastal priority.

Source: Adaptation Fund (2014), pp. 79-82.

Notes

← 1. Under the Intergovernmental Panel on Climate Change (IPCC) A2 and B2 scenarios and with a discount rate of 2-4%.

← 2. 10% of coffee farmers use tolerant varieties to combat the recent spread of rust (SEPSA, 2016).

← 3. This is the case, for instance, for rice and bean farmers in the North region (Extension Services, 2015).

← 4. Maladaptive choices are more harmful than helpful and in fact increase vulnerability to climate change.

← 5. The El Niño Southern Oscillation (ENSO) consists of three phases: El Niño (warm phase), La Niña (cold phase) and the neutral phase. See Chapter 1 for further details.

← 6. On an upside, productivity has increased in some cantons during La Niña (MINAE, 2014).

← 7. Pests and disease have proliferated in crops such as rice (bacterial blight); coffee (rust); sugar (orange rust); and cattle (ticks) (MAG, 2014). The rat population in Guanacaste has also increased due to higher rainfall from La Niña, raising concern about the spread of disease and the destruction of crops. Moreover, rising humidity has encouraged the proliferation of molluscs such as snails and slugs, threatening crops east of Cartago and in the Caribbean (MAG, 2010c). The spread of pests and disease may also have been exacerbated by the overuse of agrochemicals (Section 3.5).

← 8. Projection is based on the PRECIS model (A2 scenario). Other models provide similar projections (IMN, 2012).

← 9. With discount rates of 4% and 2% respectively.

← 10. This extrapolation acknowledges that the projections are limited by the consideration of only one model and scenario.

← 11. Costa Rica has its own definition for food sovereignty (Chapter 2).

← 12. As subsequent sections will discuss in more detail, MINAE is responsible for the design, development, evaluation and control of sector policies relating to climate change, including adaptation. Within MINAE, the Directorate of Climate Change is the multi-sector co-ordinator in the formulation of policies, plans, programmes and projects focused on compliance with the National Strategy on Climate Change.

← 13. SICA’s members include Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. The Dominican Republic is an associate member.

← 14. Established in 2009, this framework aims to address long-term problems in water management. The National Plan of Integrated Management of Water Resources is a technical instrument to support this process.

← 15. Although not included in the specific objective, the policy notes that climate change is a key risk and that risk management should be more flexible in order to adjust to this changing context.

← 16. The Environmental Sectoral Council recently replaced the Inter-Ministerial Council for Climate Change.

← 17. Technical advisory committees by CNE are also co-ordinated on threats and risks.

← 18. The National Adaptation Plan for 2017 should help to strengthen the matching of adaptation needs and financing in a more systematic way.

← 19. Not all components of this project are related to adaptation.

← 20. The extent to which this funding targets adaptation rather than mitigation could not be determined.

← 21. The projects to install irrigation technology and extend drainage infrastructure are funded by the BCIE Progirh project.

← 22. A careful balance is required. Productivity can suffer if farmers are stuck in a risk-induced poverty trap (Dercon and Christiaensen, 2011).

← 23. As outlined above for other climate change and agricultural budgets, adaptation practices may also be affected by other expenditure items which do not directly target adaptation.

← 24. MAG extension services focus primarily on basic grains, cattle, dairy and vegetable farmers, while agricultural supply chain organisations provide extension support Costa Rica’s other main crops (Chapter 2).

← 25. www.cne.go.cr/index.php/prevencie-desastres-menuprincipal-93/mapas-de-amenazas.

← 26. Agricultural supply chain organisations complement government services such as research and development and technical assistance for specific agricultural products. All of these organisations have private sector participation; in many cases, the public sector is also involved (Chapter 2).

← 27. These assessments are being conducted under the Action Plan for Strengthening Responsible Production and Trade of Pineapple in Costa Rica 2013-2017.

← 28. Maps for certain regions, such as the Central Occidental and the Jesus Maria basin/valley, have already been completed (MAG, 2011; MAG, 2014). The maps will be developed at a scale of 1:50 000. A previous version was developed in 1989 at a scale of 1:200 000.

← 29. As INTA’s budget does not earmark R&D expenditures for adaptation, a similar inference based on budget expenditure is precluded.

← 30. UNA also manages a USD 200 million World Bank loan to enable four state universities to conduct research and provide scholarships on climate change, risk management, and food security.

← 31. CORBANA funds this research by drawing on part of a USD 0.05 surcharge on each box of bananas sold.

← 32. Only one bulletin highlighted that climate change increases uncertainty and shifts the timing of seasons in temperate regions forward, due to rising temperatures.

← 33. These include the Recognition of Environmental Benefits of Sustainable Production Program, and the Organic Agriculture National Program (MAG, 2015).

← 34. In total, extension supported 32 902 producers in 2014. Data on how many of these producers benefited from adaptation-related extension is not available.

← 35. These responsibilities include issuing vehicle and fire permits, conducting surveys on rural income levels, and distributing emergency supplies.

← 36. A UNDP study found that only 3.1% of respondents viewed agrochemicals as a problem for the environment, and only 0.6% considered the use of agrochemicals in monocultures, such as pineapple and bananas, as serious (UNDP, 2014).

← 37. There are some exceptions: INTA, CNE and CONARROZ, for instance, reportedly have access to some of the data that they require (INTA, 2015b).

← 38. SENARA receives 1 300 million cubic metres of water per year, but only 600 million cubic metres of this are used; the remaining 700 million cubic metres flows into the sea. Under the “Agua para Guanecaste” Project, Costa Rica plans to build a new reservoir to capture the remaining water (SENARA, 2015).

← 39. 57% of Costa Rica’s rivers and estuaries have high levels of pollution (WB, 2016).

← 40. Nearly 64% of Costa Rica’s electricity capacity is derived from hydropower (ICE, 2012).

← 41. 55% of total water used is for the agricultural sector. Urban and industrial growth and the intensification of agriculture, livestock and tourism are increasing demand for water resources. As discussed later in this section, infrastructure for the storage, handling and distribution of water is also lacking (ICE, 2012).

← 42. In practice, this has meant that some farmers – small and medium-scale farmers in particular – have lost their farms (MAG, 2014b). While impacts such as these are severe in the short-term, this measure helps to ensure the long-term sustainability of water resources for future farmers in a changing climate.

← 43. This does not include losses to the agricultural sector as a result of breakdowns.

← 44. Mandatory according to the Executive Decree No. 35374-PLAN Standards Guidelines and Procedures for Public Investment, published in 2009.

← 45. The Natural Hazard Self-Assessment is also called the “Risk Analysis Matrix for Construction Sites to Natural and Socio-Natural Hazards for Investment Projects in Costa Rica”.

← 46. With support from the Investment and Financial Flows Assessment by the UNDP.

← 47. MAG defines the classification of types of usability as follows: Class I lands have little or no constraint on agricultural and forestry activities, including livestock ecologically adapted to the area; Class II lands have slight limitations that alone, or in combination, reduce the choice of activities or increase production costs, due to the need for management practices and soil conservation; Class III lands have moderate limitations that restrict the choice of crops. The use for annual crops requires intensive management practices, soil conservation and water; Class IV lands have severe limitations, alone or in combination, to restrict their use to semi-permanent and permanent vegetation; Class V lands have severe limitations to the development of annual, semi-permanent or permanent crops or forest, therefore its use is restricted to grazing or natural forest management; Class VI lands are used for forest production and permanent crops such as fruit and coffee, although the latter require intensive management practices and soil and water conservation; Class VII lands have severe limitations, therefore only management of forest cover is allowed. Class VIII lands do not meet the minimum conditions for agricultural production or forestry activities (Sancho, 2016).

← 48. This programme originated as the Program Promoting Sustainable Agricultural Production (PFPAS), following a loan agreement with the Inter-American Development Bank (IDB). The programme received USD 14.5 million in funding. The PFPAS supported 105 projects in 2010-11, benefiting 20 000 families and 64 000 hectares (MAG, 2010b). Since 2011, MAG has allocated funds from its regular budget to continue funding environmental projects. While the scale of the programme has been reduced (approximately 2 500 farmers benefited in 2015, for instance), its structure is relatively similar to before.

← 49. For instance, fodder banks for sustainable livestock systems; improved sustainable livestock grazing systems; irrigation systems that optimise water use; cover crops; terracing; trees for reforestation purposes for protective use, windbreaks, shade coffee and apparatus in pastures; landslide control measures; flood control; conservation equipment; and infrastructure to reduce water pollution.

← 50. This includes, for instance, reducing water use in coffee processing, and using wastewater to irrigate pastures.

← 51. New trees also help to prepare for rising temperatures by creating shade for crops below and combatting soil erosion.

← 52. 134 farms have already been enrolled, with plans for expansion (Box 3.1).

← 53. The previous scheme operated from 1969 to 2015.

← 54. Insurance payouts cover the cost of production, as opposed to estimated income losses.

← 55. Group policies are available to financial entities, co-operatives and farmer associations, with discounts depending on the number of hectares secured together and types of crop. Discounts up to 35% are available for group policies (an effective mechanism for increasing take-up).

← 56. Index insurance issues payouts according to a pre-determined index, such as rainfall levels at the local weather station or average crop yields in the region.