World Bank approves US$150M loan to promote climate-smart agriculture in Hubei

China’s agricultural sector has grown rapidly in recent decades, contributing to poverty reduction and food security.

The World Bank’s Board of Executive Directors today approved a loan to China in the amount of 136.50 million euros (US$150 million equivalent) for the Hubei Smart and Sustainable Agriculture Project, which will promote environmentally sustainable and climate-smart agriculture and improve agricultural food quality and safety in Hubei Province – one of the country’s leading agricultural producers.

China’s agricultural sector has grown rapidly in recent decades, contributing to poverty reduction and food security. However, China is also the world’s biggest emitter of greenhouse gases (GHG) from agriculture, accounting to 14 percent of the global total. Agriculture also has significant impacts on the local environment. The intensive use of natural resources, plastic mulch, and agrochemical inputs has increased environmental and ecological fragility, worsened land degradation, and contributed to greater food safety risks, as well as increasing the carbon footprint from agriculture.

“To address these challenges, this project will demonstrate a ‘3S’ approach – smart, sustainable and safe. It will be the first project to combine interventions on quality and safety of agricultural production with sustainable and climate-smart agriculture practices in an integrated way,” said Martin Raiser, World Bank Country Director for China. "This project is expected to yield significant climate co-benefits and contribute to the achievement of China’s agriculture-related climate change commitments, including under the Paris Agreement.”

The new funding will help Hubei Province enhance the capacity to assess and monitor the quality and safety of agricultural food products and environmental risks, establish provincial-level sustainable agriculture standards to help mainstream climate-smart and green agricultural practices, create the institutional basis for including agricultural offsets in the provincial emissions trading scheme, and pilot new approaches to agricultural support that can inform policy changes.

The project will address the impacts of climate change through both mitigation and adaptation measures in Hubei. To support mitigation, it will finance efforts to improve livestock waste management and nutrient management, reduce the over-use of synthetic fertilizers, and improve water management in rice production, thereby reducing agriculture pollution. On adaptation, it will strengthen overall resilience, with a focus on soil and water resources management, and disaster risk reduction and management. In addition, the project will pilot approaches to reduce the use of plastic mulch in agriculture, a key source of plastic waste, which will reduce marine plastics pollution.

The project will provide incentives to producers to apply innovative institutional and technical solutions, which in turn can provide lessons for other provinces in China and for other developing countries.