More than just cryptocurrencies - using blockchain for climate action in agriculture
The United Nations recognizes innovation as a driving force in helping the world to achieve food security and the Sustainable Development Goals (SDGs). While innovation is not only about technology, digital solutions are becoming increasingly important.
You have probably heard of the cryptocurrency Bitcoin, one of the most well-known systems built on blockchain technology. The connection between this much debated “digital cash” and climate action may seem farfetched. However, blockchain technology can be applied beyond just recording transactions. Interest in blockchains has soared in recent years, with many companies and research institutions focusing on potential applications of this innovative technology across a range of sectors. In fact, the core characteristics of blockchains - efficiency, transparency and traceability of information exchange - make it particularly useful in the context of climate change and agriculture.
Transparent digital ledger
Although often referred to as ‘the blockchain’, it is not a single technology, but a combination of digital technologies. In simple words, it can be described as a ledger; a type of database with information that is shared, copied and synchronized by different actors. A big advantage is that the data is spread over an entire network, without a central administrator managing the entities, or blocks. It is also impossible to manipulate the data or information inserted. Blockchain technology is relevant to agriculture and food systems because transactions in these sectors are often faced with trust and information management problems. Thanks to built-in control mechanisms that ensure the integrity of recorded data, it is seen as a unique opportunity for efficient, transparent and traceable information exchange.
However, the application of blockchain for climate change does not come without controversies. For instance, there are concerns that the energy consumption of certain types of blockchain technologies lead to increased CO2 emissions and adverse environmental impact. Yet, blockchains such as Bitcoin are not considered a large threat to the climate today, partly because their energy consumption must be weighed out against the energy savings made through its digitization process. More empirical research is needed, and researches and specialists in the field are looking into ways of improving consumption patterns and identify more energy friendly solutions.
New study exploring possibilities
According to a new report on Applying blockchain for climate action in agriculture: state of play and outlook from the Food and Agriculture Organization of the UN (FAO) and Wageningen University & Research (WUR), blockchain technology has a lot of potential to support effective climate policy in the agriculture sectors and to measure the effectiveness of climate action. The report outlines the limitations and potential applications of blockchains in agriculture and how it may be used in the context of climate change.
“Blockchain technology can, for example, lay the foundation for a worldwide network with reliable carbon data. Another possible application is that with the help of a blockchain you can follow exactly what happens with the ‘plant-a-tree surcharge’ that you pay when you buy a plane ticket. Or think of blockchains as a way for small farmers in developing countries to apply for crowdfunding or microcredit with a token - a kind of digital voucher.” explains Lan van Wassenaer, WUR, one of the authors.
The study shows that blockchain technology can help improve transparency and accountability of both climate change mitigation and adaptation activities. Apart from monitoring greenhouse gas emissions, it can support farmers’ adaptation to climate change by helping to track investments and outcomes of improved management practices. Blockchain can also help track gender-relevant SDG indicators in adaptation and mitigation activities. All in all, it has the potential to act as a tool to accelerate global actions towards the Paris Agreement and the SDGs of the Agenda 2030.
UNDP and FAO piloting blockchain
Blockchain technology is being piloted under the programme Scaling up Climate Ambition on Land Use and Agriculture through NDCs and NAPs (SCALA) programme, co-led by FAO and the United Nations Development Programme (UNDP) with funding from Germany’s International Climate Initiative (IKI). The methodology will be applied by digitalizing the value chain for agriculture and food systems and tracking sustainability through Key Data Elements (KDE).
“The blockchain work in SCALA is envisaged by setting up a working group with several blockchain service providers in the agriculture and food system value chain, focusing on designing KDEs that represent climate-resilient practices. The aim is to help policy makers, food producers and audit agencies to stimulate the uptake of climate resilient practices registered in blockchain,” says Erik van Ingen, FAO.
Efforts to integrate blockchain technology under SCALA will be based on lessons learned from previous initiatives – for example, the use of blockchain for sustainable cashmere production in a UNDP pilot in Mongolia. The technology was applied to track cashmere sourced from small-scale nomadic herders using sustainable practices to a processing factory in the capital and finally to end consumers willing to pay premium prices for sustainable production. By enabling end-to-end supply chain tracking, it allowed herders to receive higher prices and training on better production methods in exchange for having their cashmere marked.
SCALA also aims to engage with the private sector, globally and in its 12 partner countries, not only to scale up investments but also to bring in innovative policies and technologies. The programme’s approach is well anchored in the new FAO strategy for private sector engagement, and the Organization’s efforts to boost digital agriculture and innovation for sustainable agriculture. It is also aligned with UNDP’s Strategic Plan 2018-2021 which reiterates the role that technological advances such as digitalization can play in achieving sustainable development, as well as the ‘Future Forward: UNDP Digital Strategy’ (2019), that aims to support the fulfilment of the Strategic Plan by promoting innovation and building capabiilties for digital solutions in development. The need for investments in innovative solutions in agriculture and food systems are becoming even more important as we address the consequences of the ongoing COVID-19 pandemic and set sail to “build forward better”.
