Regenerative agriculture is a powerful solution to the environmental and social challenges facing our food systems. It revitalizes soil health, sequesters carbon and enhances biodiversity, creating a thriving ecosystem for people, communities, plants, animals and the planet, while meeting nutrition needs.
Shifting conventional global food systems to regenerative practices, however, requires significant investment. The Global Alliance for the Future of Food estimates the need between $250 billion to $430 billion annually through 2030. While the investment is significant, so are the potential returns: transitioning to regenerative agriculture could unlock $4.5 trillion in new business opportunities each year and mitigate more than $10.5 trillion in damage to the planet, according to the Food and Land Use Coalition.
Figuring out how to unlock that value can be tricky. Similar to regenerative agriculture, finance has its own ecosystem. If this ecosystem is acknowledged, understood and cultivated, financing initiatives have a much better chance of scaling.
In impact finance, writ-large, and specifically in regenerative agriculture, there is often lots of money for the new, and little money to scale what works. Initiatives often focus on creating novel mechanisms, funds, and initiatives, instead of understanding and amplifying what is already there. A 2019 analysis by the Global Impact Investing Network (GIIN) found that impact investors in sustainable agriculture were unknowingly duplicating efforts by focusing on similar regions and financing tools without coordination, leading to inefficiencies and diluted outcomes.
A way to avoid these issues: Ecosystem analysis.
Ecosystem analysis allows for a foundational understanding, avoiding misdirected efforts, missed opportunities, and ultimately, a fragmented and inefficient system. A comprehensive ecosystem analysis is crucial for ensuring that financial innovations truly cultivate a thriving regenerative future.
Born out of work on clusters and systems thinking, ecosystem analysis examines the interconnected elements within a specific system. In the context of regenerative agriculture finance, it means mapping the key players (farmers, the agri-business supply chain, investors, policymakers, researchers, etc.), the resources (financial capital, knowledge, infrastructure, government agencies, on the national and local levels), and the interactions (networks, collaborations, competition) within the financing landscape. This analysis helps identify strengths, weaknesses, and opportunities for improvement, ensuring that financial innovations are strategically targeted and address the system’s actual needs.
A good tool for mapping an ecosystem is an ecosystem logic model. There are various versions of these, we have often used the one below in our own work, especially around mapping entrepreneurial ecosystems in the Global South. Our team has used it prior to structuring financial funds and facilities to make sure we are targeting the right capital needed given the economic backdrop, regulatory systems and enterprises being funded. Our team has had great success using this logic model prior to helping USAID launch the Middle East North Africa Investment Initiative, a $500 million debt and equity fund focused on supporting early stage companies, and on developing remediations in lieu of structuring a targeted $500 million Ukraine-based investment initiative prior to the start of the Ukraine conflict.
From an ecosystem analysis, we can expect to:
- 1. Identify Synergies and Avoid Redundancy: Mapping the landscape reveals who is already working in the space, what they are doing, and where their efforts overlap or complement each other. This allows for collaboration, avoids duplication of efforts, and fosters a more cohesive and efficient system.
- 2. Uncover the Real Gaps: Regenerative agriculture presents unique financial challenges. An ecosystem analysis can pinpoint where current funding models fall short. Are farmers struggling to access capital for transitioning to new practices? Do lenders lack the tools to assess the long-term financial viability of regenerative systems? Are there gaps in technical assistance or market access for regenerative products? Is there a need for a specific type of financing to facilitate trade? By identifying the real bottlenecks, we can ensure that financial innovations address the most pressing needs.
- 3. Leverage Existing Resources: Before designing new financial instruments, it’s essential to understand what already exists. Are there successful models that can be adapted or scaled? Are there underutilized programs or funding sources that can be leveraged? An ecosystem analysis can prevent wasted resources and allow us to build upon proven approaches.
- 4. Identify Potential Risks: Analyzing the interdependencies within the ecosystem helps identify potential systemic risks, like cascading failures or contagion effects, which can be crucial for proactive risk management.
- 5. Promote Financial Inclusion: By identifying gaps in access to financial services, ecosystem analysis can help policymakers and institutions develop strategies to improve financial inclusion for underserved populations.
- 6. Ensure Regulatory Oversight: Regulators can use ecosystem analysis to assess the overall health and stability of the financial system, identify potential regulatory or funding gaps, and design appropriate policies.
- 7. Foster Strategic Partnerships: Companies can leverage ecosystem analysis to identify potential partners and collaborations that can enhance their market reach and service offerings.
- 8. Target Innovation for Maximum Impact: By understanding the strengths and weaknesses of the existing system, we can ensure that financial innovations are strategically targeted. This might involve developing specialized loan products, creating new investment vehicles, or establishing platforms that connect regenerative farmers with investors.
- 9. Measure and Demonstrate Impact: Ecosystem analysis can help establish metrics and frameworks for assessing the environmental and social benefits of regenerative agriculture. This data is crucial for attracting investors, securing government support, and building consumer confidence in regenerative products.
Ecosystem analysis, either formally or informally, was a prior step to some of the benchmark initiatives within the world of economic development, including M-Pesa, several platforms for solar in Africa, and Grameen Bank. Indeed, Muhammad Yunus’s understanding of the rural Bangladeshi financial ecosystem, where the poor lacked access to traditional banking but possessed strong community ties and entrepreneurial spirit, led him to create Grameen Bank.
Investing in ecosystem analysis is not a detour; it’s a prerequisite for building a robust, efficient, and inclusive financing system for regenerative agriculture. By prioritizing this approach, we can:
- Direct resources more effectively: Ensure investments address real bottlenecks, such as access to credit or technical assistance.
- Maximize impact: Build on proven models, avoid redundancy, and strategically scale solutions.
- Foster trust and collaboration: Engage all stakeholders—farmers, financiers, policymakers, and researchers—in a shared vision for a regenerative future.
The transition to regenerative agriculture is urgent and complex, but it is also achievable. By mapping the landscape before designing solutions, we can ensure that every dollar invested drives meaningful change for farmers, ecosystems, and communities.
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Kaitlin Archambault is the founder of Open Future Coalition. Øistein Thorsen is the CEO of FAI Farms. Jerome Tagger and Steven Zausner are co-founders and partners at WhiteLabel Impact.
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