Regional Initiative for the Dry Corridor
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INVESTMENT PRESENTATION
THE PROPOSAL
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The Dry Corridor and Arid Zones of the SICA region is a geographical territory that spans from Mexico (Chiapas) to areas of Costa Rica and Panama, as well as the arid zones of the Dominican Republic, with an extension of 19,300 km2 (34% of the whole region). This region, and particularly its agricultural sector, which employs more than 20% of the adult population, is particularly vulnerable to the effects of climate change and climate variability.
Extended periods of drought, followed by intense rains, along with the occurrence of the El Niño phenomenon, have caused significant economic impact on the region, threatening the sources of income and food security of the population. This has further encouraged the ongoing migration of young people (30% between 25-30 years) from these territories, whose remittances play a significant role in their countries of origin’s national income.
Given these environmental, economic and social contexts, agriculture is key in order to progress towards reducing poverty and creating opportunities in the region.
Within the framework of the Hand-in-Hand Initiative and under the leadership of the Central American Integration System (SICA), the Central American Agricultural Council (CAC), the Central American Commission for Environment and Development (CCAD), and the Central American Economic Integration Secretariat (SIECA), five plans for investment have been prepared to bring innovation and build resilience in the Dry Corridor and Arid Zones of the SICA region. Four of them were already presented in the previous year and now have been expanded to the eight participant countries.
COMMODITIES AND INTERVENTIONS
Agricultural Climate Risk Zoning
This investment aims to inform decision-making about current and future agricultural potential under different scenarios of climate variability and change. A database platform is being developed that includes crop phenology, climatology, and soil characteristics in order to carry out an agricultural risk zoning exercise. This platform will provide municipal maps by crop and planting date, where a minimum of 80% success in agricultural production is estimated, with a potential future connection to agricultural financing and insurance systems. The investment will benefit over 272,000 producers by reducing agricultural losses and improving access to financial markets for credit and agricultural insurance., in addition to public and private agents who might benefit from the information generated as a public good. The total investment cost is US$ 34 million with an internal rate of return of 55% and a net present value of US$ 102 million.
Digital Soil Mapping
The objective of this initiative is to improve soil management and strengthen national soil information capacities, through the development of a Digital Soil Mapping system. This digital service will facilitate informed decision making and improve agricultural output through nutrient management optimization techniques. This initiative will link different information systems benefitting more than 511,000 agricultural producers, especially as they cut production costs and boost productivity, in addition to public and private agents who benefit from the information generated as a public good. This component seeks an investment of US$ 59 million and has an internal rate of return of 24%, together with a net present value of US$ 69 million.
Strengthening R+D+I systems
This intervention aims to strengthen the technical and financial capabilities of agricultural R&D systems in the region for research in value chains relevant to the dry corridor and/or prioritized for the HiH investment programs of the eight countries in the region.
According to a study conducted by IFPRI, it is estimated that investment in agricultural research and development in most SICA countries is among the lowest in Latin America and the Caribbean, despite existing evidence of the return on investment it yields.
This investment intends to address four components: the creation of a database encompassing grain and grass seeds; a regional digital platform to facilitate registration and exchange of products and services of the regional institutes of agricultural research; the strengthening of capacities for the presentation of research proposals to international financing funds; and the leverage of financial funds from regional research and innovation projects such as FONTAGRO. The investment amounts to a total of US$ 11.3 million, with an internal rate of return of 38% and a net present value of US$ 6.8 million.
Micro-, Small, and Medium Enterprises (MSMEs) and Digital Ecosystems for Access to Markets
This intervention aims at strengthening the entrepreneurship of MSMEs and enhance market access through digital ecosystems. Specifically, it will develop investments in infrastructure, information services, technological infrastructure and digital skills development, thus improving the competitiveness and market access. It will establish 80 digital ecosystems, across 288 municipalities in El Salvador, Guatemala, Honduras and Nicaragua in a first phase, linking over 22,400 agri-food producers to 1,600 rural businesses, rural cooperatives and producer organizations in the prioritized countries. The total investment cost is US$ 26 million, with an internal rate of return of 24% and net present value of US$ 5.2 million.
Comprehensive Irrigation Water Supply Systems
This investment opportunity develops comprehensive water supply systems, improving water management and efficient irrigation in the Dry Corridor and Arid Zones of the SICA region. It uses cutting-edge technology such as the AGRI tool, developed by CIAT with support from USAID and FAO, to identify the potential best sites for surface water collection. Based on this identification, it is possible to design water storage structures that allow for deficit irrigation during the rainy season and extend the productive period into the dry season. This facilitates the transition from basic grain agriculture to one based on higher-value vegetable products, thereby increasing the climate resilience of producers and their associations.
Additionally, local water management capacities at the micro-watershed level will also be strengthened. This initiative plans to establish 100 water systems, which covering 4,200 hectares, would benefit more than 12,000 families of the Dry Corridor in El Salvador, Guatemala, Honduras and Nicaragua, and will be key in promoting resilient agriculture and the transition to sustainable agricultural systems. This investment costs US$ 180 million and has an internal rate of return of 21%, together with a net present value of US$ 56 million.
LATEST UPDATES
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