Chapter 6 | PROJECTS
The “Strengthening Innovation, Resilience and Sustainability of Agri-Food Systems in North Central Honduras” (INNOVASAN) project aims to enhance income, food and nutrition security and climate resilience among smallholder farmers and vulnerable rural populations in north-central Honduras by establishing sustainable, resilient and competitive agri-food systems. The project addresses critical development challenges including exposure to climate shocks, food insecurity, limited access to productive infrastructure and weak institutional support for rural communities. It promotes climate-smart agriculture, improved water and sanitation infrastructure, value chain development and institutional capacity strengthening. The OPEC Fund is contributing a loan of US$15 million to co-finance the project alongside IFAD, the Global Agriculture and Food Security Program (GAFSP), the Government of Honduras and project beneficiaries for a total project cost of US$60.3 million. The project will be implemented over an eight-year period and is expected to benefit over 34,000 smallholder households with a strong emphasis on gender equality, youth inclusion and climate adaptation.
The OPEC Fund’s contribution to Climate Resilience in Honduras
Situation Analysis of Climate Impacts
Honduras is highly exposed to extreme weather events — from powerful hurricanes, to intense rainfall floods, to recur- ring droughts — which strike with increasing frequency and severity. Hurricane Mitch alone destroyed an estimated 70 percent of Honduran crops and infrastructure in 1998, caus- ing over US$3 billion in damage. 16 More recently, back-to- back Hurricanes Eta (2020) and Iota (2021) inundated farm- land and displaced over a million people. In drought years, especially during El Niño cycles, the “Dry Corridor” region in southern and western Honduras suffers crop failures and water shortages, leading to recurrent food insecurity. 17 These climate shocks have major impacts on agriculture, as over half the population is rural and depends on rain-fed farming. Smallholder farmers are particularly vulnerable: Extreme weather can wipe out harvests and livestock, caus- ing substantial yield losses and worsening hunger in farm- ing communities. With limited irrigation, infrastructure and financial buffers, rural families have low adaptive capacity to withstand such shocks. 18 Notably, over the past century floods have been the single largest driver of disaster loss- es (about 48 percent of total losses), followed by droughts (34 percent). According to global indices, Honduras is among the most vulnerable and least prepared countries for climate change. The US ND-GAIN country index ranks Honduras as highly climate-vulnerable, while the EU INFORM Risk Index ranks Honduras as the second-highest risk country in Central America for disasters related to natural hazards.
Purpose of the Loan
The purpose of the OPEC Fund loan is to support the INNOVASAN project, which is designed to bolster Honduras’s agriculture against climate and food security vulnerabilities. The loan will finance interventions that enhance climate re- silience, food security and sustainable livelihoods for small- holder farmers in the targeted regions. According to the pro- ject’s development objective, the aim is to enhance income, food and nutrition security and resilience to climate change of small rural producers’ households in conditions of poverty by building sustainable, resilient and competitive agri-food systems in those areas. The project will boost climate-smart agriculture and rural in- frastructure to help farmers adapt to extreme weather (for example, drought-resistant crops, irrigation systems and soil conservation measures to mitigate flood/drought impacts). It will also improve access to safe water and sanitation in communities, strengthening health and nutrition in the face of climate-related water stress. Another key purpose is to support farmers with training, technology and financing so that they can increase their productivity and diversify income in a sustainable way. By focusing on smallholders (including women and youth) in poor rural communities, the loan directly addresses the socio-economic vulnerabil- ities that make these groups sensitive to climate shocks. Ultimately, the project serves as a climate adaptation and rural development program: It will improve food production
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