Microfinance and Ecosystems Conservation - How Green Microfinance Interacts with Socio-Ecological Systems - Lessons from Proyecto Cambio in Nicaragua and Guatemala

Abstract

Environmental degradation is the result of complex human-environment dynamics, often sustained by socio-economic inequalities. Recently microfinance has been proposed to be an interesting tool to support environmental protection strategies that aim at once to foster rural development and promote ecosystems conservation or adaptation to climate change.In this paper we provide one of the first analysis of the link between microfinance and ecosystems conservation. We base our analysis on the assessment of the first large-scale microfinance programme for biodiversity conservation: Proyecto CAMBio. Our empirical analysis exploits a unique set of secondary and primary data collected by the authors in Nicaragua and Guatemala. We introduce a theoretical framework and a practical methodology to assess such programme, and we apply it to our case studies. Even if with different peculiarities, the two cases studied show that microfinance for ecosystems conservation has good potentialities to introduce environmental elements in the rural activities of small farmers and in the products provided by microfinance institutions, and it is an interesting path to pursue. However, they also underline that choices and actions of rural households and local financial intermediary institutions are strongly influenced by habits and local dominant development pathways, which are among the main causes of socio-economic inequalities and environmental degradation. Green Microfinance per se does not seem to be able to revert such dangerous dynamics while, interacting with them without a proactive strategy, it risks to have no effect or eventually support the causes of environmental degradation.We then call for a renewed proactive role of green microfinance for ecosystems that, articulating with local actors and territorial dynamics, should aim not only at providing a green product to individual farmers, but instead support new alliances and collective, socially informed, actions to redirect the habits that support environmental degradation towards environmentally friendly and socioeconomic inclusive rural development. Environmental degradation is the result of complex human-environment dynamics, often sustained by socio-economic inequalities. Recently microfinance has been proposed to be an interesting tool to support environmental protection strategies that aim at once to foster rural development and promote ecosystems conservation or adaptation to climate change.In this paper we provide one of the first analysis of the link between microfinance and ecosystems conservation. We base our analysis on the assessment of the first large-scale microfinance programme for biodiversity conservation: Proyecto CAMBio. Our empirical analysis exploits a unique set of secondary and primary data collected by the authors in Nicaragua and Guatemala. We introduce a theoretical framework and a practical methodology to assess such programme, and we apply it to our case studies. Even if with different peculiarities, the two cases studied show that microfinance for...

Green microfinance in Latin America and the Caribbean: An Analysis of Opportunities

“…Appropriate tools are needed to assess the impact of ESP and CCA microcredits on customers and the environment in order to evaluate successful strategies. When in-depth field analysis is conducted (Forcella and Huybrechs, 2016;Forcella and Lucheschi, 2016), reality often appears to be quite complex and the impact on clients of a green product is nuanced and affected by multiple factors. Field analysis confirms this along with the need for a clear environmental strategy on provision of credit that includes the green added value as an element in decision-making.…”