Using Inclusive Finance to Significantly Scale Climate Change Adaptation

Abstract

Reversing land degradation and achieving ecosystem restoration and management are routes to climate change adaptation and mitigation. The financial resources to achieve this are increasingly available. A major challenge is the absence of scalable mechanisms that can incentivize rapid change for rural communities at the decade-long time scale needed to respond to the climate emergency. Despite moves toward inclusive green finance (IGF), a major structural gap remains between the funding available and the unbankable small-scale producers who are stewards of ecosystems. This chapter reports on inclusive finance that can help fill this gap and incentivizes improved ecosystem stewardship, productivity, and wealth creation. A key feature is the concept of eco-credit to build ecosystem management and restorative behaviors into loan terms. Eco-credit provides an approach for overcoming income inequality within communities to enhance the community-level ecosystem governance and stewardship. The paper discusses the experience of implementing the Community Environment Conservation Fund (CECF) over a 8-year-period from 2012. The CECF addresses the unbankable 80% of community members who cannot access commercial loans, has c. 20,000 users in Uganda and pilots in Malawi, Kenya, and Tanzania. The model is contextualized alongside complementary mechanisms that can also incentivize improved ecosystem governance as well as engage and align communities, government, development partners, and the private sector. This complementary infrastructure includes commercial eco-credit as exemplified by the Climate Smart Lending Platform, and the community finance of the Village Savings and Loans Associations (VSLA) model upon which CECF builds. The paper describes the technologies and climate finance necessary for significant scale-up.

Multidimensional human wellbeing in periodic octopus closures

“…All of which deepened differences and bene t capture between trader types. The implementing NGO was aware of such market constraints, addressing them through sustainable participatory market systems development, linked eco-credit solutions and enterprise incubation and development (Wild et al 2021;Nicholas 2021;FFI 2022). Yet these approaches to nance and credit in incentivizing ecosystem management or restoration are not well explored (ibid).…”

“…Integrating sustainable nance and value chain improvement solutions into relevant CB-MPA types (e.g. temporary closures or MPAs coupled to SSF systems) could help overcome some of the issues participants faced, particularly small-scale female traders, while at the same time help pay for monitoring and enforcement (which currently often falls into the " nance gap" of MPAs) (Meyers et al 2020;Wild et al 2021;FFI 2022). The co-development of community level credit and nancing infrastructure in CB conservation can improve livelihood options and increase food security and assets, helping households deal with shocks or drops in production e.g.…”

“…The co-development of community level credit and nancing infrastructure in CB conservation can improve livelihood options and increase food security and assets, helping households deal with shocks or drops in production e.g. closed shing grounds-all of which can contribute to climate change adaptation processes (Wild et al 2021;FFI 2022). It is therefore important for MPA management strategies to follow conserved/protected area species downstream in the value chain, understanding the SSF as part of a complex trading system.…”

“…By identifying market constraints that smaller-producers or traders face, including the lack of nancing infrastructure, or engaging with value chain suppliers/ large trading agents (e.g. octopus exporters; there is substantial international export of octopus from Zanzibari closure systems (Bohlin 2020)) as sources of potential capital for community ecofunds, CB MPAs could become more effective enduring forms of collaborative NRM (Wild et al 2021;FFI 2022). Noticeably this is a monetized approach to conservation practise that supports more westernized ethics in the marine management space.…”

Financial Inclusion and Carbon Reduction: Evidence From Chinese Counties

“…Afforestation and restoration activities may hamper their income growth and the way of living. As Wild et al (2021) once pointed out that it is feasible to incentivize ecosystem management or restoration activities by introducing inclusive finance. Financial inclusion could provide the rural communities alternative working opportunities and financial support.…”