Maximizing Finance for Sustainable Development? Microfinance, Debt-Driven Deforestation, and the Self-Regulation of Environmental Harm

W. Nathan Green

Annals of the American Association of Geographers, 2025, vol. 115, issue 6, 1228-1247

Abstract: A global consensus has emerged that private finance capital is required to meet the United Nations Sustainable Development Goals by 2030. Critical scholars within geography have argued that this consensus is driven by the financialization of development, and that it is based on self-regulatory market mechanisms that fail to mitigate environmental harm. Building on this scholarship, I present findings from qualitative research about the social-environmental impacts of investment into the Cambodian microfinance industry, which is increasingly carried out in the name of sustainability. This industry regularly provisions loans to farmers engaged in cash-crop agriculture within Keo Seima Wildlife Sanctuary, a highly biodiverse area located in eastern Cambodia. As part of a broader conjuncture of land grabbing, illegal logging, and migrant settlement, however, cash-crop agriculture has contributed to significant forest loss inside of community-protected areas surrounding Keo Seima’s core conservation area. I argue that microfinance loans have helped to fund much of this agricultural encroachment, thus accelerating deforestation, and that this problem is likely to be exacerbated as investment for microfinance is scaled up in the name of sustainability. This is because compliance with sustainable investment standards is voluntary, monitoring of environmental outcomes is limited, and harmful externalities are regulated by a state supportive of an extractivist mode of development. The findings from this research contribute to broader scholarship within geography related to the financialization of development and its social-environmental impacts.

Date: 2025
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DOI: 10.1080/24694452.2025.2482098

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